What are the big challenges for 2016?
Find out our payment predictions for 2016 with our Payment solution expert, Francesc Altisent, which will help us to better understand the consequences of the new PSD2 (payment service directive) on the future payment ecosystem.
#1- PSD2 will help FinTechs to disrupt payment even more
After a busy regulatory agenda in 2015 regarding payments with the IFR (Interchange Fee Regulation) regulation and the PSD2 (Payment Service Directive 2) directive, we ended this period with the publication of the latter in the European journal on the 23rd December. Even though we have to wait to the local transposition and the RTS (Regulatory Technical Standards) of the EBA to get a detailed picture of the actions to take. In 2016 the PSD2 front runners will start to position themselves and I think that a new group of FinTech will start to slowly appear. Leveraging the payment initiation and account information capabilities issued from the PSD2 we will see more PAPISPs (Payment API Service Providers). They provide improved payment services through the leverage of PIS (Payment Initiation Services) and AIS (Account Initiation Services) concepts raised in the PSD2.
Welcome to the world of the PAPISPs (Payment API Service Providers). FinTech will continue to disrupt payment regulations, creating increased competition between players in the sphere.
#2- The fight against fraud will continue its shift towards a risk-based approach
Partially brought by the need of frictionless payment already raised by the industry and partially brought by the SecuRe Pay (Security in Retail Payments) guidelines and the PSD2, a move towards a risk based approach will occur during the year to come. Strong authentication and identity management will be at the centre of the payment development for 2016, as the EU and the industry become concerned with increasing fraud losses. Moving ahead with the innovation, one of the largest projects of SlimPay for this 2016 is real-time scoring for IBAN based payments. Analysing and interpreting various sources of data, SlimPay will provide insight on the fraud and payment default likelihood.
#3- Payment speed will go up a gear
The EPC (European Payment Council) is already working towards the deadline of November 2016 to create a rulebook and has already released the first drafts covering a new optional scheme of Instant Payments based on the existing SCT scheme.
Customers are more and more demanding and when they want something they want it immediately. The EPC (European Payment Council) is also working towards the fulfilment of this market need. In order to cope with it, work already started last year with the new optional Instant Payment scheme and this work will be completed this year with the publication of the SCT Instant rulebook. Similarly to what I forecast for the PAPISPs, I predict that FinTechs will also take the axis of Instant Payments based on the IBAN as a growth and innovation path.
Closely related to Instant Payment but a whole different topic is blockchain. Most of you have heard about Bitcoins, the blockchain technology is what makes it possible for Bitcoin to exist. I foresee an extreme growth in the applied use of blockchain, and typically in other areas than bitcoins. Whether to use it in real-time clearing and settlement infrastructure (that enables Instant Payments), to improve the FX market efficiency and cost or just to make possible business cases that we do not know yet.
#4- The big debate: Digital innovation – threat or opportunity
Emerging payment technologies will provide new platforms, and enable new ways to pay. Instant payment, invisible payment, new payment methods, multi-channel… More and more services, more and more providers and greater customer expectations… Making payment invisible or even faster are important debates. The financial sector is driven by these new digital services that may weaken the role of legacy financial institutions and put even more pressure on their margins.
#5- Coexistence or confrontation will be the big dilemma for FinTech
The initiatives raised by the PSD2, new ways of assessing risk and giving access to customer assets, instant payments or even new technological paradigms like blockchain are providing compelling alternatives to traditional banking. The ecosystem of today is polyvalent and full of innovation – Banks and traditional players now have the choice to jump in to this new sphere.
Collaboration is key to move ahead and build a reliable Fintech environment. I think that all of these three topics are too important with regards to the banking ecosystem to be ignored and must be evaluated and taking into account. Let’s keep in mind one thought, the early thought leaders of today are going to be the ones with the bigger advantage tomorrow.
