FINGER ON THE PULSE CAN AUSTRALIA'S DIGITAL ID SCHEME ACHIEVE LIFT-OFF? - trust eu affairs
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www.e lectroni cpaymentsi nternati onal .com Issue 366 / DecemBER 2017
FINGER ON THE PULSE
CAN AUSTRALIA’S DIGITAL
ID SCHEME ACHIEVE LIFT-OFF?
COUNTRY SURVEYS FEATURE INSIGHT
The state of play for DBC Debate: The Ignore consumer payment
payments in Chile, Iran and challenges and preferences and risk
New Zealand opportunities of PSD2 missing a trick
EPI December 366.indd 1 09/11/2017 17:30:57
contents
this month
COVER STORY NEWS
05 / EDITOR’S LETTER
DIGITAL ID 06 / DIGEST
• WorldRemit introduces service for
remittances to Hungary
• Paytm launches Inbox chat platform
• Visa Direct makes debut in Europe
• DBS launches new API platform
• EMQ partners with QFPay in
Indonesia
• American Express adds Samsung Pay
support in Canada
• Indian banks to bring digital payment
solutions under BHIM
• US Bank unveils two digital
payment solutions
• Interac supports Samsung Pay
12
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2 | December 2017 | Electronic Payments International
EPI December 366.indd 2 09/11/2017 17:31:15
contents
december 2017
FEATURES
09 / DBC DEBATE
With the deadline for PDS2 just around the
corner, banks and fintechs must be prepared
for the challenges it brings as well as the
opportunities that come with it. Briony
Richter reports from the latest Digital
Banking Club debate
12 / DIGITAL ID
Australia Post has launched a smartphone-
based national digital ID scheme. However,
until it gains a significant number of partners,
particularly in the banking sector, the
19
scheme’s adoption may be limited. Robin
Arnfield reports
14 / FISERV
With cryptocurrencies, the Internet of Things s to talk about cracking China, disrupting s to talk about cracking China, disrupting
and APIs, a lot is happening in payments. COUNTRY SNAPSHOTS
SWIFT, and leveraging WeCha INDUSTRY INSIGHT
SWIFT, and leveraging WeCha
Patrick Brusnahan spoke to experts from
Fiserv to see how the sector will develop in
the coming years. What is set to make an
18 / CHILE 17 / ACI WORLDWIDE
Cash remains the preferred method of With more than five million high-spending
impact, and what will be a damp squib?
consumer payments in Chile, accounting for tourists from China expected to travel to
76% of total payment transaction volume Europe this year alone, merchants that ignore
15 / AMAZON WEB in 2016. However, initiatives to reduce the
unbanked population are taking effect
their payment preferences risk missing a huge
trick, writes Andy McDonald
SERVICES
From social media to payments to location,
all forms of data can be used to help the
19 / IRAN
Iran’s payment cards market recorded robust
consumer. With open banking it is becoming growth in terms of cards in circulation,
even more accessible, but how can a company transaction volume and value between 2012
go through it all? Patrick Brusnahan speaks and 2016, despite international sanctions
to Amazon Web Services to find out against the country
16 / MOBILE MONEY 20 / NEW ZEALAND
17
Mobile devices are rapidly becoming the
consumer’s most popular way to bank,
New Zealand’s cards and payments industry
is well developed, and consumers are prolific
21 / TRUSTEUAFFAIRS
5AMLD is a set of proposed amendments to
according to Visa’s third Digital Payment users of payment cards. Banks and payment
the anti-money laundering directive in the
Study. Briony Richter takes a closer look at companies also take regular initiatives to
light of recent terrorist attacks. As Monica
the survey results improve financial literacy
Monaco writes, it covers key areas including
virtual currencies and prepaid cards
22 / PPRO GROUP
No matter what happens, someone
somewhere finds a way to turn a profit. So
much focus has been on the negatives of
09 Brexit that there is a danger that opportunities
will be missed, writes Simon Black
www.electronicpaymentsinternational.com | 3
EPI December 366.indd 3 09/11/2017 17:31:21
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IE Adverts - 2017 MG Edit.indd 1 27/07/2017 12:46:16
editor’s letter
e-wallet growth set to
take off, and a huge
payments hit for Walmart
Douglas Blakey, Editor
I
t has been a busy month for global payments reports. baby boomers are increasingly enthusiastic about shopping
First up came the annual 2017 World Payments online. It notes that global household spending by people aged
Report from Capgemini and BNP Paribas, followed by over 60 will reach $15trn by 2020, twice as much as in 2010.
McKinsey’s annual survey and finally Worldpay’s Global In Europe, people aged over 50 spend 71% more than young
Payments Report. people on their average purchases. In the US, consumers aged
Worldpay’s research examines the online shopping market in over 50 will soon account for 70% of the country’s disposable
36 countries, and forecasts a major drop in established forms income. It makes a change not to read a report obsessed with
of payments such as debit and credit cards in the period to the millennial segment.
2021. In 24 of the countries surveyed, there will be double- By 2021, Worldpay estimates that China’s e-commerce
digit CAGR in e-commerce in the five years to 2021 (see table). will be worth $1.55trn a year, ahead of the US ($1.08trn) and
E-wallets are set for dramatic growth and will become the the UK third on $268bn. Japan ($183bn), Germany ($123bn),
most popular payment method for online transactions, taking France ($122bn) and India ($105bn) come net ahead of South
46% of the market, according to WorldPay – double the Korea ($81bn) and Canada ($69bn).
combined sum for credit and debit cards.
Walmart scores QR hit
The Worldpay report is notable for its comments relating
to baby boomers and silver surfers, a demographic that will Here is one in the eye for the Apple evangelists who tried to
reshape the global payments market. The report notes that persuade us all that Apple Pay would do for mobile payments
what the iPod did for music. And also a lesson for some of us
who, years back, took one look at QR codes as a method of
FASTEST-GROWING E-COMMERCE MARKETS TO 2021 (CAGR) payments and said ‘no thanks’.
Colombia 31% Netherlands 14% Reuters has the interesting story as EPI goes to press that
Nigeria 30% Turkey 13%
Walmart’s mobile app is about to overhaul Apple Pay as the
Argentina 24% UAE 12%
most popular mobile payment method in the US.
India 24% Canada 11%
Available in almost 5,000 stores, Walmart Pay was launched
Indonesia 23% China 11%
as recently as December 2015, more than a year after Apple
Vietnam 22% Germany 11%
Pay went live. Unlike Apple Pay, Walmart Pay works with both
Philippines 21% South Africa 11%
iOS and Android phones.
South Korea 19% Denmark 10%
Witnessing a demonstration of how Walmart Pay works, it
Thailand 17% Hong Kong 10%
Meico 17% Norway 10%
seemed to the writer that it was clunky and more trouble than
Malaysia 15% UK 10% it was worth, but – and it is a big but – in June it was used by
Italy 14% US 10% more than 5% of Walmart’s shoppers. That is a lot of shoppers.
Source: Worldpay Fair play to them. <
Get in touch with the editor at: douglas.blakey@verdict.co.uk
www.electronicpaymentsinternational.com | 5
EPI December 366.indd 5 09/11/2017 17:31:27
News | Digest
news digest
WorldRemit introduces service Visa Direct makes
debut in Europe
for remittances to Hungary
UK-based global digital money-transfer Commenting on the launch, WorldRemit
Visa has launched a real-time payments
platform, Visa Direct, in Europe to enable
business WorldRemit has launched instant founder and CEO Ismail Ahmed said: companies to transform domestic and
money transfers to Hungary. “Hungary’s diaspora has a growing need to cross-border payments for businesses and
The newly launched service enables access quick, secure and convenient money consumers.
migrants in over 50 countries to send transfers. WorldRemit’s service answers Visa Direct allows secure money
remittances directly to bank accounts in that need. transfers and provides immediate access
Hungary through the WorldRemit app or “Now a Hungarian waiter, language to funds and also the ability to make
website. It allows users to send money interpreter or IT professional in London purchases at 44 million retail locations
directly from mobile devices with just few can transfer money back home as easily as globally. The platform enables B2B, B2C
taps, eliminating the need to visit an agent. sending an instant message.” and P2P payments.
Approximately 600,000 Hungarian According to the World Bank, Hungary The platform is one of the application
citizens are living abroad, with top received $4.5bn in 2015, making the programme interface-based network
migration destinations including Germany, nation one of the top remittance-receiving capabilities available on the Visa
the UK, Austria and Switzerland. destinations in Europe. < Developer Platform. It aims to help
financial institutions, merchants and
Paytm launches Inbox chat platform
technology companies meet the demands
of consumers and merchants who use
connected devices to shop. Visa has
partnered Worldpay to increase the
availability of Visa Direct to merchants in
Europe and markets worldwide.
Visa Europe product solutions senior
vice-president Mike Lemberger said:
“For decades, Visa has led the way in
transforming the way we pay in stores and
online. Now we have an opportunity to
transform how consumers and business
pay each other in a fast, convenient and
secure way.
“Visa Direct is a proven platform that
enables technology companies, businesses
and financial institutions to meet the
demand for real-time payments, backed by
Indian digital wallet and payment service peer payment service for Indian customers by the ubiquity, cost-efficiency and speed of
Paytm has introduced Inbox, a messaging the end of 2017. Visa’s global network.”
service that allows users to chat, send and Paytm senior vice-president Deepak Abbot Worldpay global e-commerce chief
request money to friends and family. said: “We have realised that besides making product officer Dave Glaser said: “In
The messenger also enables users to payments, our users and merchants also like to recent years, the payments landscape
send photos and videos instantly, share live communicate with each other. There is a need has changed dramatically with clients and
locations, and recall messages using its Delete for social messaging, commerce and payments consumers alike expecting to be able to
for All function. seamlessly blending into one another. make a payment under their own terms
The Paytm Inbox also features notifications, “One step for us towards meeting this – whether that is making a real-time
orders and games as well as the messaging consumer need is Paytm Inbox, where you can payment or using a specific method.
service. It will be initially made available to chat with friends or merchants and send and “We are proud to be working with Visa
Android phone users, and subsequently to receive money effortlessly and securely. on this unrivalled platform as an early
iOS customers. “This will help us drive greater engagement adopter in Europe and other global markets
The update comes immediately after on our platform and build a stronger bond and believe that Visa Direct is an important
WhatsApp revealed plans to launch a peer-to- with our customers.” < step in meeting those needs.” <
6 | December 2017 | Electronic Payments International
EPI December 366.indd 6 09/11/2017 17:31:31
News | digest
DBS launches new API platform EMQ partners with
DBS Bank has unveiled the world’s largest
API developer platform. The platform
A McDonald’s spokesperson said: “The
DBS API partnership has helped us to speed QFPay in Indonesia
encompasses 155 APIs in more than 20 up the process of payments so that our EMQ, a Hong Kong-based financial
categories, such as fund transfers, rewards and customers can focus on enjoying their meals. technology startup, has entered into a
real-time payments. “Speed is essential in this process, and strategic partnership with mobile payment
Shee Tse Koon, group head of strategy and we’re delighted that banks such as DBS are and big data technology company QFPay
planning, and head of ecosystems, stated: exploring the use of digital capabilities to to enable merchant settlement across
“The digital momentum that we see today smoothen such experiences.” Indonesia.
is just the tip of the iceberg. By creating DBS has recently collaborated with The new merchant-settlement platform,
ecosystem partnerships – collaborating, governments, partners, fintechs and other which uses EMQ’s scalable API, is designed
creating and innovating together with partners industry players to make banking quicker, to enable consistent settlement processes
– we believe that we can provide the best simpler and efficient through the use of APIs. for businesses.
products, solutions and experiences.” David Gledhill, group chief information The platform claims to deliver a secure
DBS says it is continuing its efforts to officer at DBS Bank, said: “This has given us and scalable infrastructure for mobile
create innovative and personalised experiences an edge – enabling us to operate with fintech- payments in the country, providing
for its customers. The platform has already like agility and nimbleness, and also platform- benefits in efficiency and speed after
been adopted by 50 companies, including like inclusiveness. This will be transformative integration to mobile payments globally.
McDonald’s, MSIG, PropertyGuru and in ways not imagined previously, both for the EMQ co-founder and CEO Max Liu
several startups. customer and the bank.” < commented: “Indonesia is Southeast Asia’s
largest economy and is one of the top
American Express adds Samsung destinations for Chinese tourists, who
hold significant buying power with diverse
payment needs.
Pay support in Canada “To address this, mobile payment
providers such as QFPay are expanding
Samsung Galaxy Apps Store, for purchases with different international merchants,
made at American Express accepting which in turn require a cross-border
merchants. platform for real-time merchant
“The addition of Samsung Pay marks settlement.
another example of how American Express “Our partnership with QFPay is a great
Canada is furthering its digital-first validation that our extensive settlement
strategy,” the company said in a press note. network provides a critical gateway that
American Express’s intelligent security connects businesses. We are pleased
systems and fraud-protection guarantee to partner and support QFPay with its
will approve the transactions with PIN, expansion across Asia.”
fingerprint or iris. QFPay co-founder and president Patrick
American Express Canada’s vice- Ngan said: “This is an exciting milestone
president of consumer cards, Megan in our partnership with EMQ as we
McKee, said: “We know our cardmembers continue our strategic expansion across
love the speed and convenience of paying Asia. Our integration with EMQ’s scalable
for purchases with a tap of their mobile API platform has empowered us with a
device. faster, more cost-effective way to deliver
“That’s why we’re thrilled to add payments to our merchants and suppliers
Samsung Pay to our digital payment in Indonesia.
portfolio. Now our cardmembers have even “By leveraging our experiences in
greater flexibility and choice in how they serving over one million merchants, we
choose to pay.” are confident in continuing to bring secure
American Express has expanded its mobile Samsung Electronics Canada’s COO and mobile payment services and solutions to
wallet portfolio with the addition of executive vice-president, Paul Brannen, worldwide merchants. We look forward
Samsung Pay to Canadian cardholders. added: “We’re excited to partner with to further expanding our partnership with
The newly added service will be available American Express to help bring Samsung EMQ across Asia,” Ngan added.
for eligible Canadian consumer, small Pay to more Canadian consumers. EMQ is currently operational in Hong
business and corporate cards issued by “Not only will this enhance our digital Kong, Taiwan, Indonesia, Vietnam and the
Amex Bank of Canada. It supports all the wallet, but it will also empower Amex Philippines. It plans to expand into other
latest Samsung Galaxy mobile devices. cardmembers with a seamless mobile markets initially in Asia and then globally,
Eligible cardholders can add American payment solution that is designed for covering North America, Europe and the
Express cards to Samsung Pay via the simplicity, security and convenience.” < Middle East. <
www.electronicpaymentsinternational.com | 7
EPI December 366.indd 7 09/11/2017 17:31:32
News | Digest
Indian banks to bring digital Interac supports
payment solutions under BHIM Samsung Pay
Public and private Indian banks are set The mobile app was launched by Prime
to bring digital payment solutions under Minister Narendra Modi in December 2016 Interac Association/Acxsys has introduced
the Bharat Interface for Money (BHIM) as a government-promoted UPI application Samsung Pay as a mobile payment option
to encourage the adoption of Unified to promote digital as a direct competitor for Interac Debit card holders in Canada.
Payments Interface (UPI)-driven digital to bank-led UPI apps such as Axis Pay, The payment option is being promoted
payment applications. SBI Pay, as well as non-bank UPI players as providing convenience, security and
Banks will show BHIM as a prefix to UPI such as the Flipkart-owned PhonePe and privacy of contactless transactions to debit
applications to remove confusion among Google’s payment application, Tez. card customers issued by participating
customers. The bank-led UPI apps will be rebranded financial institutions for supported
The National Payments Corporation of and renamed Bhim SBI Pay, Bhim Axis Pay Samsung devices.
India, which developed the mobile app, has and Bhim RBL Pay. Consumers with Samsung devices and
already instructed banks to display prefix A bank representative who is directly debit cards issued by ATB Financial, CIBC
BHIM prominently at all major merchant aware of the development said: “The UPI and Scotiabank can now use Interac Debit
checkout locations. front end of the bank apps will be changed on Samsung Pay to pay for purchases at
The move aims to further the to include the name BHIM. Although this merchant locations in Canada wherever
promotion of UPI as a one-stop solution will be a nomenclature change, eventually, Interac Flash payments are accepted.
for smartphone-based small-value retail everything will become part of the larger When cardholders add Interac Debit
transactions. BHIM family.” < on Samsung Pay to their device, a
virtual account number is created that is
US Bank unveils two digital
different from the physical card number.
