April 8, 2016 | Written by: Barry Tooker
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For years, we’ve discussed real-time payments here in the U.S.
Well, yesterday’s talks are today’s action:
- The Clearing House introduced a new payment rail that should be available in 12 months.
- A consortium of banks announced the creation of the clearXchange for real-time B2B payments.
- A new European instant payments scheme in the Netherlands is slated to go live in 2019.
- Blockchain, while not ready for prime time, could be a significant player in the future.
And the list goes on.
Banks need to prepare now for these initiatives — and those on tomorrow’s horizon. Legacy applications are often batch driven. They’re expensive and difficult to maintain. And it’s risky to try to patch them for real-time processing.
Looking for low-hanging fruit? Start running your payment transactions through a real-time system today. Then, to mitigate customer risk during transition, continue to feed them into your legacy batch applications until you are fully real-time compliant.
Real-time (or immediate payments) processing introduces new implications and changes to the workflow and administration. Who are you going to offer real-time payments to, and what are your controls? What about OFAC, AML, and other fraud monitors and detectors you’re using that aren’t real-time ready? Weigh these decisions now, and make sure your real-time system can interact with your choices.
It’s a new way of thinking about your business.
We live in a real-time world. Customers have anytime, anywhere expectations. (Click the SlideShare, above, to learn more.)
Banking hours can no longer remain 9 to 5, Monday through Friday. Systems can’t continue to collect and distribute at batch intervals throughout the day. It’s time to reinvent your bank, and service offerings, with a real-time slant.
This requires tactical thinking. How can you prepare for the new world of payments? Here are some key focus areas:
- Modernize your bank’s infrastructure, so that it’s fluid, flexible, and real-time-ready
- Support standardized payment formats (e.g., ISO 20022)
- Realize that real-time requires all-the-time (24/7) operations, administration, and technical support/personnel
Ready or not, real-time is reality.
Coming to Sibos in Geneva this month? I invite you to attend our community session on Wednesday, September 28, at 9 am, in conference room 4. The topic is: “Preparing for Instant Payments in a Digital Economy.” The digital economy is rapidly changing how businesses and people interact. As technology advances and payment processing moves towards real-time how will banks position themselves in the digital economy and manage this shift towards real-time payments? Faster payment processing introduces new implications and changes to the workflow and administration. Who are you going to offer real-time payments to and what are your controls? With new real-time payment initiatives on the horizon how do you position your organization to be at the forefront of the digital revolution? Find out from Dag-Inge Flatraaker, General Manager DNB Bank and Rajesh Venkatraman, Director IBM Payments, how to tackle the every changing landscape.
Also, join our theatre sessions:
- Payments in real-time with IBM Financial Transaction Manager: The benefits of real-time payments processing are clear. But there are many challenges as well. Who do you offer real-time payments to, and what are your controls? Can your systems operate 24/7? Are your fraud monitors and detectors real-time ready? Learn one way to keep up with this new reality while covering all the payments touchpoints across the bank.
- Watson for cybersecurity: Outthink threats with security that understands, reasons, and learns. Learn how cognitive systems can shine a light into data that has been dark to bank defenses until now, uncovering new insights and security context never before seen.
- Insights on blockchain: Attend a panel discussion where early adopters discuss: implementing blockchain, building business networks, and blockchain use cases.
- Threat or opportunity: Explore how open APIs are enabling innovative new ways of banking. Discover how to manage payments in compliance with PSD2 regulations. Gain insight on expanding your ecosystem of partners and offerings while achieving efficiencies.
- The cognitive approach on real-time fraud prevention for all payment channels: Learn how cognitive fraud prevention for payment processing enables real-time detection of payment fraud across all payment types. The session both introduces the approach and presents case studies of clients adopting real-time fraud prevention.
- Fraud and compliance implications, post cyberfraud heists: Explore the impact of cyberfraud events on payment operations, compliance and risk, demands for organizational change, tools needed to respond, and measuring the organizational impact due to more payments being flagged for possible fraud.
Hope to see you there!