Accenture Banking Blog

Instant, on-the-go services have become part of daily life for consumers around the globe. It is now possible to perform a whole host of activities, from hailing a cab to ordering a meal, anywhere and anytime with just a few clicks. The financial services sector has struggled to keep up with this trend, particularly in the area of payments, but that is gradually changing.

Real-time payments—that is, 24/7 electronic payments that are cleared by banks immediately or within seconds—are gaining traction globally. With real-time payments the payee’s account is credited immediately and the payer is instantly notified about the status. By contrast, it can take several days for funds to reach a recipient’s account via traditional models and the payment is not reflected in the payer’s account balance until it has been cleared.

The combination of real-time payments and Open Banking creates real-time commerce, which is where opportunities lie.

Some countries, such as India, have had real-time payments for a number of years. Others, such as the UK, Singapore and Australia, have implemented real-time infrastructure more recently and still others are in the process of developing real-time strategies. In Australia’s case, the New Payments Platform (NPP) allows large amounts of remittance information to be attached to real-time transfers.

These developments are opening up exciting new value-creation opportunities for banks and other financial institutions, not the least of which are in the corporate and government sectors where organisations spend a lot of money on reconciliations and high-volume remittances. By leveraging instant, data-rich payments, banks can offer new services to these organisations that will save them a significant amount of money compared with traditional value transfers.

The possibilities require a wholesale rethink of what payments services entail; it’s not just about moving money from A to B. Most real-time payments systems are based on modern ISO20022 messaging standards, allowing banks to make use of additional information carried alongside the payment to develop and deliver “overlay” services and functionalities such as automated reconciliation of receivables and payables for business customers. Opportunities for monetisation will come from providing consumers with convenience and providing corporates, institutions and governments with tangible service benefits.

One of the most highly anticipated features of real-time payments is the request-to-pay capability. This will allow businesses to push payment prompts to customers who will then be able to approve the transaction and send the payment in real time without needing to fill out a form. Request-to-pay will streamline transactions and will allow users to track payments more efficiently.

Real-time Open Banking

But it’s when real-time payments are combined with the data-sharing requirements of Open Banking that things really get interesting. Under Open Banking financial institutions will be required to share customer data—things like product and pricing information and transaction history—with authorised third parties. Applying this broad set of data to real-time payments, along with the basic transaction information, allows firms to unlock an additional layer of value and bring to life what we call “real-time commerce”. For instance, a company will be able to see whether a customer has the ability to pay for a shipment of goods before the goods are shipped, thus saving the company time and the cost of transporting the goods.

We see request-to-pay as key to opening up new opportunities across the spectrum of consumers, small businesses and corporates.

It is up to banks and other financial institutions to build the digital services that enable firms to leverage the capabilities of real-time commerce. Those that move quickly to create these services will have a competitive advantage over their rivals. And, because these services will be hugely beneficial to businesses, there will be new opportunities to charge value-add fees.

Of course, the journey to making the most of real-time payments will vary for each financial institution, based on its market, operational capabilities and technologies.

A roadmap should include the following steps:

  • Assessing the market trends and potential business impact
  • Measuring the gap between current and target payments platforms
  • Determining the operational and organisational impact
  • Evaluating implementation scenarios
  • Building an implementation roadmap

I was delighted to join ACI Worldwide’s David Godfrey and Accenture colleagues Mike Aston and Lutfi Zakhour to discuss real-time payments in greater length. While we centre the conversation on real-time payments for banks and financial institutions in The Kingdom of Saudi Arabia, the points raised are applicable to organisations across the world. Have a look if you’d like to learn more about the opportunities real-time payments is opening up.