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Interview with Adrian Lovney, CEO, NPP Australia

01/02/2017

InstaPay Editor Mark McMurtrie recently interviewed Adrian Lovney the inaugural Chief Executive Officer of NPP Australia Ltd. Here are some of the points they discussed.

Question: Who and what is NPP Australia?

Answer: The New Payments Platform (NPP) is a major industry initiative to develop new infrastructure for Australian payments. It will provide Australian consumers, businesses and government a fast, versatile, data-rich payments system for making their everyday payments.

NPP Australia is the entity that will oversee the build and operation of the NPP infrastructure. It is a mutual organisation owned by the participating financial institutions. In 2014, NPP Australia signed a contract with SWIFT to design, build and operate the basic infrastructure element of the NPP.

Question: Who is involved in the project?

Answer: The current thirteen Participants in the NPP are Australia and New Zealand Banking Group (ANZ), Commonwealth Bank of Australia (CBA), National Australia Bank (NAB), Westpac Banking Corporation, Cuscal Ltd, ING Direct, HSBC Bank, Macquarie Group, Bendigo & Adelaide Bank, Citigroup, Indue, Australian Settlements Limited and the Reserve Bank of Australia’s Banking Services Department. A large number of additional financial institutions will also be connected to the NPP infrastructure from the outset via one of the 13 Participants.

The NPP is also available to companies wishing to offer products or services that utilise the benefits and functionality of the NPP. We call these ‘overlay services’ because they sit on top of the Basic Infrastructure. The first of these will be launched by BPAY, who will launch a unique payment proposition that will use the key benefits of the NPP infrastructure, once it is publicly available.

Question:  Why did the Australian banks see the need to build a new payments platform?

Answer: Technology and digitalisation have empowered consumers with convenience and choice like they have never known before. It’s changing the way we communicate, transact and experience the world, and has enabled an ‘always on, always open’ economy.

In 2012 the Reserve Bank of Australia released its ‘Strategic Review on Innovation in the Payments System’ which confirmed what the industry already knew: Australia needed a more responsive payments system to match the new reality presented by a ‘24/7/365’ digital economy. Soon after, the industry formed the ‘Real-Time Payments Committee’, which in turn evolved to the NPP we know today.

Question:   Why did you decide to join NPP Australia?

Answer: I’ve been involved with the development of the NPP since its inception; I was a member of the Real-Time Payments Committee in my previous role at Cuscal, one of the founding shareholders.  The decision to join NPP Australia in mid-2016 was easy because I am genuinely excited by the transformative nature of the NPP and have a passion for large-scale projects. But it’s not just the technology that excites me – it’s also the industry collaboration that is bringing it to life and what the market will do with it that I find incredibly engaging.

Question: Five months after your appointment what are your initial observations and priorities?

Answer: I’ve been incredibly impressed at the momentum of the industry collaboration required to launch the NPP. There are many hundreds of people inside the Participants and our technology partners, such as SWIFT, dedicated to bringing it to life. I’ve been blown away by the energy and commitment – it really is a fantastic thing to be a part of.

At the same time, I’m particularly focused on explaining to the Australian business community how the NPP can enable innovation through the overlay services – that top layer of the Basic Infrastructure. While there are some obvious players (such as Australia’s flourishing Fintech sector) there are some companies in industry verticals that may not even realise they could be an Overlay Service Provider and really improve their efficiency and capabilities, so sending out that message is a priority.

Setting up a new organization to successfully manage the NPP after it goes live and to work with the Participants and the market to run “business as usual” operations and to grow the usage of the platform is also a priority.  I joined less than six months ago as employee #1 and we are now nearly at full complement.

Question:   What type of payments and channels will you be supporting?

Answer: The four key features to underpin the NPP are:

  1. Speed: the ability to make payments in real time, with close to immediate funds availability to the recipient.
  2. 24/7 availability: the ability to make and receive low-value payments 24/7, outside normal banking hours.
  3. Data Enriched: the ability to send more complete remittance information with payments.
  4. Simple Addressing: A system to more easily address retail payments to any recipient using an identifier like a phone number, email address or an organisational identifier.

The first overlay service that will use the NPP infrastructure will be delivered by BPAY (as mentioned above) who will leverage the NPP’s ability to offer a unique proposition to consumers.

Regarding channels, this is in the hands of the Participants who will compete to offer customers access to the NPP’s speed and capabilities via their own channels such as mobile apps, internet banking or telephone banking.

Question:  Whom do you see as being the major beneficiaries and what will they gain from the new payments platform?

Answer: The NPP will provide a fast, versatile and data-rich payments system for Australian consumers, businesses and government departments. But as well as faster and data-rich payments, it also provides a competitive environment that could see payment experiences go to an entirely new level.

In terms of what these experiences could look like, speed will be a key differentiator, as well the convenience offered by the addressing service and the data that can be transmitted along with payment. It’s likely that the transmission of data along with payments will mean that a key focus will be on business applications, as well as the opportunities in industry verticals, such as funds management, in and around the stock exchange, or in the insurance and superannuation industry.

The NPP presents an opportunity for companies to solve common pain points such as efficiency, improved customer service and reducing costs, and they could do this in competition or collaboration with banks or Fintech start-ups.

Question:  How are you learning from other countries that have already made this migration?

Answer: Our plans in Australia have certainly been shaped by international experiences, but we are not replicating them. We are creating a platform that responds to our own domestic needs first, but at the same time responding to gaps that have been identified in some international systems, thanks to the benefit of hindsight.

This functionality includes:

  • infrastructure that is open access and separated from the product layer to truly empower innovation
  • enhanced data capability and the ability to support business applications
  • confirmation of payee prior to payment to provide user certainty and reassurance
  • real-time settlement in central bank money to preserve the integrity of the platform
  • components that could be leveraged by payments innovators such as the Addressing Service (that allows payments to be made to easy to remember identifiers such as phone numbers or emails addresses) and
  • the initial overlay service from BPay will include a “Request to Pay” feature, which I think is a game-changer.

Question:  Is the project running to plan? When do you expect to launch?

Answer: Like any project of this magnitude there is a complex and thorough testing regime to complete before a decision is made to make the NPP publicly available. Subject to this testing, the Australian public can expect to see services offered via the NPP ramp-up from October 2017.

More details about the NPP scheme can be found on the InstaPay Tracker.

Thank you Adrian for answering our questions. On behalf of the InstaPay Community we are grateful for you taking the time to share details of your plans and priorities. Good luck with your launch later this year.

Author: Art Division