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Held March 16, 2021
The inaugural meeting of the International Institute of Finance (IIF) – The Payments Association Global Payments Forum was held on March 16, 2021 as a virtual event. Around 100 people registered for the first meeting from across IIF and Payments Association members and invited guests. They and the speakers and co-chairs were welcomed by John Ryan, MD, Policy, Payments Association Asia, who moderated the meeting, and Brad Carr, MD, Digital Finance, IIF.
The co-chairs set out their vision for the Forum and the questions they wanted members to consider. Aditi Sholapurkar (NIUM, Singapore) said that technology advances mean there is no excuse for lack of equal access to payments, and members need to hold themselves to a very high standard. Rich Clow (Bank of America, New York) emphasised his personal curiosity about harmonizing message sets. Stephen Grainger (Mastercard, London) mentioned the private sector is doing well to solve many of the frictions in cross-border payments, but there is an opportunity to engage more with the public sector to do even better.
Kieran Murphy (Financial Stability Board, (FSB) Basel) presented on the G20 Roadmap for enhancing cross-border payments, which sets out the agenda for the public and private sectors over the coming years. In pursuit of the 4 objectives of the Roadmap to improve the speed, cost, inclusiveness and transparency of cross-border payments, actions have been identified in 19 building blocks (BBs) grouped into 5 areas. The Roadmap sets out practical steps and a timetable, meant to be ambitious but realistic, flexible and collaborative. Public consultation will be important, on both international and domestic standards. The first progress report from the FSB, due in October, will review timing and adjust BBs as necessary, under the guidance of the FSB Cross-Border Payments Coordination Group (CPCG). The first step for the FSB is release in May of the consultation on BB 1 on vision and targets, which will look to frame a small number of simple, high-level quantitative targets directly relating to the 4 objectives.
Thomas Lammer (Committee on Payments and Market Infrastructures, (CPMI) Basel) said the 19 building blocks of the Roadmap are designed to address a multidimensional problem and bring about a step change in cross-border payments. There are many interdependencies between the building blocks, which address not only technology issues but also require action on regulation, data standards, and building a shared vision. The first step for CPMI was the joint guidance letter with the Basel Committee on Banking Supervision (BCBS) issued December 2020, which encouraged bank supervisors, banks and other FX market participants to better manage FX settlement risk with reference to existing guidance. Current focus areas for CPMI include liquidity bridges and extending operating hours. The results of the recent Hackathon would be released during the BIS Innovation Summit, March 22 – 25. The authorities are aware of and welcome innovation by private actors, and the official sector can also improve traditional “plumbing”. Ongoing exchange mechanisms, like the Forum and CPMI’s conference (March 18-19) and Webinar series are all important.
Lisa Robins (formerly Standard Chartered, Singapore) said the G20 Roadmap devised by FSB and CPMI was an essential catalyst which had clearly articulated the issues, but was not a magic bullet. Achieving results would require collaboration, culture change, and investments of time and budget. Areas to be addressed included digital fortresses and data protectionism; but domestic innovation can lay the foundations for cross-border improvements too. There 2 needs to be more than one game in town, as the correspondent banking model is challenged and the scale of cross-border payments increases to a predicted $30 trillion in 2022 (est. Accenture). Asia is a good example of the scale of opportunity and the direction of travel, with its sophisticated domestic payments systems and the exponential growth of ecommerce in the APAC region. Banks, paytechs and fintechs are all working hard on a range of initiatives in region. Real-time payments systems are starting to take hold in countries like SG, TH, AU and IN, and they tend to have native capabilities to receive cross-border payments. The Regional Comprehensive Economic Partnership (RCEP) could generate more focus and results. Singapore is providing a focus for efforts such as PayNow, regulatory sandboxes and work with Hong Kong. SWIFT, with the largest number of members, needs to move fast as provider and aggregator. Regulators need to lean in to ensure a level playing field:
Success will see agreement on norms, standards and the ‘glue’ provided by payments infrastructure such as APIs.
Lars Sjogren (P27 Nordic Payments, Copenhagen) addressed the meeting with a briefing and update on the P27 initiative, which seeks to create one payments superhighway in the Nordic countries for 27 million people, with interoperability with the euro area and global connectivity. This will involve replacing 8 or 9 legacy domestic-only systems, some of which are 50+ years old, with a single new system – a “heart transplant” which will connect to the Eurosytem’s TARGET Instant Payment Settlement (TIPS). P27 is owned by 6 major banks, working closely with central banks and regulators and an ecosystem of 200+ participant banks. Focused on resilience and day/night availability, it is a cost-plus entity, not profitmaking, to deliver benefits of scale to all users. Its 4 focus areas are true instant payments (both domestic and cross-border); enhanced efficiency; increased security, and increased competitiveness and competition. P27 fully support the G20 roadmap with its emphasis on regulatory issues, but is also focused on delivery short-term ‘quick wins’, such as a pan-Nordic bill payment solution and request to pay standards are examples:
In the end, delivering the Roadmap is not just about an international project but about fixing real customer pain points.
Mohit Kansal (Flywire, Boston) briefed meeting participants on the Flywire business model. He said that for Flywire, software drives value in payments through industry-specific billing, payment and reconciliation and rich commerce and payment experiences, while also addressing failed trades through exceptions handling with a human touch with global reach. Faster payments by themselves are not that important: they need to be fully integrated with transparent billing and despatch, and speed per se is not critical where credit is also extended.
The meeting participants then voted on polling questions, identifying transparency (41%) as the objective the private sector was most able to solve for, followed by speed (36%), cost (14%) and inclusion (9%); Action area C (AA C) (improving existing payment infrastructures and arrangements for the requirements of the cross-border payments market) as the action area the participants saw the private sector as most involved in (58%); and Regulations (33%) as the area most valuable for any sub-groups of the Forum to tackle, followed by Data Standardisation and Digital Identity (25% each), AML (13%), and real time payments (4%) (see Annex).
A brief round of discussions at separate virtual tables then took place, and the co-chairs summarised the meeting outcomes. Stephen Grainger picked out Mohit’s point that understanding why people make payments is critical to thinking through the value this group can play. Rich Clow said his sense was there was broad agreement that the top building blocks right now were BB 1 (vision and targets) and aligning on regulatory standards such as hours of operation, and added he was curious about the role the BIS Innovation Hub would play around harmonisation of data. Aditi Sholapurkar stressed the variety of desires/needs of different users, as diverse as hedge funds, SMEs and retail consumers.