“In terms of the instant and general payments, probably the biggest challenge today… is the difference in regulatory approach by every country,” said Bruno Mellado, global head of payments, BNP Paribas.
“When you try to pay between two or three countries and you have to look at how each regulator is looking at requirements on (anti-money laundering) sanctions where banks as well are liable completely … you limit the possibility sometimes to make payments more efficient.”
Mellado called for a set of common rules and mutualised services between banks, adding that payments messaging organisation Swift will likely continue to play an important role in orchestrating interbank communication.
“That’s probably the biggest challenge that we have is how to marry technology which is now available, collaboration which is now possible because we set aside competitive versus non-competitive aspects, and the regulatory framework which should allow us to make things more and more efficient, less painful at the end,” he said.
Shirish Wadivkar, global head of correspondent banking products at Standard Chartered agreed that “regulatory unevenness” hinders the payments progress, but that it is not the sole impediment.
“There’s a variable of what one regulator wants and what other regulators want and that exists, but even prior to that, an equally strong problem is a data harmonisation problem,” he said. Currently, context of a cross-border payment often gets lost as the payment moves through intermediaries.
“Once you have data harmonised between banks – and not just banks, but also the intermediaries that are the financial intermediaries that guide the payments – that’s one of the big challenges to solve. ISO  will get us there, but it’s only a start,” said Wadivkar.
The payments sector is increasingly adopting a culture of collaboration. According to Capgemini’s World Payments Report, published today, 60 percent of bank executives believe working with third parties throughout the value chain will help them improve propositions. Previously, banks have been warier of competition.
“Payments is a collaborative problem. It cannot be solved by one bank for its clients or by a couple of banks. We need a lot wider collaboration to be in place. And collaboration is not just between the banks when they’re technically competition, but collaboration should also include the fintechs, the new enters who are actually changing the paradigm on customer experience,” said Wadivkar.
Melissa Tuozzolo, director, payments, Citi said banks will remain integral to the payments process as it progresses due to their scale.
“When you look at these new market entrants and new ecosystems, they can’t come anywhere near the $5trn a day that moves through the Swift network – not even a fraction of it. Some of these new ecosystems have solved the problem of the client experience, but they haven’t solved the problem of the network or the community. We have the network and the community, so what can we learn from this client experience to bring it to our network and community?” she said.
“It is going to be very tricky for any new market entry to really solve for that network connectivity and ubiquity. But if we’re not, we can’t be complacent because somebody will eventually.”