Club @ Sibos
SWIFT INTERVIEW
All change in the
payments landscape
The transformation of the payments landscape, initially driven in Europe by PSD2
and open banking, is spreading across the globe. Saskia Devolder, managing
director and head of Western and Central Europe at SWIFT, talks to Club@Sibos
about the implications for banks, market infrastructures and SWIFT itself.
Club@Sibos: We are in the midst of significant
transformation of the payments landscape
globally. What are the main drivers of this?
Saskia Devolder: The drivers of this transfor-
mation depend very much on which part of
the world you are looking at. In Europe, the
access to accounts and open banking element
of the reviewed Payment Services Directive
[PSD2] has caused banks to think about how
they give access to customer account infor-
mation to other banks and payment services
providers [PSPs]. Inevitably, this becomes a
discussion about technology because it in-
volves issues such as protection of customer
data when it is exchanged between banks and
PSPs. The use of APIs [application program-
ming interfaces] has become the standard
technology to enable access to accounts and
open banking.
The success of open banking in the UK and
in Europe has led to it being picked up else-
where in the world. Singapore, for example, is
moving towards open banking, but the driver
is not regulation. Here, they are adopting
open banking because the technology allows
it and consumers are requesting it.
Customer requirements and competition
are also converging to change the value
proposition in payments. On the one hand,
you have new competitors in the payments
space, including fintechs that want to take
a little piece of the payments business and
offer very focused services. Banks, of course,
are focused on a much broader picture
and looking at how they can offer custom-
ers a better service. Additionally, the large
platform players such as Google, Alipay
and Amazon look at payments as part of the
overall customer experience; they want that
experience to be seamless, fast and simple. If
banks want to be a part of this, they must look
at changing some of the payments processes
they have been operating for the past century.
Technology comes into play as a way they can
achieve this.
There are challenges in this transformation,
particularly cybersecurity. Everyone – banks,
PSPs, market infrastructures and the platform
players must ensure they protect customer
data. Any breach would have a huge impact
on an organisation’s image. When a payments
organisation chooses a new technology to
deploy, it must take cybersecurity into con-
sideration. APIs have a relatively proven track
record when it comes to cybersecurity, but it’s
early days for distributed ledger technology.
fully exploited. Data analytics will enable
infrastructures to deliver much more tailored
reports to participants about their transaction
settlement performance. This will be partic-
ularly important as the market moves to real
time and instant payments.
Another important area for market infra-
structures is collateral management. The
optimisation of collateral has been a key focus
since the financial crisis. Market infrastruc-
tures are essential for collateral management,
but it is difficult for institutions to place
“With new technologies and new entrants into the payments
market, banks will be continually challenged.”
SASKIA DEVOLDER, MANAGING DIRECTOR AND HEAD
OF WESTERN AND CENTRAL EUROPE, SWIFT
CS: How are market infrastructures responding
to this changing payments environment?
SD: The communication between a bank and
a payments market infrastructure determines
the type of services a bank can offer its clients
and customers. Like cybersecurity, the mar-
ket infrastructure is out of the scope of a bank
customer’s experience, but it determines the
quality of services a bank can offer. How fast
a bank can execute a payment depends on the
services the market infrastructure can offer.
Many of the market infrastructures are
renewing both their services and their in-
frastructure and this is an area that is really
coming to life. This has given infrastructures
the opportunity to think about how they can
reduce their operating costs, become more
efficient and optimise systems. They are do-
ing this while considering the needs of their
participants, who in turn are responding to
the needs of their customers.
One area the market infrastructures are
looking at closely is data analytics; they have
a lot of data, which until now they have not
10 | CLUB@SIBOS | Bringing the world to Sibos and Sibos to the world
collateral in all infrastructures and applica-
tions. Market infrastructures are looking to
harmonise their operations to enable banks to
reuse their collateral. This is something that
the Eurosystem is looking at with its Vision
2020.
CS: Let’s talk in more detail about Vision
2020 – it envisages the migration of payments
platforms to the ISO 20022 standard. What
are the benefits of such a move?
SD: The Eurosystem is doing this because on
the one hand, it is looking to reduce costs and
improve efficiency and on the other, it wants
to offer new services, such as the TARGET
Instant Payments Settlement (TIPS) service,
which will be live in November 2018. Vision
2020 also involves the technical consoli-
dation of the TARGET2 RTGS and TAR-
GET2-Securities – the consolidated system
will be launched in November 2021. Follow-
ing that, the Eurosystem Collateral Manage-
ment System [ECMS], which will provide a
harmonised platform for collateral operations