Thursday, October 04, 2007

The payments 'World Cup'

Guest blogger, Colin Kerr, research area director, payments practice, TowerGroup says regulation in Europe is unleashing a wealth of innovation around payments.

Well, what a week! Strategic changes announced by SWIFT on Monday, to the Red Sox winning their first game of the series last night. As I pondered the sports obsessions of Boston it struck me that Sibos is like the FIFA World Cup: the global soccer tournament that has until recently been neglected by the US.

This week the rest of the world has descended upon Boston to discuss the issues of global payments and, as with sports; the US is on its own track. This week over 50% of delegates arrived from Europe to dominate a conference held 4,000 miles from home.

Payments are 'Gaining Momentum' all right, as evidenced by the 44% of attendees who indicated 'payments' as their key interest area. No wonder that the payment sessions were overflowing with not a seat to be found. I almost felt a pang of sorrow for my colleagues in securities who suffered a dearth of attendees.

But the truth is that on a global basis, payments is the most diverse business in SWIFT’s domain today, and Sibos is the only true global payments conference. It is a forum to debate and share ideas, a showcase of global payments technology, but just as important it is a place to learn from each other.

Sibos is no longer a "SWIFT-only" conference for international messaging standards, but many US domestic payments industry participants have yet to recognize this.

Legislation is driving innovation ever faster in Europe. The Payments Services Directive (PSD) rather than free market forces is forcing the implementation of new payments instruments, but in the midst of upheaval this legislation is also fostering more innovation than may otherwise have existed.

There is collaboration on infrastructure and standards such as ISO 20022, but competition will result in product delivery and client service as banks seek to differentiate themselves.

Looking at the United Kingdom in particular, we can also see that legislation will soon result in low value, real-time, yet low cost payments through the Faster Payments initiative: a concept those of us who bank in the US can only dream of.

So what’s my point? The domino effect is that technology vendors are pushed to innovate rather then rest on the laurels of past successes. This year over 200 exhibitors showcased their technology and services to address the re-engineering efforts of banks.

Payments convergence is coming right now as evidenced by the interoperability pact announced this week among European processors, Equens, Iberpay, Seceti Stet and VocaLink. As the US drags itself away from cheques, its institutions and processors can learn and share at Sibos.

Meet at the world stage, engage, and play the game. Isn’t the concept of real time, person-to-person payments something worth pursuing, or is the banking industry content to let Paypal eat its lunch?

Next year the "Payments World Cup" is in Vienna. See you there.

No comments: