The Future of
“Thought-provoking questions, and I appreciated seeing the total results by question and how my opinion compared to the rest of the respondents.”
Olimpia Modorcea, Euronet Worldwide
About this report
The results are ‘in’ from over 500 banking and non-banking financial institution players across Treasury, Fraud, Operations, Innovation, Product, and Technical Implementation at C-Level in 32 countries globally. The breakdown by region: 36% APAC, 29% Europe, 11% North America, 11% UK, 9% Middle East & Africa, and 4% LATAM.
Across 12 insights, get instant visibility on how your strategy and pain points compare with your peers in banking and payments. How do you measure up in meeting customer expectations and in your digital payments modernisation strategy? Additionally, get insights and commentary from Aite-Noverica, Zanders, EBA CLEARING, Visa, Swift, Payments Canada, Banque Cantonale de Genève, the Payments System Regulator, Cambridge Building Society and HSBC.
This report is built on a peer-based, real-time comparison benchmarking survey to see how executives and their companies met customer expectations and progressed toward achieving their digital payments transformation strategy. Topics covered include real-time/instant payments, cross-border payments, ISO 20022 messaging, transitioning from on-premise to SaaS, compliance and regulation, cash positioning and fraud monitoring, and pre-validation (Confirmation of Payee).
Why this report is worth reading?
Banks and FIs need to take advantage of the opportunity to compare their strategic priorities, product roadmaps, and plans for future innovation with their peers. In the process, they can discover the technology trends the industry is prioritising and align with themes. For instance, adopting new payment rails, such as real-time payments, has risen from 40% in 2021 to 51% in 2023 as the top priority for banks and FIs over the next 12 months, followed by mitigating fraud risk from 38% in 2021 to 45% in 2023. However, creating new revenue streams using digital overlays has dropped a massive 13% from 2021, which may be down to frustration at the lack of progress being made within Open Banking and the lack of standardised APIs to aid innovation and speed of transformation.
The report will help you gauge if your financial institution is on track to maximise on the changes impacting the payments ecosystem and accelerate your digital payments transformation strategy today – that is where true competitive advantage can be leveraged.
Book a tailored 1:1 strategy workshop.
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Insight 1: How confident are you with your company’s digital payments transformation strategy?
We asked
How confident are you with your Financial Institution’s digital payments transformation strategy?
It is great to see that financial institutions are much more bullish about their digital payments transformation strategy than they were two years ago, with a rise of 8% responding that they are somewhat or highly confident. However, that still leaves 23% who are somewhat or highly sceptical – a decrease of 3% from 2021 but an increase of 3% from 2022.
We have removed the option for ‘not sure’ from the previous years because, quite frankly, it is such a key part of any bank or non-banking financial institution’s growth strategy that no one should be sitting on the fence.
Gilles Ubaghs – Strategic Advisor
Commercial Banking & Payments at
Aite-Novarica Group
“Given the huge amounts of investment from banks globally in their digital transformation, it’s a positive sign that there has been an increase from those somewhat sceptical to becoming somewhat confident. More alarming, however, is the static nature of those organisations feeling highly confident. Changing customer demands across all bank offerings are not slowing down, and there is a risk banks are not moving fast enough to keep pace. Progress is moving positively – but banks have no time to rest on their laurels.”
Aite-Noverica Matrix Payments Hub Report - Bottomline's Rating
Supporting resource
Aite-Noverica Matrix Payments Hub Report
Insight 2: What is your financial institution’s appetite to transition to a single SaaS platform for your payments and messaging ecosystem in 5 years?
We asked
What is your Financial Institution’s appetite to transition to a single SaaS platform ecosystem for payments and messaging in 5 years?
60% have a strong or extremely strong appetite for transitioning to a single SaaS-based platform in 2023 vs. 75% in 2021. This would suggest that the enthusiasm has clearly been dulled, with a drop of 13% in 2023 indicating that they have an extremely strong appetite from 35% in 2021.
This seems contrary to other research in the market, which says that 72% of banks have committed to increasing their budgets for payments modernisation in the coming year, with 93% of this budget allocated to cloud-based payments as a service delivery model. Of those cloud-based services, 40% will be provided by vendors (PaaS) solutions which is four times higher than the 11% stat in 2022.*
KPMG’s Payments Modernisation report in July 2023 said that in the UK, the average investment in a payments modernisation programme was £27 million and that they expected it to take two years to complete. 69% said that the main drivers were changing expectations from their customers, and 71% expect to see direct results in improved customer experience. An additional 58% cited regulatory change, meaning business continuity was impossible without transformation.
*Volante Big Modernisation Survey – July 2023
Vitus Rotzer – Chief Revenue Officer – Financial Messaging Global, Bottomline
“Banks and financial institutions globally are facing unprecedented change, accelerated by the global economy, customer demands to be ‘always-on,’ busy roadmaps, a plethora of regulatory mandates, and emerging technology. As a result, institutions need to line up alternate networks, scope modern technologies, and be prepared for good times, as well as tough and unexpected ones, in the changing world of business payments and geopolitical uncertainty. Those prioritising the need to modernise their payment infrastructures by replacing legacy systems and simplifying connectivity to global payment networks will be better prepared to adapt to these changes.
Therefore, it has been vital for Bottomline to invest in developing innovative solutions that support the most straightforward integration through standard connectors that will offer our customers quick time to testing and speed-to-market combined with a genuine capacity for custom integration. This way, we can do the heavy lifting on our client’s behalf to provide seamless integration across all their systems within a centralised hosted platform.
Bottomline fulfils and delivers on the mandatory first factors that banks and FI need from a solution partner, such as robustness and efficiency, disaster recovery, and high availability, including firm Service Level Agreements. But more than the technical knowledge and the promise to meet expectations, Bottomline truly knows and understands our client’s pain points, has a proven track record in delivering successful projects, and has solid relationships with regulators and auditors. It is this expertise that allows us to transcend a simple supplier relationship and deliver more in our capacity as a valuable and trusted partner in day-to-day operations.
Here are some key benefits that will help with your digital payments modernisation strategy and the transition to SaaS:
• Access centralised visibility – Bottomline’s Universal Aggregator IQ solution allows banks and financial institutions to control and monitor the flow of financial information within their operating environment. Better, richer insight, improved security, and assured compliance gives our customers complete confidence about how their financial messaging data is processed globally.
