SWIFT: Eurosystem has set clear path for financial market renewal
27 November 2018 London
Image: Shutterstock
While change is underway in wholesale and retail payments across the world, in Europe, the Eurosystem has set a clear path for financial market infrastructure renewal, according to a white paper published by SWIFT.
SWIFT’s white paper, The Transformation of the European Payments Landscape, examined the drivers of payments transformation in Europe and looks at the challenges and opportunities for financial institutions.
It said the payments market infrastructures “are re-designing as well as renewing” and “payments market infrastructures, including clearing and settlement mechanisms and real-time gross settlement systems, are principal actors in the global payments transformation currently underway”.
It also added: “As ageing infrastructure comes up for renewal, [the industry is] taking the opportunity to re-design as well as renew, so that, when current plans come to fruition, their communities will benefit from more efficient processing and the ability to provide their ability to provide their customers with richer data and more valuable services.”
SWIFT indicated, through research carried out by Ovum, 85 percent of banks surveyed expect real-time payments will drive revenue growth—up from 53 percent last year.
The whitepaper also discussed how regulations, such as the Second Payment Services Directive (PSD2), are driving a period of radical payments transformation across Europe.
SWIFT said: “Regulators are intervening to foster competition, protect consumer rights and promote payments efficiency and innovation, for example, by requiring banks to open customer data to third-party providers for account information and payment services.”
It added: “The implementation of PSD2, the planned consolidation of the Eurosystem’s TARGET2 and TARGET2- Securities, the evolution of EBA Clearing’s EURO1 and the introduction of pan-European instant payments services are challenging financial institutions to redefine their business models.”
The whitepaper also indicated “digitisation is driving expectations for fast, frictionless and borderless payments that are embedded in transaction chains and eco-systems, whether for retail purchases or business transactions”.
It also stated technology, which is offering opportunities for innovation and efficiency is also enabling competitors—fintechs, global retail giants, card networks and digital start-up banks to challenge incumbent providers and existing business models.
SWIFT also included comment from other financial institutions in its whitepaper—BNP Paribas and Deutsche Bank, among others.
BNP Paribas said: “Financial services are living through exciting times as rapid technological evolution makes payments faster, more flexible and transparent.”
It added: “The current modernisation initiatives in the payments markets, combined with real-time payment infrastructures and the adoption of ISO 20022 by corporates, will enable the creation of new business models and a host of new, integrated banking services that cater to the evolving needs of corporate and retail customers alike.”
Deutsche Bank commented: “We are opening up our infrastructure to expand our payments leadership, providing an ecosystem to most relevant payment solutions of our clients. Ultimately that means being established as a leading network agnostic payments provider offering efficiency and global reach through highly automated payments services.”
Alain Raes, chief executive of Europe, the Middle East and Africa, and the Asia Pacific at SWIFT, said: “The financial industry is going through a period of profound change. In this evolving landscape, market infrastructures and financial institutions are having to renew their infrastructure and reshape their business models to meet customer expectations and capitalise on new opportunities.”
“We are committed to supporting our community through this transformation as a trusted partner.”
SWIFT’s white paper, The Transformation of the European Payments Landscape, examined the drivers of payments transformation in Europe and looks at the challenges and opportunities for financial institutions.
It said the payments market infrastructures “are re-designing as well as renewing” and “payments market infrastructures, including clearing and settlement mechanisms and real-time gross settlement systems, are principal actors in the global payments transformation currently underway”.
It also added: “As ageing infrastructure comes up for renewal, [the industry is] taking the opportunity to re-design as well as renew, so that, when current plans come to fruition, their communities will benefit from more efficient processing and the ability to provide their ability to provide their customers with richer data and more valuable services.”
SWIFT indicated, through research carried out by Ovum, 85 percent of banks surveyed expect real-time payments will drive revenue growth—up from 53 percent last year.
The whitepaper also discussed how regulations, such as the Second Payment Services Directive (PSD2), are driving a period of radical payments transformation across Europe.
SWIFT said: “Regulators are intervening to foster competition, protect consumer rights and promote payments efficiency and innovation, for example, by requiring banks to open customer data to third-party providers for account information and payment services.”
It added: “The implementation of PSD2, the planned consolidation of the Eurosystem’s TARGET2 and TARGET2- Securities, the evolution of EBA Clearing’s EURO1 and the introduction of pan-European instant payments services are challenging financial institutions to redefine their business models.”
The whitepaper also indicated “digitisation is driving expectations for fast, frictionless and borderless payments that are embedded in transaction chains and eco-systems, whether for retail purchases or business transactions”.
It also stated technology, which is offering opportunities for innovation and efficiency is also enabling competitors—fintechs, global retail giants, card networks and digital start-up banks to challenge incumbent providers and existing business models.
SWIFT also included comment from other financial institutions in its whitepaper—BNP Paribas and Deutsche Bank, among others.
BNP Paribas said: “Financial services are living through exciting times as rapid technological evolution makes payments faster, more flexible and transparent.”
It added: “The current modernisation initiatives in the payments markets, combined with real-time payment infrastructures and the adoption of ISO 20022 by corporates, will enable the creation of new business models and a host of new, integrated banking services that cater to the evolving needs of corporate and retail customers alike.”
Deutsche Bank commented: “We are opening up our infrastructure to expand our payments leadership, providing an ecosystem to most relevant payment solutions of our clients. Ultimately that means being established as a leading network agnostic payments provider offering efficiency and global reach through highly automated payments services.”
Alain Raes, chief executive of Europe, the Middle East and Africa, and the Asia Pacific at SWIFT, said: “The financial industry is going through a period of profound change. In this evolving landscape, market infrastructures and financial institutions are having to renew their infrastructure and reshape their business models to meet customer expectations and capitalise on new opportunities.”
“We are committed to supporting our community through this transformation as a trusted partner.”
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