The potential consolidation and restructuring of payment schemes

The potential consolidation and restructuring of payment schemes

Ahead of the Payments Forum 2018, the Center for Financial Professionals interviewed Caitriona Whelan, Head of Compliance and Controls, NatWest and Becky Clements, Head of Industry Engagement and Payment Change, Metro Bank.

Becky, can you please tell the Risk Insights readers a little bit about yourself, your experiences and what your current professional focus is?

I have worked in the payment industry since I left school spending many years working for RBS managing operations and payment change for every brand. I am currently Head of Industry Engagement for Metro Bank’s industry payment and card regulatory and change activity, as well as acting as the relationship manager for our payment third party suppliers. I currently sit on both the Advisory Panel and the Strategic Forum for the Payment Systems Regulator (PSR) and Chair of the Implementation Work stream for the New Payment Architect (NPA)

I was also part of the delivery group for the New Payment System Operator(NPSO)and was a NED for the interim board for the delivery of UK Finance. I am currently a NED for Faster Payments and Payments UK. I am very involved in the delivery of the NPA and ensuring that the industry is aligned and can deliver this along with Open Banking, PSD2 and other mandatory change. The NPA is very important for smaller players which simplifies access allows competition and the technical layered approach should make future change easier.

Can you explain how financial institutions can benefit from the restructuring of payment schemes?

Becky: Multiple payment systems are unnecessarily complex, time consuming and costly for financial institutions to join and participate in which especially it makes it more difficult for the smaller players

At the Payments Forum, you will be giving your insight regarding the replacement of the central infrastructure with the new payment architecture. Why do you believe this is currently a key talking point within the industry?

Becky: This is a once in a lifetime opportunity to ensure that the UK remain a world leader in processing payments. What we have today is no longer fit for purpose the age and complexity of the systems makes it difficult for the industry to innovate and meet the changing needs of a growing diverse group of users .

Without giving too much away, can you outline some of the consequences of the NPA for the industry?

Becky: Moving to a modern architecture based on ISO 20022, layered approach with a ’thin’ collaborative infrastructure provides the opportunity to address the historic problems of slow innovation, concentration of ownership and control by the larger Banks . The combination of a ‘thin’ centre, overlay services and interoperable standards allow for more flexibility and agile change while maintaining the security, stability and resilience.

Caitriona: Development of the NPA is an exciting ‘once in a generation’ development, which will require significant investment and change for the industry.  It is expected to increase competition and support Open Banking, by the introduction of a streamlined clearing layer based on interoperable ISO20022 message standards.  Overlay services will support existing payments types such as Direct Debits.

What are your thoughts on the Bank of England RTGS agenda and the impact on financial institutions as a whole?

Becky: I think the RTGS review complements the work the PSF are doing and with non-banks eligible for Reserve accounts with the BoE this will really open up the ability to become a scheme participant and aid competition.

Caitriona:  The Bank of England’s RTGS agenda is a progressive one which will deliver a comprehensive modernisation of the UK’s high value payments system and support more flexible central settlement for bank and non-bank payments providers. It will support the NPA’s settlement model and the development and adoption of interoperable message standards.

How do you see the payments industry evolving over the next 6-12 months, particularly in relation to the current and upcoming political landscape?

Becky: I think this is the most exciting time in payments and within the next 12 months the NPSO will be up and running and the NPA will be into procurement. There has never been so much change in the payments environment which is very refreshing and great for customers. The UK is still in the EEA and will deliver the mandatory changes for PSD2 and other European regulations so nothing new in the next 6, 12 months.

Caitriona: 2018 will be influenced by the evolution of Open Banking and PSD2 – it will be interesting to see the reaction of consumers and businesses to the propositions offered.  The fight against financial crime and scams will continue, the focus could increase further combined with active regulatory interest. From a European perspective, Brexit will continue to dominate the agenda, and we will see financial institutions developing their plans in response to the changing landscape .