• Receive consolidated access to services - Financial messaging aggregates payments and cash, securities, messaging, and connectivity. Scalable, flexible, robust, and secure – we provide a single unified interface with access to enhanced functional and straight-through processing.
• Develop opportunity through connectivity to robust platforms – Be equipped for the opportunities of near and real-time payments, open banking, and the emerging, API-enabled ecosystem with extended access to global markets & services through multiple clearing, networks, and gateways - in one intelligent platform.
• Leverage additional insight – Maximise improved visibility, fraud prevention & compliance tools that help support and protect our customers, improve retention, and streamline customer acquisition.
• Benefit from peace of mind, protection & security - Ensure compliance & maintenance for regulatory, legal, and mandatory requirements globally with Bottomline’s integrated solution of end-to-end Financial Crime Management products that meet regulatory obligations and reduce risks.
• Scalability to support growth instead of stagnancy – Bottomline allows our clients to expand maturely instead of simply compounding inefficiencies at a larger scale through the provision of effective storage, tracking, and control of messages and transactions to gain insight, mitigate risks, and improve visibility. “
Supporting resource
Podcast: Banking on the Future with Cloud-based Infrastructure.
Insight 3: What is the key issue you face with your current payment infrastructure?
We asked
What is the key issue your Financial Institution faces with your current payments infrastructure?
Legacy systems continue to be the key pain point for banks and FIs with an increase of 3% from 2022. This will remain the case until there is a higher number of FIs focusing on the transition from on-premise to SaaS. Operational efficiency and interoperability between internal systems will automatically follow as the industry moves closer to the co-existence period for ISO 20022. We are already to see an impact with a fall of 7%, seeing interoperability between internal systems as being an issue from 2022. In an era of increasing amounts of industry mandates and busy roadmaps then, the ability to scale and outsource updates will become ever more critical.
Judy Li, Director of Information Management, Data Analytics, and ISO 20022 at
Payments Canada
“Updating legacy infrastructure is vital for every part of the payments ecosystem. As the market infrastructure operator in Canada, we operate the settlement and clearance piece, so it’s very important for us to stay in line with what the industry needs, and what the industry wants. Since Payments Canada started its modernisation journey seven or eight years ago, we have been constantly working with the industry on collaboration and driving best practice.
As a result, we have updated our legacy infrastructure by replacing a 20-year-old high-value system with Lynx, and just a few months ago, Lynx also went live with the support of MX messages. We are also working on new initiatives around our real-time domestic and cross-border payment rails and fraud prevention to build the foundation for future overlay services.
Supporting resource
Sibos Session: Managing Change with Platform Services -Transitioning from On-Premise to SaaS and Building the Business Case.
Insight 4: Which of the following are the top priorities on your product roadmap over the next 12 months?
We asked
Which of the following is the top priority on your product road-map over the next 12 months?
Real-time payments still reign supreme at the top of the priorities, followed by mitigating fraud risk.
This is a sign of the times we live in, where there is increased customer demand for everything to be as instant as possible as part of the post-COVID digital banking economy. Additionally, we have mandates in place such as SIC IP where 90% of the Swiss market who process 500,000+ SIC messages need to be ready by Aug 2024 (the planning for SIC IP service corresponds to a ‘technical go live’ in November 2023 and a ‘market go live’ in August 2024). FedNow has now gone ‘live’ with 35 banks in the US on the 20th of July 2023, with a further nine thousand in scope (The Clearing House has been live since 2017), and Pay.UK is announcing changes to the New Payments Architecture, and UKFPs increased role imminently. Let’s also not forget about the European Commission’s proposed SEPA Inst requirements, where all citizens in the EU need to be able to receive Instant Payments in Euros within six months and be able to send in 12 months which is likely to be approved by the end of 2023 (EEA is 30 months and 36 months, respectively).
Turning our attention to the issue of mitigating fraud risk, you can see that this year’s percentage is higher than in 2021 (+7%) but less than in 2022 (+8%). This can be explained by the fear of real-time payments being a new vehicle for ‘wily’ fraudsters in 2021 and the nature of the payment being able to be retrieved from the account or transferred on within minutes or even seconds after a payment has been initiated. This is being combated by bodies like the Payments System Regulator in the UK introducing a new reimbursement requirement for Authorised Push Payment (APP) fraud within the Faster Payments system (APP fraud has quickly become one of the most significant types of payment fraud globally). This should concern financial institutions as it places the responsibility on them. For example, the new reimbursement requirement is underpinned by several key policies that require payment firms to reimburse all in-scope customers who fall victim to APP fraud in most cases, share the cost of reimbursing victims 50:50 between sending and receiving payment firms, provide additional protections for vulnerable customers.
The new reimbursement requirement will come into force in 2024. While the announcement has been met with widespread approval from industry stakeholders, according to Reuters, the worry is that the UK’s approach could inspire regulatory bodies around the world to take similar action, e.g., in the US where the regulatory landscape is much softer and does not mandate reimbursements for victims of fraud. Expect more initiatives like the aforementioned Confirmation of Payee and other forms of pre-validation such as Bank Account Verification (BAV) and more robust sanction screening requirements similar to what is included in the proposed SEPA Inst mandate to be rolled out to keep apace.
It is also worth calling out the decrease in priority of creating new revenue streams using digital overlays, which has fallen by 13% compared to 2021. Maybe this is because financial institutions are so overwhelmed with getting ready for the various ISO 20022, pre-validation, and real-time payment regulations that they can’t focus on new business cases. It also may be due to the fact that Open Banking, which is seen as a vehicle for creating new revenue streams has been more sluggish than expected, and so further clarity is needed to get top-down buy-in.
Finally, it is surprising to see that migrating the cloud or SaaS technology as an option in 2023 is also down 14% from 2021. This does tally up with the responses in Insight Two earlier in the report, where only 60% have a strong or extremely strong appetite in 2023 vs. 75% in 2021. However, it is contrary to the feedback shared in Insight Three, where the critical issues highlighted, such as legacy infrastructure, lack of efficiency, interoperability, access to rails, limited in-house IT, and scalability, can all be vastly improved by transitioning from on-premise to SaaS. KPMG’s Payments Modernisation report in July 2023 said that the top three benefits of having a SaaS platform were 1) positive customer impacts, 2) operational cost & efficiency, and 3) improved security and fraud measures.
