The Fintech Times returned to PAY360 at the ExCeL Centre in London for the second and final day of its 2024 edition, to delve into all of the latest developments in the world of payments.
Opening up day two of PAY360 2024, John Penrose MP addressed the future of open banking and its evolution into smart data, while highlighting what he feels is missing from the Data Protection and Digital Information (DPDI) Bill.
He explored the importance of ‘pace’ to see the successful expansion of open banking data to additional sectors including energy and healthcare. Open banking is a British success story, he said, but warned that as the rest of the world is trying to leapfrog, “we need to stretch our lead” and “take open banking to other sectors of the economy that are ripe for disruption”.
Payments’ next giant leap
Payments policy also took centre stage in the morning, as panellists discussed how policymakers and payment operators are addressing a disparate set of frictions in cross-border payments and how innovation in payments is facilitating improvements.
Victoria Cleland, executive director of payments at the Bank of England, explained the important role that ISO20022 is set to play: “We’re seeing change in a number of different ways. Part of it is the way the people pay, we’re seeing new ways to pay, and we’re also seeing new ideas such as stablecoins and CBDCs, as well as a lot of enhancements in the existing payment rails. There’s a lot of new technology and excitement – but there is sometimes the danger of following that ‘whizzy’ exciting idea.
“It’s important that the industry embraces ISO20022. From a policymaker perspective, I see a real advantage in harmonisation – it enhances cross-border payments. In the UK, the Bank of England is working closely with Pay.UK around a common credit message around ISO. For the industry, it can help with straight-through processing; understanding your customer more; and you can start using some AI to interrogate the rich data that ISO is giving, which can help with AML.”
Panellists also discussed how open banking and open finance could drive financial inclusion, innovation and consumer empowerment.
Henk Van Hulle, CEO of Open Banking Ltd, explained how open banking could have a transformative effect on everyone: “We believe that open banking and open finance really change and improve people’s lives. We have a third-party provider which is mainly focusing on what they call non-discriminatory lending. They’re mainly focusing on vulnerable customers, key workers, NHS workers, as well as civil servants. They want to improve lending by enriching thin credit files.”
A look into the payments crystal ball
There was the chance to glimpse into the payments crystal ball to explore the evolving relationships between banks and fintechs and address the future of the payments ecosystem in a panel session led by The Payments Association ambassador Teresa Connors and featuring Jenni Himberg-Wild, managing director, head of financial institutions and fintech Europe, international corporate banking (CIB), Barclays, Saira Khan, head of innovation and partnerships, First Direct Bank, Adam Bealey, head of SWIFT UK and Ireland, Jessica Richards, head of performance and business management, NatWest Payments and Natasha Zurnamer, CEO and founder, Optty.
Khan expects to see a “return to the human element and more human interaction”, saying many are fatigued with the amount of digital channel choice, while Zurnamer highlighted the growing importance of “hyper-personalisation at the checkout” to help people “see their liquidity in a single view”.
The past, present and future of payments
Tribh Grewal, head of altpay, fintech and commercial payments EMA at Discover Global Network, also delivered a review of the changes witnessed in the payments industry since the inception of PSD1.
He explained how the transition from PSD1 to PSD2 marked a notable improvement in consumer protection. Nonetheless, the evolving payments
landscape and the emergence of new forms of fraud prompted discussions about the need for further enhancements, culminating in the proposal for PSD3. He also shed light on the potential benefits that PSD3 could offer to the payments ecosystem.
Later, in the Innovation Zone, Chris Skinner took to the stage with a pair of fancy glasses to introduce his new book Intelligent Money and discussed the future of money and how it will become digitally and artificially intelligent, asking questions such as who and why should we care about its future?
The role of the regulator
Regulation was an important topic throughout day two of PAY360, as Chris Hemsley, managing director of the Payment Systems Regulator, delved into the PSR’s priorities for the future, and also explained the importance of the regulator for the future of payments: “We need to get the delivery of the payment systems right. These central systems can make a vital contribution to competition and innovation elsewhere in the ecosystem.
“The openness that is built into our interbank systems is a real strength. It has helped new firms grow. This is an important part of supporting the UK’s thriving payments fintech sector – 10 per cent of fintechs globally reside in the UK (outstripping the whole of Europe combined) and the payments subsector currently accounts for the largest share of fintech funding. Payments fintechs are busy developing ideas, competing for customers and delivering innovative new payment services that users value.
“Markets and competition are powerful forces that we rely on to deliver innovation. But markets are institutions – they depend on agreeing on the rules of the game. Effective rules are needed to provide fair competition and unlock market investment and innovation.
“To agree rules, there needs to be coordination between market participants. To ensure fair and effective rules – particularly where there are powerful incumbents and where the rules need to take account of the interests of future participants – there is an important role for regulatory oversight. Payment markets need regulation to make them work well.”
Tourist attractions
Having taken so much information in on day one of PAY360, we also dedicated some time to ‘seeing the sights’ the payments conference had to offer.
An interactive motion-capture goalkeeper mini-game at the Mastercard booth, an approximately eight-foot tall polar bear (which, sadly, wasn’t real), a ‘money-laundering’ washing machine, professional masseuses, various food trucks and a ball wind tunnel reminiscent of the Crystal Maze, were among a huge number of curiosities spread around the exhibition hall.