All Samsung Pay transactions will be
processed through the Interac Token
payment solutions Service Provider, which generates a
sequence of numbers valid for a single
transaction only.
mobile number or email address. The bank Interac Association and Acxsys
uses the Zelle Network and its messaging Corporation president and CEO Mark
capabilities to enable clients to send money O’Connell said: “Interac Debit continues
to any payee with a US bank account, to be the most-used payment method in
either immediately or the next day. Canada, and by making it available through
Supplier Prefer Pay offers multiple Samsung Pay, we’re ensuring that even
payment options and allows the enrolment more Canadians will be able to use it to
and payment of suppliers. It processes make mobile payments directly from their
vendor payments and provides detailed bank account.
payment-related remittance information to “This is part of our ongoing commitment
the vendor. to offer Canadians a broad range of fast
US Bank executive vice-president and secure payment options, including the
and chief innovation officer Dominic convenience of paying with their mobile
Venturo said: “Organisations are looking device,” O’Connell added.
for payment solutions that solve real-life Samsung COO and executive vice-
challenges. With Disbursements via Zelle president Paul Brannen commented:
and Supplier Prefer Pay we make payables “We’re happy to expand our Samsung
more secure and efficient for business Pay offering to Interac Debit customers
US Bank has rolled out two new digital clients by eliminating the upfront effort throughout Canada and offer them a
payment solutions, Disbursements via required to obtain the payees’ banking seamless mobile payment solution that is
Zelle and Supplier Prefer Pay, which enable information.” simple, safe and convenient.”
corporate and commercial banking clients US Bank executive vice-president and Interac branded products and services
to shift from paper to electronic payments. head of global treasury management Rich are currently offered by Interac Association
The payment solutions reduce the Erario said: “US Bank continues to be a and Acxsys, which together operate a
time and risk involved in the process of leader in financial services innovation. debit system in Canada. In 1996, the
soliciting, storing and maintaining banking These solutions are examples of how US original architects of the Interac network
information for business and individual Bank is innovating using new payment created Acxsys to develop new business
payees. technology to provide clients with effective partnerships and new services and
Disbursements via Zelle allow companies ways of optimising working capital and take advantage of opportunities in the
to transfer funds to individuals using a reducing overall processing costs.” < marketplace on a competitive basis. <
8 | December 2017 | Electronic Payments International
EPI December 366.indd 8 09/11/2017 17:31:38
feature | dbc debate
consumers about the benefits of open banking
and sharing data in a responsible way.
will open banking “Unless we do this, the customer interface
will be hijacked by the social media
breathe new life
companies. If we do this as an industry
correctly then we will continue to own the
interface. If we do not, it may go to Google,
Facebook and the rest.”
into the industry?
Roberto Ferrari, chief digital and
innovation officer at Mediobanca group, said:
“Open banking will force banks to use the
data they have to its full potential.”
In agreement with Ferrari was TSB Bank’s
digital innovation and transformation director,
With the deadline for PDS2 just around the corner, banks Pol Navarro, who argued: “Open banking and
and fintechs must be prepared for the challenges it brings as the introduction of PSD2 is pushing banks to
become more oriented towards the customer.
well as the opportunities that come with it. Briony Richter Customers seek good experiences from their
reports from the latest Digital Banking Club debate banks.”
Asked if TSB is approaching this from
the mindset of an incumbent or challenger,
W
ill open banking really there is a little reservation. Is it really going to Navarro said: “We are a challenger. We at
be transformational? The live up to its promises? Do consumers really TSB are making sure that we can take full
latest Digital Banking Club understand it and will they embrace it? It is advantage of the data we receive.”
debate of 2017, powered by Intelligent quite a confusing time for a lot of people, and Jenkins argued that data is important, but
Environments, discussed just that. it needs to be carried out carefully. customers must always come first. “Data is
Hosted at the formidable Law Society in “If customers allow it, licensed AISPs the fuel, but you have to think carefully about
London, the debate featured an outstanding [Account Information Service Providers] and the customer experience and what their needs
panel to debate the challenges and PISPs [Payment Initiation Service Providers] are. We need that creativeness coming into
opportunities posed by the implementation of will enjoy unprecedented access to a platform the industry to give our customers something
open banking. on which they can develop entirely new kinds of value. Often, customers are a little anxious
of products, services and experiences.” about open banking.
Why is it a good time to be discussing Anne Boden, CEO of Starling Bank and “We need to ask ourselves, how are we going
open banking? the 2017 Digital Banking Club Power 50 to get customers to trust us with their data as
Simon Cadbury, director of strategy and Personality of the Year, added: “It could much as they trust us with their money?
innovation at Intelligent Environments, began completely change retail banking forever “We have to answer this together. We have
the debate by expressing his thoughts on the – if it happens. There is a huge amount of to think about putting the customer first.
introduction of open banking. opportunity out there but implementing it in Some big banks may naturally want to hold
He said: “It is the topic on everyone’s lips. traditional banks could prove difficult. onto their customer base, but collaboration
The most interesting thing for me is that “The opportunities that PSD2 will open is the way forward. If we do it securely with
every article I read and everyone I speak to is up are great; they are good for consumers, APIs then it really could be phenomenal. ”
incredibly positive about open banking. but those changes actually attack the heart of The panel were all agreed that open banking
“I agree that it is a very exciting time, but banking as it is at the moment.” has great potential – if harnessed with the
actually when you scratch beneath the surface Hilda Jenkins, digital experience and right tools.
engagement director at Barclays, argued that
it is the customer that should be the priority.
“The way we go about it has to put the
customer at the centre of everything. The big
banks, the fintechs are all looking to come in
and create new ways to excite our customers.
If we do that then it can only be a good thing
for all of us.
“At Barclays we put the trust of our
customers first. If data is shared securely and
open banking is approached in a mature way
by all, then it could work.”