Jean-Marc Joris -Executive Board and Chief Operating Officer at Banque Cantonale de Genève
“Meeting our corporate customers’ expectations is vital to remain competitive and it will have a very deep impact on the margins that we can generate on payments. So, the only way to address this is to provide additional service for our own direct corporate clients, as well as to become an in-direct aggregator for other banks. The interoperability of ISO 20022 enables us to access and share data to support both propositions in delivering good treasury and liquidity prospection, as well as additional services that will generate new revenue streams. However, the survey results below show that the expectation of the corporate customer is that it is for free, which is an expectation that is hard to meet.”
Supporting resource
What are the product roadmap priorities for banks in the next 12 months?
Sibos Lunch and Learn Panel 2023 with Payments Canada, Swift, Banque Cantonale de Genevé and Zanders.
Insight 5: Which services are your Financial Institution prioritising specifically for your corporate customers over the next 12 months?
We asked
Which services are your Financial Institution prioritising specifically for your corporate customers over the next 12 months?
If the key to competitive advantage for banks and FIs is keeping their corporate customers happy, then it is vital to directly compare these responses with what they want from their banks over the next 12 months.
According to our 2023 Business Payments Barometer, corporates listed the following as their top priorities in the future - #1 Cash flow management, #2 Technology, and #3 Fraud & Compliance.
The top answer from financial decision-makers in Great Britain was high-quality business services, followed by fair and transparent pricing. Larger companies are particularly likely to want their banks to offer innovative technology such as UX connectivity and integration capabilities.
In the US, financial decision-makers have a wide range of expectations from their banks, with security and technology needs predominating. Like British respondents, large companies are more likely to want innovative technology. Enterprises have a particular interest for support in implementing embedded finance.
It is great to see that banks and financial institutions are aligned with the corporates, with the top priority being to ensure that online banking and Host2Host are accessible, efficient, reliable, and secure. This heavy emphasis on security is also evident globally when we examine stats from the Strategic Treasurer / Bottomline Fraud and Control Survey 2023, where 78% of corporates believe the threat of fraud has increased either somewhat or significantly in the past year. This means that 27% plan to spend more or significantly more on security. Having said that, there are areas that banks and FIs need to offer better support and education, as currently, only 27% of corporates are using payment monitoring systems that detect fraud before the payment leaves. Finally, 53% of corporates view real-time payments as a potential risk, with the real-time payment's irrevocability and the transaction's speed being the top concerns. However, offering fair and transparent pricing languished in 6th as a priority for banks despite this being listed joint first and joint second for the UK and US, respectively.
While being provided with access and visibility of transactional data ranks 3rd for corporates in the UK, it is far less of a priority in the US (6th). This is potentially because the UK is more strictly regulated and is also more aggressive about leveraging the data as part of Open Banking.
If offering innovative technology (e.g., UX, connectivity and integration capabilities, digitisation) is ranked third for financial institutions and also rated highly for corporates, then why are 28% of respondents in Insight Two indicating that they have a weak or no appetite to transition to SaaS in the next five years? The good news is that banks and FIs are in a great position to meet their client’s expectations, as only 16% listed interoperability between internal systems as a critical issue in Insight 3, and only 12% chose seamless access to multiple rails.
The fundamental misalignment lies in how corporates have prioritised fair and transparent pricing (6th), a responsive and empathetic relationship, and offering industry and regulation advice and guidance (7th=). Don’t forget that corporates ranked fraud and compliance as their third highest priority in the future. Clearly, financial institutions have sorely underestimated the importance of having a robust client support model. No more so than in the face of increased regulation, the launch of alternative payments, and real-time becoming ever more present as we celebrate the wave adoption of digital banking. This attitude will do little to diffuse criticism of local high-street branches closing.
The eagle-eyed readers will spot that an extra option was added in for banks and FIs: multi-banks, multi-channel cash balance position calculated in real-time, with 32% selecting this priority and ranking as the 4th priority. While we can’t make a direct comparison for this section, according to Bottomline’s Business Payments Barometer this was the top overall priority in the future. Additionally, according to the ‘CFOs, Find A Recipe For Success. Bottomline and CFO Dive Industry Report 2022’, CFOs list three primary functional needs that drive their future requirements, with both a more complete vision of business cash and liquidity and better overall integration listed among the highest priorities: 80% said they need a more complete vision of business cash and liquidity, 80% said they need better access to real-time payment data, analytics and insights and 72% said they need a more integrated view of payables, receivables, and treasury management.
Mark Sutton, Senior Manager – Zanders
"It’s probably no surprise that there is alignment on the first priority around accessibility, reliability and importantly security of the channel management domain. Corporate treasury will be working closely with the finance and accounting teams to ensure the company has the required technology to make secure payments on time in addition to having timely visibility around cash positions and collections. So logically, channel management is the core foundation as it provides access to the underlying bank services.
We can probably understand that the corporate community has a focus on pricing, but it's really encouraging that the banking community has placed data as its second priority, and this could be influenced by the current SWIFT MT-MX migration and the broader financial industry adoption of ISO 20022 XML messaging. There is a real value-added element with structured data, which will provide the opportunity for corporates to elevate performance. With advances in Artificial Intelligence and Machine Learning technologies that provide the opportunity for predictive and prescriptive analytics, this will become a key differentiator in terms of a bank proposition. It’s important to remember that data is the fuel of AI, so the ability to provide more data in a structured manner will help corporates fully harness the power of technology. This could be a game-changer.
It is also great to see alignment on the third priority around technology and innovation. We are witnessing the digital transformation of the payments ecosystem, which was really kick-started with the birth of the world wide web, back in 1991. This technology backbone provided the foundation for the growth in e-commerce, introducing new business models that would also require new payment methods and has provided the opportunity for the emergence of the alternative payment methods. We are now in a world of tokenisation, where you no longer need the beneficiary bank account details to make a secure payment.
