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Real-time Payments: Just the first step to real-time banking

Just the First Step to Real-time Banking

I am fortunate enough to be part of many conversations around the globe on immediate or instant payments, but where ever I go there seems to be a whisper that follows me…. “This isn’t really about real-time payments, but real-time banking”.

So let me share with you my viewpoint, and let’s examine it together.

Almost every country is looking to implement a mechanism to allow consumers (you and me) to send and receive money in real-time. I accept that there are exceptions, but even the most reluctant will eventually have to jump on the band wagon—as regulation, technology and the competition advances beyond their reach.

So imagine, we are a few years into the future, in a world where every customer is enabled to send and receive payments instantly through a variety of different channels. Are we, as consumers, happy and satisfied now? History tends to show that we will always want more. 

Look at Apple; 10 years ago I didn’t even know I needed a smartphone, now most people couldn’t live without one. Just when we thought things couldn’t get better and all our needs were catered to, the iPad was launched, and now I can’t live without that either. Skip to 2015, the Apple Watch is here, and I can hear people saying “how did I live without it before;” I wonder what will be next. 

The truth is that as companies innovate to stay ahead of the competition, they are changing our behaviour and expectations, and the same principles apply to banking. As banks enable new technologies—mobile, contactless, on-line, real-time—they change our habits around the way we manage our finances and our expectations along with it.

Consider this legitimate real-life example: “Mr Banker, I can send €20 to my window cleaner immediately via my smartphone, but if I want to change the payment date on my credit card, I have to call the customer service line, which is only open Monday-Friday 8am-8pm, to submit a request, to then have to call back after a specific date to enable the request, then I have to…” You get the picture.

As consumers’ behaviors around sending and receiving payments change, they will begin to expect all their banking interactions to be as easy, as seamless and as instant as sending the €20 to their window cleaner.

This is what I mean by real-time banking—the ability for customers of the bank to perform their banking transactions 24/7/365 in a seamless and user-friendly manner.

In order for real-time banking to be achieved, it is going to require a lot more than just a patch here, an integration layer there, or a new real-time payments gateway. It will need a mind-set change, and it will mean reviewing all the processes and business models in the bank and the platforms that enable them. 

In order to keep the bank competitive, it (the bank) will need to provide an ‘invisible’ process and a customer experience that meets or exceeds expectations.

So, to bring me full circle, the banks—by enabling real-time payments—are taking the first step toward being real-time banks. I guess in some ways it is a self-fulfilling prophecy; the banks respond to customer demand for real-time, which in turn creates the demand for real-time banking.

I will be discussing this topic on the ACI Supercharged Payment Stage at Sibos. Click here to see details of the sessions and to add them to your diary.