Boden emphasised this point: “Customers
should come first and they should own their
Hilda Jenkins, Barclays data. It is up to the industry to educate Roberto Ferrari, Mediobanca
www.electronicpaymentsinternational.com | 9
EPI December 366.indd 9 09/11/2017 17:31:40
feature | dbc debate
Will open banking live up to expectations? “Traditional banks are in the driving seat, to create different types of data. With these
On the topic of whether open banking is more but if they hesitate, technology heavyweights partnerships we can marry the data gained
exciting in business than in other sectors, Will like Google, Amazon, Facebook and Apple are from them with the data we already hold.”
Beeson, head of operations and innovation well placed to take advantage of PSD2.” Cadbury said: “I hope the challenges are
at Civilised Bank, stated: “It is very exciting. Navarro stated: “In the long run it will overcome and there is success, but I do fear
There is much broader competition. Banks are really change the banking industry. If you give that the big brands have an advantage at this
doing it because of the changing expectations good, trustworthy customer service then the time.”
from customers. Also, if you look across customers will continue to come again.” Boden added: “The big banks will be
the industry you are seeing fewer and fewer PSD2 follows on from PSD, and could pushed to be more creative and make more
standalone banks wanting to own 100% of essentially revolutionise the banking and investments in things that make the customer
customer services. payments industry, affecting everything from happy. New entrants will drive innovation
“It will be much faster to deliver with the way we pay online to the information and creativity, and hopefully everyone will get
collaboration, and there will be more that can be seen when making a payment. a better deal if it works. We must, however,
comprehensive services for customers.” Adapting to these new regulations will educate our customers in what all this will
Boden reiterated the need for collaboration, need significant levels of investment and mean for them.”
saying: “We envisage a world where people commitment from the banking industry. Navarro believed that it will be the
like us will provide the business current Boden talked about the differences that customers that will benefit the most from
account, and then customers can use APIs to consumers will all see with PSD2. “With PSD open banking. Ferrari agreed, but emphasised
get access to other services. We can provide we didn’t have all these new players providing that it is essential to have the right architecture
an alternative and different value chain to the people with specialised services. PSD2 is going from the top to the bottom of the bank.
traditional banks.” to do that. It has the infrastructure to join up Beeson said the winners will not necessarily
Customer expectations are at the heart new services to old services. It is going to link be specific companies or individuals, but those
of the debate; they are the main driver for the incumbent and traditional banks in new who are prepared.
implementing the changes needed. and interesting ways.” He stated: “Regardless of bank or non-
Ferrari argued that the expectations of For consumers who hold more than bank, incumbent or new entrant, the winners
customers are clear: They want top service one bank account, the changes will allow will be those that have efficient, scalable, open
from their banks. Ferrari stated: “Banks are businesses and providers to show all their architecture. The losers will be the ones that
data companies, therefore money and banking account information in one place. Of course, do not. There are so many factors that are
is about data. along with these changes come much stronger changing and there will be pressure to make
“There are very high expectations from security checks to ensure safe customer changes.”
customers. You can see this from the rapid payment. A question from the floor – again the DBC
uptake in mobile banking globally. In the end debate played to a full house – referenced
it is what you give to them.” Who will be the winners and losers? seven-day switching and why, as customers,
As well as customer support, open banking With high expectations for all players across we should switch our accounts for, potentially,
will also be beneficial to banks and fintechs. the board, the panel were asked who will be another average experience. What unique
Cadbury emphasised how the business banker the ones that stand up to the challenges and experience do the panel have to offer?
has more to benefit from in the short term, overcome the hurdles. Beeson began by stating that Civilised
but must look to the future in order to secure Jenkins stated: “This is the time to be in Bank’s unique experience would be “delivering
customer loyalty. banking. These new laws are exciting for a face-to-face human interface that would be
“The open banking component of PSD2 us and our customers. Of course the big the single point of contact for all of the bank’s
is nothing less than an invitation to rethink banks will embrace it. We want to keep our resources”.
banking. The walled gardens that banks have customers and keep them satisfied. Boden added that when customers come
built around their customers’ data will start to “We need to innovate and take hold of the to Starling Bank it is because they want that
crumble. The customer loyalty that banks have opportunities opening up. Barclays has been unique experience, and the mobile app it
spent fortunes to build could be challenged. opening up to partner with small players provides does just that.
10 | December 2017 | Electronic Payments International
EPI December 366.indd 10 09/11/2017 17:31:42feature | dbc debate
and seeing other banks, retailers or tech
companies eat their lunch.
“Equally, there is a risk of overestimating
the impact of PSD2 and wasting resources on
it, to the detriment of some other left-field
advance such as machine learning.”
Cadbury also highlighted that customers
might not want PSD2. “Some customers like
to compartmentalise their financial interests,
particularly their debts.
“For some this is a matter of security or an
insurance against fraud, for others it’s simply
IE’s Jerry Mulle with Anne Boden because they don’t want their bank to have Jerry Mulle with Will Beeson
a full picture of their financial lives. Services
“We built all the functions into the mobile built on the back of PSD2 will have to all fits together. If open banking can help in
app. We did get an incredible number of overcome this to succeed.” a way that is safe, secure, and does not abuse
people switching over in the first couple of Carrying on the importance of educating data, then I think it could be a very powerful
weeks. People want something different and consumers, Boden stated: “I believe it comes thing.”
unique. I believe the seven-day switch works. down to education again. Using methods that Speaking about the opportunities of
“By providing the right infrastructure, are sophisticated will help customers connect GDPR, Jenkins said: “It is a great opportunity
delivering interesting products and a number with their data and systems. – how we leverage the trust in our customer
of relevant partners, we can gain new “We must educate people that it is safer base and use the enhancement of privacy
customers and keep the loyalty of our existing to have all their information stored in one laws that GDPR is bringing. It is important
ones,” Boden noted. place, with trusted institutions, and use those to approach it responsibly and expose it to
services to log on to other providers.” customers in a way that they can enjoy.”