Secondly, consumers have been a major driving force through the increasing convergence and integration between e-commerce and mobile technology. Consumer expectation is around payment choice, frictionless, fast, and secure buying experiences. We have also seen the Digital Natives – companies that have a digital-first mindset that have been quick to recognise that payments can actually be a key differentiator, delivering an elevated experience to the consumer through a combination of choice, speed, and security. Employees and vendors can also benefit from the ability to make real-time payments. This is very relevant for the gig economy, where the flexibility to pay employees immediately at the end of a shift is a value-added service.
So, the payments ecosystem provides a real opportunity for further innovation to accelerate and elevate the current end-to-end payments experience."
Supporting resource
Are FIs aligning their priorities with what their corporate customers are asking for?
Sibos Lunch and Learn Panel 2023 with Payments Canada, Swift, Banque Cantonale de Genevé and Zanders.
Read the report: 2023 Business Payments Barometer for Corporates Report
Insight 6: How important do you think compliance & regulation will be in the next 12 months?
We asked
How important do you think compliance & regulation will be in the next 12 months?
Despite the above stats showing that banks and FIs are predicting the importance of compliance and regulation increasing over the next 12 months, it was only listed as their sixth priority in Insight Four at 29%. Perhaps this is because RegTech is seen as already integrated into their priorities around real-time domestic and cross-border payments, sanction screening, and ISO 20022, so it isn’t a stand-alone issue. We are pleased to see that compliance and regulation are now seen as being owned by more stakeholders within an institution, and so silos are being broken down. This is demonstrated by the reduction of 4% in respondents being unsure of their answers.
Supporting resources
Fact Sheet: UAIQ Sanction Screening Services Fact Sheet
Webinar: How are UAIQ Sanction Screening Services different from GT Sanctions and other third-party filtering tools?
Insight 7: How challenging do you think it will be to remain compliant?
We asked
How challenging do you think it will be to remain compliant?
Concerns about remaining compliant have roughly stayed the same from last year, with 88% being somewhat or very concerned in 2023 versus 91% in 2022.
More regulation equals more pressure on product roadmaps and resources. Part of the answer again centres around SaaS, where a joint industry solution across multiple banks and FIs benefits from speed-to-market and automatic adherence to new mandates. However, regulation is rarely seen as a friend. The mandatory adoption of initiatives such as ISO 20022 will help in many ways. For instance, the structured data will help with compliance for sanction screening and AML by providing efficient alerts, automation, and better results. Better flows and adequate controls will result in cost reduction through better orchestration and enabling customers to self-serve. Also, one of the key benefits of SaaS is improved security and fraud measures.
Frédéric Viard – Joint Head of Commercial Products, Financial Messaging at Bottomline
“A perfect storm of new regulations, payment infrastructure initiatives, accelerating fraud threats, and legislation has snapped global banks to attention.
Technology is set to influence businesses over the next 12 months, and while generally seen as beneficial and a driver of productivity, adopting these innovative solutions can be challenging for companies. One thing is clear; there remains a lack of understanding and preparation around the upcoming regulations, new payment infrastructures, and systems – all of which are driving digitalization. That is where Bottomline can help offer strategic support and advice.”
“Harmonisation is what success looks like” Becky Clements, Head of Industry Engagement, Pay.UK. “You can’t have harmonisation without standardisation. So, regulation and compliance will continue to drive change." The tools are out there, so banks and FIs must collaborate better. An excellent example of this is the New Payments Architecture Group.
Supporting resource
Fact Sheet: Swift CSP
ISO 20022
Insight 8: Which areas of your company’s cash positioning & fraud monitoring could benefit from the improved data that ISO 20022 provides?
We asked
Which areas of your Financial Institution’s cash positioning & fraud monitoring could benefit from the improved data that ISO 20022 provides?
The main benefit still remains improving fraud monitoring and management at 56%. However, the truth is that ISO 20022 has a role to play in all of the above and more use cases besides.
Again, despite the results shared in Insight Six about the recognition of the importance of RegTech in the next 12 months and the concerns about remaining compliant in Insight Seven, only 47% of banks and FIs have listed ISO 20022 as being useful to utilise data analytics to improve compliance with payment standards. This is a reduction of 6% from 2022.
The most dramatic shift has seen ISO 20022 being perceived as less instrumental in improving intraday liquidity management and enhancing cash visibility positions, with a 13% drop in responses between 2022 and 2023. This might be because now ISO 20022 has become more standardised post-March 2023 with the CBPR+ and many domestic schemes requiring that banks and FIs can receive ISO 20022 data, then it is already doing its job and is taken for granted in this role. However, there are still parts of the world that have not had to comply yet – e.g., FedNow and CHIPS in 2025. This is only part of the transaction chain, and banks and FIs have until the end of the co-existence period in 2025 to ensure that they can both send and receive ISO messages.
Finally, we added a new option this year to ask how ISO 20022 will impact the reduction in manual intervention, which came in at third place with 45%. This centres around the standardised and structured data fields that ISO 20022 provides. The example of ‘Bar Cuba’ and how this has caused transactions to be flagged and rejected against sanctions screening lists is well known. However, the rich data from ISO 20022 means that these issues are almost eradicated, especially as ISO 20022 is now the standard adopted for real-time payment rails.
Previously, the nature of real-time being 0-10 seconds and 24/7/365 meant that a transaction was simply rejected, while traditional same-day allowed the payment to be investigated and processed. Manual intervention also has ramifications for cost reduction, which was option four and remains at the same percentage in 2023 as in 2022 at 37%. This is a cost in terms of internal staff and resources, as well as a monetary value and risk of attrition from unsatisfied customers. In fact, as the industry and regulators roll out more pre-validation initiatives, such as Confirmation of Payee and Bank Account Verification (BAV), we will see the value of ISO 20022 rich data rise even further. As it stands, 36M+ out of 700M+ transactions processed by Swift each year suffer some form of friction (circa 5%). This friction costs the industry €2Bn, and Swift estimates circa 65% of payment issues would be fixed by pre-validation, saving organisations €1.3Bn.
ISO 20022 – Leveraging Enhanced Data
Discover how banks and FIs can fully leverage ISO 20022 as an opportunity for growth, and not just another compliance upgrade.
ISO 20022 is the globally accepted format that improves the quality and structure of financial messages, provides rich data with each transaction, enabling everything from enhanced analytics to status tracking, sanction checking and automated invoice reconciliation – all whilst delivering an improved experience for end customers.
How can Bottomline help me choose a tailored solution for my business?
