The future of digital finance is closer than it appears

What does the future of digital financial services hold?

“There is a wealth of opportunities in a changing payments industry, with the evolving payments ecosystem supporting and protecting customers by making payments safer and faster,” was one of the key messages from the panel, which included Jessica Richards, Head of Market Development, Payments at NatWest.


These are the predictions the payments experts shared with the audience.

State of the market: 

The payments landscape is changing rapidly due to the following three factors: 

  1. Customers are starting to expect real time 24/7 digital payments with enhanced data running alongside.
  2.  Regulators are driving innovation and competition while at the same time focusing on protecting customers and ensuring the security and resilience of the systems.
  3.  Technology has given the industry a host of new solutions, from APIs to Open Banking, Cloud and digital ledger technology as well as QR codes and other tech solutions. 


Going forward, there will be huge investments in payments infrastructure including RTGS, TARGET2, SEPA and NPA to comply with standards such as ISO 20022, while the focus on Open Banking remains. What does all this mean for customers? First, they will benefit from simpler, smarter, and safer payments. Second, they will continue to receive innovative solutions – and faster. Third, and probably most importantly, the data and insights that banks and Fintechs can offer today will help customers to thrive financially.  


The next phase in Open Banking:

Variable Recurring Payments (VRP) are in their early infancy but have the potential to be transformative for the industry, enhancing the customer experience by further streamlining payments as other Open Banking solutions have already started to do. For example: APIs help consumers to top up wallets or accounts more easily, rather than having to go through the more time-consuming process of a bank transfer. 


Customer protection: 

The industry and regulators are focused on protecting customers against fraud through initiatives such as PSD2, Secure Customer Authentication (SCA), and the work being done to stop Authorised Push Payment (APP) scams. However, with fraudsters now attempting to get into the payments cycle earlier by inserting fake identities, merchants must and have already become much more careful with the customer verification process. To tackle the challenge, they will have to move from rather simplistic identity checks to more complex machine learning models with many more inputs to determine whether they are dealing with a real person or a fraudster. 


“Creativity will win the war for talent”: 

To take advantage of the innovation capacity of the payments industry, new talent is crucial. Equally, growth and scaling up can only be realized with additional staff. So, how can the industry find the right people? The panelists agreed that they need to offer attractive pathways for people on all levels from outside the industry rather than ‘stealing’ talent from competitors.  


2022 is the year for being 20022-ready: 

ISO 20022, the emerging global standard for payments messaging, will create a common language for payments data across the globe, making interoperability and the exchange of data easier. ISO 20022 will bring the industry together while also allowing payments – internationally and domestically – to include a lot more data. More data will enable more innovation, and provide greater safety and protection from fraudsters.


Co-opetition and collaboration – a new form of partnerships: 

Partnerships have become a key success factor for the payments industry and will continue to play a crucial role to tap into the innovation potential of the sector. Collaborating in one market segment while competing in another will become the norm for fintechs and banks, requiring all market participants to be nimble and agile. The panel agreed that the power of partnerships lies in the opportunity to focus on one specialty payments area while collaborating with other specialist providers for other areas.


If you are a fintech and want to find out more about NatWest’s Open Banking solutions, such as VRP and Payit, and how you could partner with us, please visit our ‘Bank of APIs’ website or speak to your usual NatWest representative.

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