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Immediate Payments Are "Necessary"—And the Banks Know It

Immediate Payments are "necessary"—and the banks know it

Who says banks are dinosaurs? They just have a lot of innovation to juggle to keep pace. There are so many new initiatives to address—so how should banks prioritize? 

At Sibos in Geneva this week, it was clear that bankers have a lot to absorb. This year’s hot topics included PSD2/open APIs, immediate payments, blockchain and corresponding issues of security and compliance (which are front and center with SWIFT).

I'll focus on immediate payments first.  When asked to use one word to describe faster payments across a global set of panelists, answers ranged from "new normal" to "flexibility" to "necessary" to "unavoidable" and "for granted."

With same-day ACH, U.S. bankers are eager to move forward. Yet, doubts remain: in one session, panelists vehemently advocated against the business case.  This is a critical "do or die" move to stay relevant and address customer needs and expectations. While proving the business case remains important, faster payments adoption in countries like Mexico and the U.K. offers valid proof that this is a promising endeavor.

The Europeans are facing the regulatory requirement of PSD2, which is driving a broader discussion about how open APIs and instant payments can fit together. There seem to be strong arguments to approach these game-changers holistically.

As part of this, instant payments are being examined closely and there is a realization that existing SEPA systems won't hold up to real-time transaction speeds and 24x7 requirements. This expands the approach to drive toward a platform that will support the real-time banking needs going forward.  Many speakers also emphasized that FIs must be flexible in the approach to real-time, in order to be able to quickly add capabilities as the market evolves.

Overall, the tone at Sibos was confident. There was an undeniable sense of momentum, particularly around immediate payments.

While the new players may be putting on the pressure, it's clear that these "dinosaurs" aren't going down quietly. They are eager to step forward and win business—and they know the time to act is now.