Real-Time Payments Will Be a Catalyst for Change in Italy
2017 will be a crucial year for real-time payments globally. Two major schemes are set to go live: The pan-European SEPA Instant Credit Transfer Scheme (SCT Inst), which will eventually enable consumers and businesses to make euro credit transfers in real-time between accounts 34 European countries, and The Clearing House (TCH) Real-time Payments System in the US. In addition, a number of new regional schemes are in the pipeline, so banks have their work cut out for them.
I caught up with Domenico Scaffidi, Principal Consultant for Immediate Payments at ACI. As a former Head of the International Payments Application and Infrastructure Department of the Italian Cooperative Banks and with over 20 year experience in payments (and as a descendant of a Sardinian wine making family) he knows the Italian banking landscape and mentality inside out.
Dome, how are Italian banks gearing up for the launch of the pan-European scheme?
You know Italians can be a bit slow in general. A couple of months ago immediate payments was probably not high on the agenda but now things are really changing. I would say the 5 or 6 top banks are getting ready to join the scheme when it launches in November.
Why do you think the move to Immediate Payments is gaining momentum?
I think that once banks are starting to look at the business case and understand that real-time payments is not just an investment into new IT but crucial to survive and compete in the new era of digital banking, things fall into place. Banks in Italy are beginning to understand that customers want these new services and they have started to feel the pressure from their competitors.
I am in Italy a lot talking to our clients and prospects. Last week I attended an event of the Association of Foreign Banks in Milan (AIBE) speaking to Italian and foreign bankers about the business case for immediate payments and the impact of PSD2. I have rarely seen a meeting of bankers so animated! I presented the results of our recent YouGov survey of SMEs which found that 50 percent of small and medium-sized businesses in Italy think real-time banking services would be ‘essential’ to the success of their business. That same survey found that 90 percent of businesses would consider switching banks for the offer of real-time payments - I think that figure really woke everyone up!
What do you see as key challenges when it comes to the implementation of Immediate Payments?
There is a lot of confusion among many PSPs in regards to TIPS, the Settlement Instant Payment Service the ECB is currently developing to mitigate liquidity risk. The so-called Target Instant Payment Service (TIPS) will be available for all members of the new pan- European scheme at the end of 2018. Some banks think they need to wait for TIPS to go live with instant payments. That view is simply wrong! Banks can and should join the pan-European scheme as soon as they can. In 2018, when TIPS goes live, the settlement layer will move from the IP scheme to the TIPS service without any new investments necessary, provided participants have chosen an IP solution that will allow them to do that.
I think it is fair to say that Italy is a country where Cash is still King. Do you think that will change with Immediate Payments?
Italians like cash indeed, for a variety of reasons that I won’t go into here! And so far there has not been any significant initiative or incentive from the government to reduce cash. It simply has not been on the agenda. I believe instant payments will be the catalyst of change, not with a big bang but gradually Italian consumers and consumers will see the benefit of being able to make guaranteed instant payments that will reach the account of the recipient within seconds !
ACI Worldwide has been named by EBA Clearing as one of the ‘frontrunner service providers’ for the pan-European EBA SEPA Instant Credit Transfer Scheme and we currently support and provide assistance to a number of banks joining the scheme. ACI’s UP Immediate Payments solution provides a single point of access and liquidity control to all Immediate Payments (IP) schemes globally. Available via a SaaS delivery model or on-premise, the solution is fully designed to provide connectivity to the pan-European EBA SEPA Instant Credit Transfer Scheme (SCT Inst).
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