VocaLink has released the findings from what it describes as ‘the banking industry’s first piece of qualitative research into the UK’s Faster Payment Service (FPS) since its launch in May 2008’. The analysis, conducted by VocaLink in association with PricewaterhouseCoopers UK (PwC), identifies the key lessons learnt from the FPS rollout in the UK, based on interviews with FPS bank participants and scheme members, and provides a roadmap for any bank or economy seeking to benefit from real-time payments.
The research shows that FPS has evolved from its regulatory origins into offering a clear business case for adoption of the service. Two-thirds of banks interviewed felt that FPS could deliver new revenues for banks.
One of the participants in the research, Mike Banyard, senior payment industry commercialisation manager at HSBC Bank, explained: “As one of the founding members of the service, we are reaping the benefits of seizing the commercial advantages of Faster Payments early on. From the outset, far from regarding Faster Payments as a compliance issue, we have embraced the real-time technology as a way of introducing new and improved services to our customers and unlocking new revenue opportunities.”
The research showed that the experience of participating banks provides a strong business case for real-time payments to be rolled out into Europe and beyond. However, the research identified key lessons for banks to consider when implementing any real-time payment infrastructure in the future.
Banks which have already invested in modern real-time accounting systems will find it easier to implement and operate faster payments than their counterparts with old legacy and batch-based systems. However, those banks with legacy systems will find that real-time payments provides a much-needed incentive to re-architect their transaction banking platforms to cope with the demands of the modern payments world. Secondly, banks introducing real-time payments should consider a charging model for customers from the outset. Finally, it is clear that real-time payments bring banks back into alignment with their customers needs and, crucially, provide a platform on which they can develop more value-added services for customers.
There are a number of benefits that are highlighted in the research, from helping to reduce cheque and cash volumes to delivering benefits within the corporate and government sectors. Businesses will recognise the greater flexibility of FPS to integrate within existing business processes. Among banks interviewed, those who are helping businesses in this way are already showing revenues that exceed costs, and are predicting an early payback. “We have a three-year payback on the investment,” observed one of the bank representatives.
Martin Wilson, chief commercial officer at VocaLink, said: “The analysis dispels some of the myths and tells the facts about Faster Payments. Operationally, banks have had to implement Faster Payments alongside other instruments, incurring new, fixed costs. Significantly, however, some banks are already able to point to areas where improved business models are leading to a reduction in operational costs, most notably in the areas of exception management. The completion of these final steps takes Faster Payments from infancy to maturity, and as it approaches its adulthood, FPS is beginning to earn its living.”
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