FinTechs as a catalyst for improving payment services

Transcription

1 FinTechs as a catalyst for improving payment services Heike Winter, Retail Payment Policy, Deutsche Bundesbank Annual Global Conference of the European Banking Institute Frankfurt, 28 October 2016

2 Worldwide trend: Non-Banks as a driver for innovation in payments Report from the BIS Committee on Payments and Market Settlement Systems 2012: Worldwide overview on the various innovations in payments One result: The role of non-banks in retail payment innovations has increased significantly owing in part to the growing use of innovative technology that allows nonbanks to compete in areas as mobile and internet payments which are not yet dominated by banks. Heike Winter, Deutsche Bundesbank Seite 2

3 Worldwide trend: Non-Banks as a driver for innovation in payments Role of non-banks is significantly increasing 100% 8% 7% 90% 80% 20% 38% 18% 29% 31% Central Bank 70% 64% 27% 60% 50% 40% 33% 41% 14% 16% 16% Co-owner Non-banks 30% 20% 39% 36% 55% 50% 38% Banks 10% 22% 0% All Internet Mobile Card EBPP Infra & Sec Source: CPSS Working Group on Innovations 3

4 Worldwide trend: Non-Banks as a driver for innovation in payments Fact finding worldwide - Examples Product type Example Effect Innovative card solutions Octopus Card (Hong Kong) More than 20 mn cards in circulation 11 mn transactions / day Internet payments Sofort (DE) Internet payment Mobile payments Paypal (Luxemburg, International) M-Pesa (Kenya et al.) Payment service for online purchases based on the customer s online banking application merchants, 5 mn transactions per month (2016) Worldwide internet-based electronic money scheme. Various ways of funding are offered depending on the user s country of residence mn customers (Kenya) over 2 mn transactions / day EBPP (Electronic Bill Payment & Presentment) Infrastructure & Security SADAD (Saudi Arabia) Faster payments (UK) Market share in SA: > 90 % Migration of access channels to ATMs and internet banking Near-real time settlement of internet / phone banking or standing orders 122 mn transactions (September 2016) 4

5 Worldwide trend: Non-Banks as a driver for innovation in payments Follow-up work 2014: analytical study Definition of non-banks : Entities involved in the provision of retail payment services whose main business is not related to taking deposits from the public and using these deposits to make loans Driving factors: - The trend for banks to outsource payments and technology-related services - Changing payment habits and customer preferences, including the emergence of new payment needs Heike Winter, Deutsche Bundesbank Seite 5

6 The FinTech wave P2P QR Digital is the most disruptive force that the payments industry has seen in decades (Accenture, 2015) NFC Digital wallets Tokenization & HCE Smart data & analytics Payments is at the epicenter of financial innovation (McKinsey, 2015) m-commerce Roboadvisors Biometrics Instant payments e-commerce/ e-payments Crypto currencies Blockchain The great wave off Kanagawa, Katsushika Hokusai, about 1830 Seite 6

7 The FinTech wave Driving factors Infrastructure: Legacy / complex landscape IT-investments by banks worldwide in 2015 of ~50 bn USD* New technologies Contactless, NFC Biometrics API banking Smart data & analytics / data monetization Mobile devices / true Omni-Channel Anytime, anywhere, any device 95% of millennials are always on 62% of customers prefer to support only one wallet in their mobile Messaging instead of platforms Convenience, availability, integration in daily live Incumbent players FinTechs Consumer expectations Regulations: Cumbersome product adaption High investment requirements PSD2 / MIF-regulation: choice of brand, X2A, PISP, AISP, 2-factor authentication Instant payments Still new regulations looming European regulation WW: 2010 = ~2bn USD, 2015 = ~23bn USD DE: stellar growth since 2013, 2015 = 0.5bn EUR (>1.2bn EUR incl. 360T tx) Funding / investments** Source: Some details from Capgemini, Big changes in the payments industry, 2016 * Citi GPS, Digital disruption, March 2016 ** Accenture, Fintech and the evolving Landscape, 2016 EY, German FinTech landscape, 2016 Page 7

8 The FinTech wave Definition and areas of activity Definition (BaFin) There is still no clear definition of the concept of a FinTech. Combining the words financial services and technology, FinTechs are commonly understood to be young undertakings that provide specialised and in particular customer-oriented financial services using technology-based systems. As such, FinTechs follow the trend towards digitalisation and customisation, and encourage digital progress in the financial market at the same time. They rely in particular on customer-friendly, fast and convenient applications for the user. However, FinTechs are not just in competition with traditional financial services providers such as banks, insurers and investment firms, they also to some extent supplement the services that these offer. Areas of activity Payments P2P payments Remittances E-/m-commerce payments Account switching service Process optimization Financing & credit P2P lending Crowdfunding Banking & investment Mobile banking Personal finance mgmt Roboadvisory Social trading Crowdinvesting Others Behavior-based insurance Smart data & analytics Cloud computing RegTech Page 8

9 Direct Impact of FinTechs on the German market for e-payments Starting point: - Upcoming e-commerce during the midst of nougthies - Lack of payment instruments capable for online payments - New solutions were quite successful: Paypal and Sofort Reaction: - Cooperative effort by German credit institutions in Introduction of paydirekt - Catching up with incumbents turns out to be a challenge Page 9

10 Indirect Impact of FinTechs on the German market for payments - New App-based payment offerings from FinTechs became a benchmark for user friendliness (e.g. Number 26/N 26) - New P2P offerings from incumbents (e.g. Geldbote ) - New drive to develop new products (e.g. innovation labs as a tool for traditional bank-owned software providers) - Increasing openness to implement Instant Payments - Regulation (PSD2) has taken new types of payment services providers into scope banks will be required to allow access to account for third party providers enabling payment initiation and account information services Page 10

11 Thank you for your attention Heike Winter Retail Payment Policy Wilhelm-Epstein-Str Frankfurt Germany Slide 11