Risks and hurdles Ferrari agreed that it is important to let Cadbury concluded: “Open banking is a
Open banking does not come without customers know how their data is being used, revolutionary concept in financial services,
conduct risks. In particular, many customers and from where it is being accessed. “We need but not in the technology sector. Open APIs
are very concerned about their security and to be much more transparent. The technology are the driving force behind the Internet of
data privacy. to prevent fraud and hacking will become Things and an essential feature of almost all
Jenkins discussed the importance of much more relevant, and we need to be successful online platforms – from Twitter and
guiding consumers through the process of prepared for that.” Expedia to Amazon and Uber.
open banking. “We want to embrace open Navarro also emphasised that an important “As banking goes digital, an API-driven
banking in the right way, building APIs and part of it is down to communication. future is as inevitable as the internet-driven
encouraging customers not to share their log “Security in banks has been good, and it is present that precedes it.
in details. Barclays has just launched a major all about the evolution of technology. What “It is the opinion of Intelligent
campaign around being digitally safe, and that we do need to do is communicate to our Environments that PSD2 could sustain
is to educate consumers that come into our customers that we are secure. We have not entirely new business models, but that
bank on the right way to engage in this digital done that well, and so we must sell it better.” regulation needs ultimately to go further –
world. encompassing all account types and financial
“What has to be understood is that there Killer features data – to make open banking the revolution it
are different types of customer, and we have to A question from the audience asked, what will could be.”
provide for everyone across the demographics. be the killer feature that attracts customers? The panel all agreed that open banking
There are a lot of older customers who are Boden believed it will not come from is incredibly exciting and innovative. There
more vulnerable, and a lot of young people the banks. She said: “I don’t think that the are hurdles to overcome, but with the right
and millennials that are more savvy but do killer feature will come from the industry amount of collaboration, security and
not necessarily think about it on a day-to-day or incumbents. That killer feature will come creativity, open banking can be something to
basis, so a bank has to be about protecting all from people who build applications upon our look forward to as the next step in banking
of our customers.” infrastructure. Banks cannot fail: If a project is and payments.
Cadbury said that open banking does come started it must finish successfully. Following the Digital Banking Club debate,
with risks and, when speaking to clients about “With open infrastructure, with the Power 50 winners were invited onto the
open banking, the advice given is to start processes and procedures to vet people and the stage to receive their awards, presented by
off small and build from there; that way the chance to use APIs with hundreds of people Jerry Mulle, sales and marketing director at
customer will not be giving away more data innovating, there will be breakthroughs. Those Intelligent Environments.
than is necessary. breakthroughs will come from someone using Categories for the awards were: Personality
On the risks, he stated: “Because of its the possibility of putting data together to of the Year, Digital Financial Services Power
open-endedness, open banking comes with create good.” 50, Digital Financial Services Rising Stars,
substantial risks. There is a risk of banks Cadbury said: “I’m very excited, potentially, Digital Innovation in Collections, and Digital
failing to embrace the opportunities of PSD2 to see all my money in one place and where it Innovation in Vehicle Finance. <
www.electronicpaymentsinternational.com | 11
EPI December 366.indd 11 09/11/2017 17:31:44feature | digital ID
australia post
develops national
digital ID Scheme
Australia Post has launched a smartphone-based national
digital ID scheme. However, until it gains a significant
number of partners, particularly in the banking sector, the
idea may see limited adoption. Robin Arnfield reports
I
n August 2017, government-owned number of users, aims to provide secure ways Post’s data to increase the ability to verify
Australia Post announced Digital iD, for Australians to identify themselves when those individuals is a huge step forward.”
a free service allowing Australians to using digital government services. Users will “CUA is looking to begin a pilot within
verify their identity online and in person be able to prove themselves by having an the coming weeks, trialling Digital iD on
when accessing government and business accredited organisation vouch for them such its online and mobile application forms
services. as a government agency, or in the future, their for two savings accounts: the CUA eSaver
Australia Post says the service allows people bank, the DTA says. Boost and eSaver Reward accounts,” a CUA
to verify their ID once, so they can then easily The DTA expects to have digital ID services spokesperson tells EPI.
prove who they are online and in person available for a broader group of users to test “The pilot is likely to run for around 12
through the Digital iD app. This removes on a wider number of government services in weeks, so CUA can collect feedback on
the need for people to repeatedly use several the first half of 2018. the Digital iD experience and identify any
forms of ID to prove who they are, or have potential refinements or improvements.
numerous passwords to access products and PARTNERS Following the pilot, CUA will consider
services, it says. potentially expanding Digital iD to other
Australia Post’s research has found that The first organisations to sign up for Digital products. This may include verification for
existing time-consuming ID verification iD are job outsourcing site Airtasker, other transactional and saving accounts, term
processes cost the Australian economy up to Australia’s largest credit union, CUA, deposits, credit cards or personal loans. CUA
A$11bn ($8.4bn) a year, Andrew Walduck, Travelex Australia, and the Queensland Police may also explore the use of Digital iD to
Australia Post’s executive general manager, Service. Consumers can use Digital iD when allow members to identify themselves over the
trusted e-commerce services, said. registering online for Australia Post services phone or in a branch.
In May 2017, Australia Post said that such as MyPost Parcel Collect and Mail “At this stage, CUA hasn’t explored whether
it was partnering with Australia’s Federal Redirection. to utilise Digital iD for logging into digital
Government to ensure that Digital iD can Airtasker will use Digital iD to give its users services, such as online or mobile banking.
be used to access the government’s digital an identity ‘badge’ to prove who they are, However, this may be an area for further
services. strengthening trust in its service. consideration following the Digital iD pilot
“Australia Post will work with the CUA will initially use the technology to and the upcoming launch of CUA’s new
Government’s Digital Transformation Agency verify new members applying for CUA eSaver mobile banking app.”
