The importance of being able to offer real-time payments, digital, AI and open banking has never been greater. Daryl Proctor, Product Director – Payments and Universal Banking at Temenos tells EPI where banks that service today’s corporate treasury where they need to invest
The payments sector is evolving at a dizzying rate and the importance of a corporate bank servicing its clientele with what they need has never been greater.
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Research undertaken by Ovum for Temenos ahead of SIBOS found that a staggeringly high 80% of corporates are willing to change their banks for those that offer better servicing and products. Banks are listening but slow to change.
Ageing legacy platforms and so called best of breed single solution systems that only communicate to other systems because of an interface that passes the minimum of data, make that change difficult.
But, if it doesn’t happen customers will move to banks who have made that leap to a best of breed integrated solution accessing real real-time payment solutions (cited as the most valuable service enhancement for corporates), and making data access (cited as a most valued service), product development and regulation exponentially easier, cheaper and faster to achieve.
EPI sat down with Daryl Proctor, Product Director – Payments and Universal Banking at Temenos during SIBOS to discuss the different priorities, perceptions and plans of both corporates and banks in countries that have implemented real-time payments and those that have yet to do so.
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By GlobalDataEPI: Is there potential for a virtual currency
Daryl Proctor, Product Director – Payments and Universal Banking at Temenos (DP):
There is value in a crypto-currency. It needs the correct controls and balances to be traded in the right way. People are not using crypto-currency for the right things. I look at it in same way as non-standard currencies such as gold or oil.
EPI: And what about the opportunities offered by blockchain?
DP: As a technology it offers many benefits but we are yet to see the full collaboration of roll-outs of proper blockchain. It requires a lot of collaboration especially in trade finance where people talk about smart contracts. The banks’ end clients will have to be involved in the same blockchain and so there is a potential pitfall with using blockchain in trade finance.
But look at syndicated lending and banks are more likely to adopt the technology as it will be very useful. In payments, especially cross-border, there is interest but there are other ways of achieving the same thing and may be more short-lived than the original intention.
EPI: On payments, customer behaviour is changing-what is the main direction of change?
DP: Corporates’ perspectives of payments are changing. We have examined this very carefully in our survey. Some 64% of corporates said they would benefit from receiving payments in real time. It is one of their top requirements. Banks are addressing the corporates needs but potentially they are building the use case around real time payments is becoming a difficult thing for a bank to do. Banks typically wait for the regulation and then they build their real time infrastructures rather than being an early adopter.
Even if the industry is not ready for real time payments-if you are ready when it happens-you can start innovating – that is what our survey found.
EPI: Virtual accounts for example?
DP: In countries with real time payments one of the top requirements was virtual accounts according to corporates. There is a change in industry but there is much more to it than just the payments themselves. 53% of corporates surveyed said they plan to provide virtual accounts in the next 12 to 18 months, rising to 57% among banks from countries with real-time payments.
EPI: And corporates you questioned have spoken of an increasing willingness to switch banks?
DP: Corporates are increasingly willing to change service provider: in countries without real-time payment infrastructures, 80% have considered moving main banking relations in the past year. This figure falls to 75% in other countries, in contrast to 52% in our survey last year.
EPI: Payment hubs were a big topic 10 years ago and then we had APIs. Now we have the emergence of international payment hubs.
DP: I use the analogy of spaghetti. The industry is taking the spaghetti and combing it so it is in straight lines and then chopping it up so you can have discrete pieces of functionality as part of the same offering. So at Temenos solution around our payments hub: we have low value payments, we have high value payments, we have instant payments, we have cross-border payments all in the same solution. It is bringing those things together as one solution which gives the clients the benefits. That gives the end customer of the bank the same experience and the same understanding of their payments.
EPI: What about open banking and other exciting innovations on the horizon?
DP: Corporate banks are positive about the impact of open banking: despite initial reservations and inherent conservatism, 57% say that they are working with trusted third parties to improve their services to clients.