We can leverage our global experience, in particular the 2015 Swiss SIC migration to ISO 20022, to forge a best practice approach. This will involve assessing your institution's unique challenges in order to build a tailored strategy that will help with a speedy and effective migration. On the whole, there is value in your financial institution considering a phased approach or ‘minimal functional requirements’ remit for the ISO 20022 adoption/migration, providing the agility for you to optimise in the immediate future.
François Maigre, Head of Payments Go to Market – Europe at Swift
“Let me focus on two types of use case for ISO 20022, but there are many more. One would be improving operational efficiency through the payments, exceptions, and investigations process. It is estimated that between 3% to 5% of payments result in an inquiry. And each of them would require, on average, three to four minutes to resolve. Therefore, Swift has formed an expert group that is currently busy designing structured ways of handling this by utilising ISO 20022 to improve the automation of such processes. We're also trying to look at how to combine this with leveraging our central case management utility. And so far, we estimate that up to 84% of those inquiries will be solved and be fully automated.
The second use case I want to discuss is directed at how you grow and build your business by offering tailored services to specific groups of customers. You achieve this by using the additional rich data of ISO 20022 to help you profile your customer’s identity patterns, and then assess what would be the most valuable service that you can offer to a specific cluster.“
Supporting resource
CBPR+ and ISO 20022 Webinar with HSBC and Swift
What are the use cases for ISO 20022, including fraud monitoring and cash positioning?
Sibos Lunch and Learn Panel 2023 with Payments Canada, Swift, Banque Cantonale de Genevé, and Zanders.
Swift and Bottomline: Accelerating Best Practice Cross-Border Payments
Bottomline and Swift as they discuss the future of real-time domestic and cross-border payments and why Pre-Validation, Customer Case Management, ISO 20022, and SWIFT gpi hold the key to success.
Instant/Real-Time/Faster Payments
The sooner you achieve ISO Native status, the sooner you can reap the rewards that the extra data, interoperability, etc., can provide across your payments ecosystem.
Insight 9: How advanced is your Financial Institution with implementing Real-Time/Instant Payments?
We asked
How advanced is your Financial Institution with the implementation of Real-Time/Instant Payments?
In our survey, 29% of respondents have enabled their customers to both send and receive real-time instant payments, while 9% only offer receipt. While this is a rise of 13% from 2022, the capability breakdown was not assessed last year.
Either way, with the imminent approval of the SEPA Inst mandate likely to be in late 2023 for all citizens in the EU to be able to receive Instant Payments in Euros within six months of ratification and be able to receive within 12 months (EEA is 30 months and 36 months, respectively), those in Europe that form part of the 19% who haven’t started yet need to get cracking. Also, those 29% who have just started planning need to pick up the pace. Not only because adding a new payment rail in itself involves at least a 9-month project, but also to ensure you achieve the following added requirements; that fees for these new instant payments stay in line with non-instant transfers and that you will have the functionality in place to match the international bank account number (IBAN) and the name of the beneficiary and verify clients against the EU sanctions list on a daily basis. It is these two additional requirements below that are causing the most concerns:
• Increasing trust in instant payments, with an obligation on providers to verify the match between the bank account number (IBAN) and the name of the beneficiary provided by the payer to alert the payer of a possible mistake or fraud before the payment is made, e.g., Confirmation of Payee
• Removing friction in the processing of instant euro payments while preserving the effectiveness of screening persons subject to EU sanctions through a procedure whereby Payment Service Providers (PSPs) will verify, at least daily, their clients against EU sanctions lists instead of screening all transactions one by one.
In fact, 44% of all respondents who attended our recent SEPA Inst webinar with The Paypers in April 2023 said that they were still waiting for guidance and a clear definition of the above before they could get started. The good news is that Bottomline has the experience you can leverage – the market share of all ‘live’ participants of Confirmation of Payee in the UK have gone ‘live’ with Bottomline and our sanction screening tools are used by more than 200 customers globally.
However, it isn’t all about just SEPA Inst. The Fed announced the official launch of FedNow in July 2023, though only a small portion of banks are among the service's early adopters (35). Those further 9000 institutions in scope for 2026 need to start their strategic planning now. Similarly, 90% of the Swiss market who process 500,000+ SIC messages needs to be ready for SIC IP by Aug 2024 (the planning for SIC IP service corresponds to a ‘technical go live’ in November 2023 and a ‘market go live’ in August 2024. Testing should start no later than mid-2023 for early adopters and so yet another date for your strategic diaries) and the remaining ten percent by 2026. Finally, Pay.UK is announcing changes to the New Payments Architecture, and UK Faster Payment’s role is increasing imminently.
Supporting resource
Podcast; Spanning the Globe with Real-time Payments with Leo Lipis Podcast.
Barriers to the adoption of Real-Time Payments
Insight 10: What is your Financial Institution’s most significant barrier to the adoption of real-time/instant payments?
We asked
What is your Financial Institution’s most significant barrier to the adoption of Real-Time/Instant/ Faster Payments?
Legacy infrastructure came out top at 32%, down from 36% in 2021, which is a sign that modernisation is already taking place in the industry. But it’s important to say that legacy infrastructure is not limited to payment systems because if you want to enable instant payments as a bank, you need to also consider real-time limit checks, real-time sanctions and real-time booking, amongst many others. In a world of 24/7/365, you can’t just focus on the payment system; you need to think about the end-to-end secondary infrastructure process too. Therefore, there is no room for complacency, and this should still remain the top priority, where laggards are viewed unfavourably by the industry, their peers, and, more importantly, their customers.
In 2021 we combined a 'Lack of IT Resource and Prioritisation in an Already Busy Roadmap' into one option, which came up top with 34%. However, this year we chose to split them out in the face of more regulation driving new solutions and also the focus on outsourcing IT solutions and transitioning from on-premise to hosted SaaS solutions.
Overall, for the responses for 1, 2, and 3, the solution to these pain points has already been covered extensively above under migrating to a single SaaS integrated platform and having a hybrid integration model if you are a smaller Tier 3 or 4 bank or a smaller non-banking financial institution.
