Finding the sweet spot for instant payments

Technology, Cash management

Finding the sweet spot for instant payments

September 2019

One of the busiest speakers at Sibos 2019 will be Deutsche Bank’s Christof Hofmann, who is a panellist on sessions ranging from the ‘sweet spot’ for banks on instant payments to recent progress in developing real time cross border payments. He tells Graham Buck that much of the potential of instant payment is still being realised

As we move towards the third decade of the 21st century, instant payments are fast developing as the “new normal”. “There has already been considerable momentum, but we’re still only at the beginning of the instant payment journey and there are many interesting opportunities still to be developed,” says Christof Hofmann, global
head of payments and collection products, cash management at Deutsche Bank.

“In particular, we’ll see instant payments in combination with a number of other innovations that will allow for seamless integration in the payments chain.”

Hofmann is set to be the busiest speaker of those representing the bank at Sibos 2019 in London this month as a panellist on no less than three sessions – each with a real-time payment theme – over just two days at this year’s event and is also a participant in a Sibos TV presentation on payments transformation.

This busy schedule reflects his engagement in key initiatives that include instant payments, Europe’s revised Payment Services Directive (PSD2) and SWIFT’s global payments innovation (gpi) initiative. In addition, he is a board member of the Euro Banking Association’s payment infrastructure, EBA Clearing.

EBA Clearing has just announced the launch of the development phase of a pan-European request to pay (R2P) infrastructure. Supported by 26 payment service providers (PSPs) from 11 countries, the new service is scheduled to go live in H2 of 2020.

Christof Hofmann

Christof Hofmann

Global Head of Payments and Collection Products, Cash Management, Deutsche Bank

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Completing the puzzle

In a lunchtime session on 24 September, titled “EBA: Clearing community getting ready for R2P, the missing piece of the puzzle”, Hofmann will join panellists from other major European banks and representatives from EBA Clearing in discussing the benefits of R2P, why it is needed as a driver for Europe’s mass adoption of instant payments and how quickly it can achieve pan-European reach.

"The industry is working on ensuring that Instant Payments and R2P can both be seamlessly integrated into e-commerce and m-commerce"
says Hofmann

For an example of what potential this could hold, look at India’s Unified Payments Interface (UPI), where payment volumes typically quadruple every 12 months and users can easily send an R2P or pay to an email address or mobile.

He will also participate in an afternoon session the same day titled “Banks and instant payments – Where is the sweet spot?” Based on the fact that SWIFTS’s global payment innovation (gpi) initiative has demonstrated their ability to deliver fast-to-instant cross-border payments worldwide, the panellists will consider whether banks can now compete effectively against alternative providers who have taken some of their market share and how ambitious they should be in defending their position.

“Fintechs are certainly innovative; for example some now use Instant Payments for instant validation of account details,” says Hofmann. “This is accomplished by transferring a small amount to your account, which includes a unique reference number that you are then asked to enter on the website to validate that you own and have access to the account.”

His third panel session, on the afternoon of 25 September, is titled “Real time cross border payments in Europe – From vision to reality”. It will include a focus on the proof of concept launched in May this year by the European Central Bank (ECB) and SWIFT to leverage the 24/7 availability of central bank money settlement offered via the new TARGET instant payment settlement (TIPS ) system, which allows for the instant crediting of accounts at ultimate beneficiary banks across Europe.

The trial, in which 20 banks participated, aims to remove any remaining frictions that can still sometimes delay cross-border payments where local systems have limited operating hours and ensure they can now be completed in seconds.

"All of these initiatives are supporting the move to a cashless society.Instant payments are final and irrevocable. For merchants they provide the benefit of instant liquidity, while often being cheaper than credit card transactions."

Christof Hofmann, Global Head of Payments and Collection Products, Cash Management, Deutsche Bank

All three sessions will include the opportunity for audience members to put questions to members of the panel.

Christof Hofmann is a panellist for the following sessions:

All sessions take place at London’s Excel Centre.

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