(DTA) to integrate Digital iD into the Reward or eSaver Boost savings accounts Travelex will use Digital iD as part of its
Commonwealth of Australia’s Digital Identity online or via smartphone, enabling more KYC checks, while the Queensland Police
Framework, a set of standards, processes people to complete the process digitally Service will incorporate the technology into
and partnerships guiding the government’s without visiting physical branches. its forthcoming national police clearance
formation of a federated system of ID “We see [Digital iD] as a tool to help us certificates process.
providers,” it said. support members through life events – like Travelex plans to integrate Digital iD
“The partnership between Australia Post moving house – with a better way to have within its online currency ordering systems,
and the DTA will focus on developing a their identity verified,” says CUA chief digital providing KYC for online orders at Travelex.
proof of concept to help government agencies officer Sue Coulter. com.au where customers do not visit a
enhance how they provide access to services “Changing addresses is one of the most Travelex store, Travelex online country
online and over the counter.” common reasons that people are unsuccessful manager James Vatiliotis says.
The DTA’s Govpass project, which is in in verifying their identity as part of an online “We’re currently rapidly developing our
beta development and testing with a limited application. So being able to tap into Australia solution for Digital iD, and hope trials will
12 | December 2017 | Electronic Payments International
EPI December 366.indd 12 09/11/2017 17:31:47feature | digital ID
start before the New Year and a full-scale allow a national program to be built? on partnerships that SecureKey has established
rollout early next year,” he says. “Digital iD “The organisations currently signed up for for SecureKey Concierge, an authentication
will really enhance our fulfilment offering Digital iD will use it for a mix of unrelated service enabling Canadian consumers to log
and allow us to offer a home delivery solution tasks,” Halverson continues. “There are no into multiple Canadian government services
similar to Travelex’s offerings in UK, US and banks or insurance companies and no other using their bank ID. All major Canadian
Japan. Digital iD also starts a new fulfilment top 200 companies. The key issue for banks banks participate in SecureKey Concierge.
journey as we look to automated fulfilment. is whether Digital iD will replace existing “We’re currently undergoing market
“What this looks like is still being explored, forms of ID and/or credit checks: this is most trials of the new digital network and are
however. But with Digital iD there are some unlikely. A better model is what Estonia has aiming for commercial launch in early
exciting possibilities to make our customers’ done with digital citizenship and digital ID 2018,” says SecureKey’s Boysen. “We’ll have
lives easier. For example, we’re exploring using all being driven by the Estonian Government. banks, government departments and telcos
Digital iD to provide a second level of KYC However, this government-issued digital ID participating as digital ID providers in our
above our current KYC checks.” model suffers if you have to scale it in larger Canadian network.”
To sign up for Digital iD, consumers populations.”
download the associated app to their Android “Without the involvement of Australia’s DIACC
smartphone or iPhone and enter their big banks, Digital iD won’t get large numbers
personal data from their passport or driver’s of users,” says Andre Boysen, chief identity The Digital ID and Authentication Council
licence. The Digital iD system compares this officer at Toronto-based SecureKey, which of Canada (DIACC) is a non-profit coalition
data with the information kept on the ID is working with Canada’s banks to build a of public and private sector organisations
document issuer’s database to verify the user’s nationwide digital ID scheme in Canada. committed to developing a Canadian
identity. “From the consumer perspective, Digital iD digital ID and authentication framework.
Australia Post says that when someone uses has limited usage potential. Without multiple A standards-setting body, the DIACC’s
Digital iD, a verified token showing that the partners, people won’t want to sign up for it. members include representatives from federal
customer is who they say they are is passed to What’s the use of a credential I can and provincial government as well as
the relevant organisation. Only information only use at one organisation? private sector firms.
authorised by the customer – such as name, I might as well get the In February 2017, the
address and date of birth – is passed on. Users’ credential direct from that DIACC and SecureKey
identity data is stored within an encrypted organisation. Consumers were awarded a grant
system located in Australia. want to not have to do of up to $800,000 to
“Data is encrypted and stored with two digital ID verification at develop a Cloud Identity
keys, both of which are needed to unlock the every service.” Ecosystem. The DIACC
user’s personal data,” Australia Post says. “One The Reserve Bank of said it will work with
key is held by Australia Post and the other Australia’s Payments Systems SecureKey to develop the
is on the user’s secure device. Both keys are Board’s August 2017 meeting digital security framework
required to unlock the user’s data; neither the discussed “the potential for a based on SecureKey’s technology
user nor Australia Post can access the private framework for trusted digital identity architecture.
data without the other.” to make online interactions more convenient The grant is the result of collaboration
Australia Post has created a developer centre and secure, including the potential to reverse between DIACC and the Command Control
providing a sandbox environment where the rise in fraud rates on card transactions”, and Interoperability Center for Advanced
developers can test Digital iD on behalf of the RBA said in a statement. Data Analytics, a research centre funded by
organisations interested in using the system. “Board members encouraged the payments the US Department of Homeland Security
“The sandbox environment allows industry to work collaboratively on digital Science and Technology Directorate.
technology teams to perform all the operations identity and noted the importance of In the US SecureKey is setting up a
available in the production environment engagement between banks and government consortium of US banks, government
using fictitious identities and verifications,” it on this issue.” departments and telcos to build a federated
says. “This means technology teams can fully By contrast with Australia Post, Canada digital ID network. SecureKey’s long-term
test the end-to-end process of verifying an is further down the road to building a goal is to link digital ID networks in different
identity.” nationwide digital ID network. In October countries that use its platform.
