Banks, Payments Innovation & APIs
June 9th, 2014
There are three strong trends driving banks towards innovation in payments: competition outside the banks, mass technology adoption by consumers, and regulation. Banks have no option but to change.
But accommodating change is not so straightforward.
Lots of innovation – but still some important challenges
Finextra published a very short video with Jeremy Light, head of payments services at Accenture. Jeremy identifies a key issue not often spoken about in the payments technology world:
- most of the innovation is on the payment initiation side, and the bank to bank payment settlement side has yet to catch up. This is limiting.
He raises another uncomfortable point :
- some of the complexities around payments like settlement, risk and liquidity are not well understood by new entrants. And the new entrants will find it hard to resolve these issues, and deliver good and reliable consumer experience, without the help of the banks.
Banks will continue to be important in payments, but they have some things to do…
What banks need to do
In the video, Jeremy Light outlines what banks need to do:
- Support polymorphic payments (lots of different payments mechanisms and lots of different consumer experiences) – presumably third parties will be centrally involved here, designing and delivering consumer friendly applications;
- Expose APIs – used by the applications, and providing secure, controlled, access to account information and services;
- Make payments real-time – APIs and straight through processing on the bank to bank side perhaps?
(Accenture have been paying a lot of attention to APIs. See their work around industrialization of APIs).
Enterprise payments experience?
There’s lots of talk about innovation in consumer payments. It will be interesting to see what innovations arise in the world of enterprise payments. What, for example, are StandardTreasury working on?
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