In presentations from a widely diverse range of viewpoints, speakers in the panel discussion on Transformation in Payments Infrastructure at IDC’s Asian Financial Service Conference in Singapore last month all came up with a common yet uncommon view. Bruce Mansfield from debit system provider EFTPOS Payments Australia, Andrew Lai from SWIFT and Tony Horrell from xGemina all concurred that the infrastructure for corporate and consumer payments will soon reach an tipping point where change has to happen.
Mansfield said that consumers’ conversion from cash to cards or other electronic payments is increasing in Australia. As the range of payment channels and the need for interoperability and connectivity increases, he believes banks will have to make a decision on whether to stick with existing systems or make changes to increase efficiency and leverage new technologies. He believes change has to happen, and soon.
In the corporate environment, Lai said, a multitude of standards and a lack of interoperability mean that corporates and financial institutions are also looking for ways to increase speed, interoperability and efficiency. While he talked about how they’re switching to SWIFT, and listeners obviously expected this viewpoint, Lai emphasised that companies feel compelled to make some sort of change to operate more effectively in an increasingly complex and uncertain environment.
Horrell sees the glue that holds everything together coming unstuck. He believes that 60% of payments technology is at the end of its life and another 20% also requires urgent replacement. Financial institutions therefore need to make an urgent decision on how to cope with technology that could break at any time and that doesn’t fully handle new channels or technologies. He also believes that software which increases efficiency, interoperability and the capability to leverage new technologies is critical to success, and even to financial institutions’ retaining the capability to continue processing payments.
While each speaker, not unexpectedly, saw their own company as a solution to solve the needs of particular sectors in the payments industry, what was especially striking was how there was a consensus of views from a debit organisation, a corporate payments service provider and a technology company – all coming from very different backgrounds – about how the current system needs urgent improvements.
Asked about when the change is likely to happen, since stories about impending breakdowns have been heard before, Mansfield said that the industry is at an inflection point and the banks can make a choice. They can try to live with their legacy systems, or they can move forward and avoid difficulties with the infrastructure that currently links payments together. While it was clear what the panelists believe financial institutions should do – and fast – it remains to be seen whether financial institutions feel the same sense of urgency and whether not making a change is actually a viable option.
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