2016, SecureKey raised C$27m ($21m) in “The problem with national digital ID
COMMENTS growth capital to fund the commercial rollout schemes is that they aren’t interoperable with
of a nationwide federated digital identity each other,” Boysen says. “Our vision is to
“The key issue is whether consumers trust network in Canada. The country’s largest establish national digital ID schemes using
Australian Post,” Grant Halverson, CEO of banks, BMO Bank of Montreal, Scotiabank, our technology in two or three countries,
Australian payments consultancy McLean CIBC, Desjardins, RBC Royal Bank of and then use this as the catalyst for a global
Roche, says. Canada, and TD, participated in the funding. interoperable digital ID system.
“Will consumers be proactive in registering In October 2017, SecureKey said Quebec- “This global platform will be cross-border
and will they remember they have an Australia based National Bank of Canada would but will respect the fact that individual
Post digital ID when they need it? Will participate in its new digital ID network along countries require their citizens’ ID data to
Australia Post build enough critical mass to with the other big banks. This platform builds reside in-country rather than offshore.” <
www.electronicpaymentsinternational.com | 13
EPI December 366.indd 13 09/11/2017 17:31:49feature | fiserv
Payment hubs were a major industry theme
the three things around 10 years ago, but as the API provided
an alternative to large payment hub
set to change
implementation, discussions on international
payment hubs have emerged. Is this going to
be the next big payments theme?
TL: While payment hubs emerged as an area
payments forever
of focus among larger institutions nearly a
decade ago, the capability of payment hubs are
even more applicable to medium and smaller
financial institutions today. Banks of any size
can benefit from fewer systems than are in
use to support the payment needs of today.
Payments is a quickly changing sector; with cryptocurrencies, We have several medium-sized bank clients
the Internet of Things and APIs, a lot is happening. Patrick that have embarked on a payment platform
Brusnahan spoke to experts from Fiserv to see how payments journey this year, including the recently
announced Hellenic Bank.
will develop in the coming years. What is set to make a I disagree that APIs are an alternative
permanent impact, and what will be a damp squib? to payment hubs. APIs are fundamentally
different. APIs can expose the underlying
EPI: On 22 September, JPMorgan CEO Jamie Deva Annamalai, director, innovation payment application in a new way, but if
Dimon strongly criticised bitcoin and digital and client engagement, digital banking: the application is not capable of processing
currencies once again. Is there any potential We are seeing bank customers making more multiple transaction types you will still need
or value in virtual currencies? recurring and subscription-based payments. multiple applications.
Marc West, chief technology officer: It is too In addition to regular payments for services This is back to the old spaghetti of siloed
early in the digital currency evolution to make such as utilities – electricity, cable, gas, water systems and is a Band-Aid approach that
a clear call on how they can be of value in the – consumers are signing up for subscription- simply increases costs and delays innovation.
traditional banking market. based services that require recurring payments. In addition, exposing APIs to the wider world
The combination of regulatory These services are starting to proliferate in is difficult with legacy systems, so we see a
requirements, central bank needs and everyday life – Netflix, Spotify, YouTube Red, number of our customer looking at doing this
consumer demand are key drivers of potential Amazon Prime and Hulu are examples. The with the underlying capability of a modern
use. Said simply, while there is a likely fit for subscription model is moving beyond content payments platform.
purpose, the demand-driven use cases are not consumption to other areas like shopping –
at the level to compel action right now. such as Bombfell, Trunk Club, Birch Box. One area of focus for payment innovation is
An average customer is also starting to the Internet of Things. What type of horizon
Many banks are engaged in proof of concept, prefer services that make the payment step do you foresee for this?
pilots and some early rollout. Do your client ‘disappear’. Uber and Amazon Go do this very DA: The IoT represents a relatively new way
banks see value in blockchain and if so, in effectively, and we expect this payment format of how people will experience payments via
which areas? will continue to spread, driven by consumers’ interaction with physical objects around
MW: We see realistic use cases in identity desire for convenience and time savings. them. We are seeing an influx of connected
management, data sharing and lending. Pilots Trevor LaFleche, vice-president, product devices, and it is only a matter of time before
are evolving from exploration to simplification marketing and analyst relations, billing these become a staple in the financial services
of complex processes. and payments group: The advent of real- industry. Aite group projects that the IoT will
time payments in the P2P and B2B space is grow to around 30 billion devices by 2020
Would a distributed ledger be suitable fundamentally changing the way people pay. and more than a 100 billion by 2050. As
at central bank level as a clearing Initiatives in Europe, the US and Asia are more value-added services become part of the
infrastructure? focused on the transmission of ‘good funds’ in IoT, the ability to pay for those services will
MW: With the right regulatory and central real time, which is a preferred target state over become an increasingly integral part of the
bank environment and involvement, existing methods. ecosystem.
distributed ledger technologies can enhance As a result of the move toward real time, In the next decade we will start seeing IoT-
country clearing functions. banks are being forced to evaluate payment, enabled usage-based payments permeating
However, it is clear that high-value market- channels and even core banking capabilities our everyday lives, be it our connected car
driven use cases, created by the combination to ensure the proper support is in place. In paying for gas at the pump or our refrigerator
of regulatory requirements, central bank needs addition, moving good funds in real time ordering a carton of milk. In order to thrive,
and consumer demand noted above, will be means fraud, risk and liquidity need to be those offering payment services need to
critical to creating a mass opportunity. evaluated in real time. All these changes are evaluate and understand how their customers
needed to match the increasing consumer want to interact with this type of technology,
How do you see client banks’ customer bases expectations, and are not a trivial project for a and more importantly how to ensure the
changing their payment usage and needs? financial institution. security of payments made via the IoT. <
14 | December 2017 | Electronic Payments International
EPI December 366.indd 14 09/11/2017 17:31:50You can also read
