BankingOpen BankingFuture of B2B payments ‘on platform not product’

Future of B2B payments ‘on platform not product’

Unbundling of payments will be a boon to SMEs

As the payments space has grown, the rise of integration platforms will define the next evolution of the market.

“I think the game is shifting [away] from the product towards the service and the platform. The more open you are and the better experience you provide, that’s how you’ll gain market share”, said Juan Jiménez, head of financial industry transformation at Santander.

Speaking during a panel at the Money Next Summit, he added that even though payments have become more commoditised, payment processing remains the bread and butter of the banking industry.

But with open banking comes a ‘fragmentation’ or ‘unbundling’ of corporate payments and banks continue to search for best practice when it comes to sharing information.

“We’re part of this fragmentation”, says Jiménez. “Of course, as a bank we’d love for clients to do more business with us, but the reality is that they have different banking relationships. This drives us to a very interesting concept of how banks can work together to share information in a secure manner, and how clients can benefit from that, from the usage of the APIs that are now everywhere.”

Simon Jones, chief customer officer at ClearBank said the benefits of this unbundling will be most felt by SMEs.

“Open banking is going to drive that ability to pick best in class for various different things that you need as a small business. You could easily do it by aggregating it through your open banking tools, either with one provider or with multiple providers going forward.”

Even with the advent of new players, open banking and APIs, institutions like SWIFT still serve as the bedrock of many payments.

“Every single construct we have has to be interoperable and has to connect or respect MT messaging, SWIFT gpi standards, and the new ISOs,” said Jiménez. “Even the more innovative and disruptive solutions are swift interoperable, though we are developing new rails”.

With open banking, corporates have more options in B2B payments but Nigel Verdon CEO of Railsbank sees hurdles to this as fraud takes a toll on A2A payments.

A lot of people got the fingers burnt or stung because there is no real recourse on the payment schemes. we’ve all seen massive amounts of fraud go through faster payments, and it’s one of the downside and the unintended consequences of real time payments.”

“This is why you pay more for Visa, MasterCard, you have the chargeback. But if schemes can start going towards giving guarantees or underwriting it can stop people from being stung. This is not just a UK problem; Singapore has a ton of push payment fraud and so has elsewhere in the world its been rolled out in”.

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