However, don’t just take our word for it. Mambu’s 2023 Benchmarking Survey showed that companies who had partnered with hybrid integration models or a SaaS platform over the course of 2020 and 2021 fared remarkably better than those who hadn’t. Adopters averaged an improved annual revenue growth during the trying year of 2020 of 14 percent, versus 1 percent for the rest of the market. They also recorded a bounce-back rate in 2021 of 34 percent, compared to 10 percent for those unaided by SaaS.
Unfortunately, the 19% who indicated the cost and hassle of implementing a new payment rail will need to swallow their pain. Real-time payments are here, and they are here for good. The volume of real-time payments was 195B transactions globally in 2022, which is a year-on-year growth of 63.2%, according to GlobalData. They also predict that there will be 511.7B transactions by 2077, a CAGR of 21.3% and that 2027 will see real-time payments accounting for 27.8% of all electronic payments globally. Furthermore, the industry is mandating them in key regions, as we have seen with SEPA Inst and SIC IP. The way to mitigate this challenge is to look into new business cases for real-time that will create additional revenue streams that will justify the hassle and cost of initial implementation. These should be further explored by looking at what your corporate customers are struggling with and requesting. Real-time payments are not simply about speed, and some payments are absolutely fine to use same-day or other traditional rails. It is the structured, rich data that comes from ISO 20022 that is key for many corporates. Since ISO 20022 is already well on its way to becoming the global standard for all payments in 2025, then there is an argument that if you solve for ISO 20022 and maximise on the opportunity for being ISO Native, then you help discover those new use cases.
David Renault, Head of SEPA Payments & Country Manager for France at EBA CLEARING
“While we’ve seen significant innovation in consumer payments experiences in recent years, there’s a long way to go to match these advancements within the corporate payments market. In the realm of cross-border payments, significant obstacles remain, evident by Visa research [1] which found ~70% of surveyed businesses reported systemic issues with poor visibility and inefficiency, such as lack of transparency, predictability, payment data transparency and unforeseen costs. With Visa B2B Connect, a multilateral network that offers one-to-many connection, we’re truly empowering payments and uplifting people, bringing more transparency and affordability to the cross-border B2B payments space.”
Our users are heavily focused on creating solutions in these areas and we will continue to develop our RT1 and R2P Services to help them monetise their investments in instant payments. RT1 also provides the easiest adoption path for instant payments to new joiners, thanks to its maximum alignment with STEP2, which all PSPs in Europe are already using today, and the fact that RT1 comes with built-in connectivity to TIPS. We look forward to supporting PSPs from all over Europe in bringing their payment processing up to speed and expanding their business opportunities going forward.”
Bottomline Real-Time & Instant Payment Solutions
Delivering access for both Message and Payments Services, and Connectivity via SwiftNet Inst for TIPS and SIC 5 Instant. Centred around Bottomline's Universal Aggregator IQ single SaaS platform solution that leverages multiple gateways, the services can be wrapped around any real-time payment scheme to deliver speed-to-market, adherence to all scheme compliance and full access to orchestration and payments services.
Use case - SEPA Inst
The SEPA Inst standard (SCT Inst) has been ‘live’ since 2017 and is already used by several schemes, banks, and service providers. However, the European landscape remains fragmented with various local schemes having different rules and a very domestic approach, preventing a harmonised and wide reach of instant payment across the borders within Europe. More recently, both TIPS and EBA RT1 have built a pan-European approach with a great reach where it is now possible to achieve a single instant payment area in the Eurozone. Recent declarations from the EU Payments Council about the plan to regulate – and possibly to make compulsory - the use of instant payments should dramatically speed up adoption in order to reach the required critical mass for true success. This is the reason why Bottomline focuses on delivering access for both Message Services, Payments Services, and Connectivity via SwiftNET Inst – a proven and reliable network well known by the banks - for both RT1 and TIPS. Other connectivity options are also on our future roadmap, including P27, so watch this space.
Use case - SIC 5 Instant
In Switzerland, the need for a modern and state-of-the art platform for instant payments has already been widely recognised and understood. So much so, that a renewal plan for the domestic payment platform has been issued by SIX in conjunction with the Swiss National Bank. This initiative called SIC 5 aims to renew the current RTGS platform used by 246 banks in the country, whilst also introducing a brand-new instant payment rail in parallel. Unlike the EU landscape at this stage, SNB and SIX are making the usage of instant payments compulsory - they announced that all banks with 500’000+ SIC messages in 2020 must be ready to process incoming SIC IP by August 2024. It will then become mandatory for all SIC participants by 2026. The planning for SIC IP service corresponds to a ‘technical go live’ in November 2023 and a ‘market go live’ in August 2024. Testing should start no later than mid-2023 for early adopters and so yet another date for your strategic diaries.
UK faster payments
Podcast: 5 things businesses need to know about the UK’s New Payment Architecture (NPA)
Supporting resource
What are the key barriers for real-time and cross-border payments and how can they be overcome?
Sibos Lunch and Learn Panel 2023 with Payments Canada, Swift, Banque Cantonale de Genevé, and Zanders.
Cross-border pain points
The tools to help solve pain points in cross-border payments are out there; Banks and FIs just need to accelerate the adoption of SWIFT gpi and multi-lateral platforms such as Visa B2B Connect.
Insight 11: What is your Financial Institution’s greatest pain point when sending cross-border business payments?
We asked
What is your Financial Institution's greatest pain point when sending cross-border business payments?
The value of cross-border payments is said to be worth over $250 trillion by 2027 according to the Bank of England and so it is so important for banks and FIs to fully leverage the opportunity available.
Lack of visibility on payment status has risen by 6% since 2021. This is surprising as the lack of visibility, unknown arrival, and poor quality of data for retail payments can all mainly be addressed by ISO 20022 or is in-built into SWIFT gpi. The exception is Wholesale Payments, where only 60% reach customer accounts in one hour due to delays at the beneficiary leg caused by issues including regulatory controls, batch processing, and opening hours of market infrastructures. Swift announced in August 2023 that 89% of transactions processed on their network reach recipient banks within an hour. This is well ahead of speed targets set by the Financial Stability Board to achieve one-hour processing for 75% of international payments by 2027. It also disproves the myth that payments are often required to travel through chains of intermediary banks to their financial destination, as Swift data shows, 84% of all payments on their network are conducted directly or via a single intermediary.
