Realtime offers immense potential for payments for banks and fintechs, finds EPA report
New research from Emerging Payments Association reveals that realtime payments are growing rapidly in the UK, signifying potential for business payments for banks and fintechs.
The leading trade association has today published its original research, The Impact of Realtime on Payments and Data, which details how consumer expectations have drastically changed over a short period of time – and consumers no longer accept delays to funds movement or clearance.
The spike in demand for realtime payments was sparked by the implementation of PSD2 and Open Banking in 2018. Intended to be a catalyst for innovation in the financial industry, the regulation has massively impacted consumer behaviour and attitude towards slower payment processes.
Mark McMurtrie, EPA Ambassador and report author, commented: “Realtime is the new normal for payments procession. Customers expect realtime, regulators encourage its adoption and competition demands that instant payment options are provided.
“This comprehensive report, based on input from an interactive workshop with EPA members, examines the key use cases, innovations and regulations behind the rapid growth of realtime in the UK, across Europe and throughout the world.”
The move towards realtime payments can prove beneficial to businesses since additional data can improve insight into customer behaviour, allowing for instant rewards and personalised offers. However, the report also warns that faster processing times create more opportunities for criminals to exploit businesses. More investment must therefore be made to enhance fraud protection.
The report also highlights that the amount of innovation a financial institution can deliver is severely hampered by the growing number of regulations that have to be completed, tying up financial and employee resources and management bandwidth. This means that there is still a way to go before demand for realtime payments can be met as commonplace.
For more on what realtime really means and what the industry needs to do to match consumer demand for instant payments, download the report here.
The report was produced following a series of Project Futures workshops, hosted by the EPA. Project Futures is designed to provide insight and thought leadership on new innovations and technological developments, emerging market trends, and the prospective future regulatory landscape in payments.
Previous reports from Project Futures have explored: The impact of new credit and lending services on payment providers, Data proliferation and using data to drive payments innovation, Monetisation of data, and Innovation in international trade. To access previous EPA reports, please click here.