An audience poll conducted by Robert Heisterborg, Global Head, Payments and Cash Management, ING, during Thursday’s ‘payments innovation’ session concluded that more discussion on innovation was required. Despite upcoming initiatives such as mobile and internet payments and pre-paid cards, several of the panel members concurred.

“I would like to challenge the industry by saying that it is not innovating in many ways,” said Russ Waterhouse, Executive Vice President of Products and Development at The Clearing House. While he acknowledged US initiatives for peer-to-peer (P2P) payments and e-billing and aggregation, such as Check- Free and Yodlee, he believes these efforts are following rather than leading the market “That is really to catch up to what PayPal has done,” he said of the US P2P efforts. “In many cases we are still playing catch-up and innovation is happening around us.”

David Sear, Divisional Managing Director, Travelex Global Business Payments, argued banks and their business partners should focus more on the needs of consumers and stop trying to imitate others’ successes. “I am a little tired of hearing about PayPal,” he said. “It was 10 years ago. We need to get over it. The industry needs to think again.”

Sear asserted that while it is difficult to argue with PayPal’s commercial success, there are certain flaws from a consumer perspective. “It doesn’t provide me with the kind of safety and security that I expect a payment instrument to provide to me on a day-by-day basis,” he said. “One piece of US research claimed 81% of consumers would prefer a P2P instrument provided by their bank. That is quite a statement in an environment where trust in banks has been at a premium over the past 18 months. We have to do a little better.”

“I am a little tired of hearing about PayPal. It was 10 years ago. We need to get over it. The industry needs to think again.” David Sear, Divisional Managing Director, Travelex Global Business Payments

Getting together

Banks are not totally to blame for their apparent lack of progress. Over the past decade a raft of regulatory and infrastructure changes has conspired to stifle innovation. Europe for example, has had TARGET, SEPA and MiFID to contend with, to name but a few.

“The budgets of most European banks have been directed towards those must-dos,” said Rajesh Mehta, Managing Director, Head of Treasury and Trade Solutions, EMEA, Citi Global Transaction Services.

However, Mehta argued that banks might have been able to lighten the load and focus more attention on innovation by working together. “Banks could have handled a lot of the mandatory spend, whether brought on by regulation, infrastructure or new schemes, in a less competitive and more collaborative way,” he said. “That spending was for core infrastructure and not really where banks compete.”

Waterhouse at The Clearing House believes there is increasing evidence of bank collaboration. He gave as an example Bank of America operating a joint clearing house with Wells Fargo, as mentioned in Wednesday’s Big Issue debate by Bank of America’s Catherine Bessant. “Banks are going to share and cooperate more than they have historically,” he said.

“In many cases we are still playing catch-up and innovation is happening around us.” Russ Waterhouse, Executive Vice President of Products and Development, The Clearing House

Central infrastructure role

Marcus Treacher, Head of Electronic Banking and e-Commerce, Global Transaction Banking, HSBC, held SWIFT up as a good example of bank collaboration. “There is a real role for strong, central infrastructure providers, whether they be clearing infrastructures or SWIFT, to provide the engine with which the global banking community can thrive and grow.”

However, he questioned the role SWIFT could play in payment innovation. “One of the challenges we have with SWIFT is: to what degree can we move this very big organisation?” he said. “It is very good at managing environments that have been worked out, such as standards and messaging. It is rock-solid and dependable. However, it is not the place where you can take new ideas and move them quickly, as we know with the example. New thinking is best achieved by clients and providers working together.”



Back to headlines