As for costs of nostro accounts and trapped liquidity, these can be solved using multi-lateral cross-border platforms such as Visa B2B Connect. The 5% increase in those selecting trapped liquidity in the system is due to the growing focus on reaching global markets and issues with correspondent banks de-risking and reducing their relationships in territories with exotic currencies - this is a particular issue in APAC, where 36% of our total responders for the survey are based. However, as the Emerging Payments Association APAC discussed at their Global Payments Forum 2023, one of the significant challenges is the risk of unexpected volatility in foreign exchange (FX) rates and liquidity risks in multilateral platforms. The operation of platforms that process multiple currencies becomes challenging due to these risks. Anton Ruddenklau from KPMG highlighted the perennial issue of liquidity and its cost, emphasising the need for regulatory harmonisation while acknowledging the challenges posed by sovereign wealth and territorial data issues. He also suggested that tokenised assets, blockchain technology, and real-time bank-to-bank settlements were a potential solution. However, while the continued progress on CBDCs in the region and globally will help to reduce this burden, there is still a lot more progress needed as this is a closed-loop solution at present.
The issue here is that while the tools are available to solve these pain points, banks and FIs need to adopt the right solutions - and quickly.
Ben Ellis, Senior Vice President, Global Head, Visa B2B Connect
“While we’ve seen significant innovation in consumer payments experiences in recent years, there’s a long way to go to match these advancements within the corporate payments market. In the realm of cross-border payments, significant obstacles remain, evident by Visa research [1] which found ~70% of surveyed businesses reported systemic issues with poor visibility and inefficiency, such as lack of transparency, predictability, payment data transparency and unforeseen costs. With Visa B2B Connect, a multilateral network that offers one-to-many connection, we’re truly empowering payments and uplifting people, bringing more transparency and affordability to the cross-border B2B payments space.”
Our users are heavily focused on creating solutions in these areas and we will continue to develop our RT1 and R2P Services to help them monetise their investments in instant payments. RT1 also provides the easiest adoption path for instant payments to new joiners, thanks to its maximum alignment with STEP2, which all PSPs in Europe are already using today, and the fact that RT1 comes with built-in connectivity to TIPS. We look forward to supporting PSPs from all over Europe in bringing their payment processing up to speed and expanding their business opportunities going forward.”
Julie Bolan Head of Payments - Go To Market APAC at Swift
“Swift is working with banks to increase the speed and the processing of transactions, and it’s a G20 target, as well. By 2027, all banks must be able to credit their end beneficiary account, or 75% of payments, within one hour. Now, that’s something that we all need to work towards. And where we do find the challenge is the time that it takes for the beneficiary bank to credit the end customer account. I share a lot of this data around speed, with different countries, and different banks, and we measure speed very closely at Swift. What we’re seeing is some challenges where compliance checks are needed. As an example, in Malaysia they have 200 purpose codes that are required, from a compliance perspective which need to be validated.
There are also challenges in terms of domestic rules around processing in countries like India for instance and limitations around operating hours where because banks are not open 24/7 they can’t credit customer accounts from 8pm to 8am, as an example. All of these things impact the customer experience. The view of end-to-end time, from a customer experience perspective, is closer to 29 hours.
However, Swift is constantly working on solutions with all of our member banks in terms of making payments faster, implementing new offerings such as Swift Go (moving low-value payments more quickly than gpi payments, so a service level of four hours). Finally, with even more instant payment systems opening up around the world, this will allow us to move cross-border payments into instant payment systems, and have them credited 24/7, in a much quicker and faster way.”
Swift gpi for API & Universal Confirmation
Bottomline’s Swift gpi for API solution provides seamless technical connectivity to update and engage with the new Swift tools (Swift Observer, Directory & Tracker) that reduce the previous issues with transparency, tracking, reconciliation, cost, and overall efficiency.
Visa B2B Connect integration available via Bottomline APIs
Visa B2B Connect is an innovative cross-border multilateral network that builds on Visa’s reputation and expertise, delivering B2B cross-border payments that are predictable, secure, and cost-effective for financial institutions and their corporate clients.
As part of the Visa and Bottomline partnership, we provide cloud-native, API-based implementation of Visa B2B Connect. It is completely integrated with your existing payments infrastructure and 100% interoperable with Swift flows. As such, we are uniquely placed to offer banks a seamless and elegant solution for all cross-border payment flows.
• Runs alongside your Swift operations
• Simple contracting options
• 3 months to go live
Customer Case Study
Kiatnakin Phatra Bank Swift SaaS Connectivity
Supporting resource
Sathapana for Visa B2B Connect
Insight 12: How advanced is your Financial Institution in your implementation of Confirmation of Payee?
We asked
How advanced is your Financial Institution in your implementation of Confirmation of Payee?
The 17% who are already ‘live’ with their CoP solution will be part of Group 1, which the Payments System Regulator announced a mandate for in October 2022. These enterprise-level banks need to implement CoP before the end of October 2023. This group may also comprise part of the 15% who have completed their plans and are looking to start implementation. Although it takes, on average, 20 weeks to implement (this alone is 4-6 weeks), test, and go ‘live’ with CoP, this is a risky strategy.
What is more likely is that the majority of the 15% will be part of Group 2, where 400 additional financial institutions (with an impact on an additional 5000) will need to be ready by October 2024. This will also cover the 27% who have just started planning and the 17% who haven’t started yet.
Either way, this means that the mandated banks need to be able to respond to CoP requests as well as sending CoP requests to other banks to verify the beneficiary details before initiating a payment.
It is also worth highlighting that further groups may be mandated within insurance, pensions, and mortgages, and so the 24% who say it isn’t applicable may find that this will change.
However, CoP should not be considered a hassle as it holds significant benefits for the UK payments industry;
• APP fraud dropped to £485.2m in 2022, following a 39% rise the previous year. According to a May report from UK Finance:
• UK fraud losses overall fell by 8% to £1.2bn, driven by a 17% fall in authorised push payment (APP) fraud losses.
• More than 1.5 billion CoP checks have been completed since its launch, and Pay.UK’s CoP is industry-recognised as a highly successful product proposition, winning multiple awards. PSPs onboarding to the service have grown by 100% from 2021 to 2022, and is expected to continue.
• It addresses the issue of a new wave of APP, CEO, and impersonation fraud as criminals have taken advantage of the uncertainties caused by the pandemic to pose as senior people in a company, requesting urgent funds to be transferred.
There are also key benefits for banks and FIs:
• Avoiding misdirected payments: Human errors, such as typing a wrong account number, can result in misdirected payments. CoP can help avoid these by confirming the recipient's details before the money is sent.
• Corporate payments: Companies that need to pay suppliers, employees, or partners can use CoP to ensure their payments go to the correct recipients. This is particularly useful for businesses that frequently set up new payees.
• Customer confidence: The system also provides customers with peace of mind by confirming that their money is going to the intended recipient. This increases trust in the banking system overall.
• Regulatory compliance: Implementing and using the CoP system helps banks comply with regulations to prevent money laundering and other illicit financial activities.
• Online transactions: With the rise of e-commerce, many transactions are completed online. CoP can help ensure that payments made on these platforms are sent to the right sellers, further promoting safe online shopping.
• Direct Debits and standing orders: When setting up Direct Debits or standing orders, the CoP system can verify that these regular payments are being sent to the correct accounts. This prevents future payments from going astray.
"Fraudsters move fast and adapt quickly, coming up with novel methods and using technology to their advantage. This is reflected in the steep rise of online scams, which are one of the most prevalent crimes in the UK, with impersonation scams, where fraudsters pretend to be a friend, family member, or a trusted organisation, being one of the most common methods this year. We are working with the payments industry to develop tools to detect and prevent this type of fraud.”
Kate Frankish, Chief Business Development Officer, and Anti-fraud lead at Pay.UK*
Edward Ireland – Joint Head of Commercial Products, Financial Messaging at Bottomline
“CoP in the UK: An Essential Tool Against APP Fraud
“Nevertheless, CoP’s implementation has shown a significant reduction in APP fraud (UK Finance’s 2023 report reveals it’s down 17% compared to 2021) and misdirected payments, enhancing customer experience and assurance in electronic payment initiation. This system, therefore, offers a promising future in pre-validating payment transactions to prevent fraud.”
Nick Warner, Programmes Manager at the Cambridge Building Society who went ‘Live’ with CoP on 7th September 2022 via Bottomline
“The main decision for implementing Confirmation of Payee is supplier choice. We completed a full tender at the start of 2022 and chose Bottomline. That was kind of the starting point where we wanted somebody who could guide us through the technical work and had the experience and understanding working with Pay.UK. Cambridge Building Society was an early adopter, and we needed to ensure we had a partner who could support that ambition. Then we progressed to the registration with the payment gateway all in that first couple of months of the year. Then we moved into the data and simulation, and then finally moved into the testing environment. So, going live in September 2023 was pretty successful. My advice would be to not underestimate the simulator testing as that involves very niche knowledge and skill sets. However, the business understood that CoP was something that we would eventually have to do and would help support our customers and so it was better to get ahead of it rather than risk a bottleneck closer to the mandated deadline.
From my point of view, people will be in the budgeting cycle right now and thinking this is something to sort next year. If they’re looking to engage in 1 month to discuss their strategy, that’s close enough to Xmas for things to lose momentum. Naturally, January will come and go, and the ~45% reviewing options will hit panic stations. October will soon be here… . Additionally, the element of scarcity of resources should motivate Group Two to ‘get going’ ASAP. After all, there are only so many CoP vendors and only so many Project Managers at those vendors to manage.”
Bottomline provides offers an outsourced technical solution to support the PSPs obligation to respond to inbound CoP requests, as per the PSR Mandate.
The Card and Payments Awards 2022
Bottomline is honoured to be the winner for Best Security or Anti-Fraud Development for our Confirmation of Payee solution.
Cashplus bank
Richard Bastin | Chief Technology Officer
“With the rising patterns of Authorised Push Payments (APP) fraud affecting the UK industry, Cashplus Bank wanted a robust technical solution, backed by deep market expertise and 24x7 support. We are delighted to work with Bottomline who bring their Open Banking credentials and innovative matching technology together to deliver this primary objective of protecting our clients.”
The Access Bank UK
Bob Attwood | Head of IT & Operations
“As a relationship bank, we want to make sure our customers are fully protected against the growing instances of APP fraud and also make it as simple as possible for our customers to send funds to us. Bottomline provides this out of the box with their CoP solution.”
For those financial institutions mandated, contact our specialist team to find out how our multi-award-winning Confirmation of Payee solution can help you comply.
Supporting resource
Webinar: Confirmation of Payee – Best Practice Roll-Out and How to Leverage the Opportunity with HSBC and Swift
Whitepaper: The Future of Confirmation of Payee in Europe - How can Europe make the most out of the Iban-name check requirement included in the update to
the Instant Payment Regulation?
CoP e-Book.
About Bottomline
Bottomline makes business payments simple, smart, and secure for businesses and financial institutions, of all sizes, all over the world. More than 10,000 corporate customers, 1,400 commercial and business banks, including 15 of the top 25 global banks, rely on our industry-recognized payment and software platforms to accelerate digital transformation in a complex world of business payments and financial management. Bottomline solutions touch customers and payments in 92 countries across six continents. Our teams serve the world from primary locations in the United States, the United Kingdom, Switzerland, Israel, India, Australia, and Singapore. Bottomline is a portfolio company of Thoma Bravo, a highly respected software-centric private equity firm with $122 billion in assets under management. For more information visit www.bottomline.com.
Bottomline is a registered trademark of Bottomline Technologies, Inc.
About Bottomline Financial Messaging Solutions
Connect, Comply, Compete
Universal Aggregator IQ - Securely communicate, reconcile, and manage the data in financial transactions within, and between banks and Non-Banking Financial Institutions, both locally and internationally.
Payments & Cash Aggregator • Messaging & Connectivity Aggregator • Securities Aggregator • Fraud & Financial Crime Management • Data & Analytics
www.bottomline.com/UAIQ
Find out more and book a meeting to discuss your payments strategy.
About the author
Zhenya Winter, Global Head of Marketing – Financial Messaging at Bottomline
More than 24 years of experience in the Financial Services sector, specialising in payments over the last 10+ years. Key areas of focus within payments messaging, orchestration and connectivity include real-time domestic and cross-border payments, and ISO 20022.
The Future of Competitive Advantage in Banking & Payments
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