InstaPay interviews ING on the implementation of instant payments in Europe
1) SCTInst is gaining traction across Europe. Given that it is not mandated how can the industry ensure ubiquity across the region?
Although the scheme is not mandatory, the adoption of the scheme is getting much traction throughout Europe, at a faster pace as the adoption of the (mandatory) SEPA scheme. The commercial possibilities and the realization that Instant Payments (IP) is the new normal drives Payments Service Providers (PSP’s) towards adoption. The adoption is accelerated when countries agree a common approach and go-live or when large PSPs (with >50% market share) adopt Instant Payments. For example, PSPs in the Netherlands expect to process for example approx. 800 million instant payments a year, which will be an enormous contribution to the current IP volume (EBA CL: 1 million transactions April 2018). Once reach is >50%, those PSPs that have not joined will feel more urgency to do so. We expect that most remaining PSPs will join in the course of 2019-2021 starting with reachability first.
2) ING is a European bank and one of the three largest banks in the Netherlands. How is progress towards the May 2019 deadline for implementation in that market?
We are almost finished! We are currently in testing phase and results so far have been promising. No real impediments have shown themselves. In January we will already start with processing instant payments in real transactions, starting with limited volume and gradually scaling up. If results are good, we might process the total foreseen volume before May 2019. We will also go-live in Belgium in November 2018 with more launches across the other European countries will follow in the coming years.
3) ING services a large number of corporate clients. How do you see corporate embracing instant payments across Europe?
Large corporates are already requesting us to offer instant payments. Those which are active in e-commerce / b2c are exploring opportunities for an improved user experience and seamless payments (e.g. offering an instant Request to Pay in their client app). However demand in other segments is generating other use cases as well: e.g. direct salary payments (e.g. by recruitment firms), direct refund (e.g. insurance companies), alternatives for documentary trade (shipping). Instant payments is also interesting for international corporates that are looking for a Pan-European payment solutions as an alternative to the card, e-wallet or local (e.g. iDEAL) based solution. The fact that instant payments is part of SEPA enables harmonisation.
4) It is common when discussing instant payments to speak not only of the speed of the payment but the additional value added services that can be brought from this capability. What needs to be thought about when considering implementing instant payments?
The solution build needs to be able to support multiple use cases. Anticipating that instant payments will be an alternative for cards, direct debits, batch payments it needs to cater to process high volume in real time. This also puts stringent requirements on your solutions robustness in terms of recovery, resilience and availability. Innovation will take place on the front end layer of the solution. You already see PSPs or countries offering overlay solutions on top of the paymen solution itself, such as Proxy and Request to pay.
5) In January 2018 ING announced the acquisition of Payvision, a global merchant acquirer and omni-channel payment provider, and in June announced a partnership with AXA to build a global insurance platform. How important are these partnerships both in payments but the financial services industry more generally?
Partnerships are key to us. We believe that the bank of the future has to be a digital one – be mobile-first – with a superior customer experience. That bank has to be connected to THE platforms or BE a platform, so banks need to adopt platform business models…that means that fintechs, or the bigtechs – they are both our new competition and potential partners in our ecosystem. Because they are where our customers are, that’s where people do their transactions. So we’re designing and building one platform and one way of interacting with our customers.
To become a successful platform you need to actively involve others from outside your own business, invest in them, and get them invested in what you are doing. So we have to team up with Fintechs and other start-ups, to combine our strengths, we already have more than 150 Fintech partnerships, where we’re collaborating to improve the customer experience, and we recently formed ING Ventures, a 300 million Euro fund to accelerate those collaborations by investing in our partners.
6) ING is a global bank and is active in the Australian market. The bank has recently introduced the PayID, a proxy payments service from BPay. How important is an instant payments capability to support these innovations?
As instant payments is gradually becoming the new normal, integrating these kind of solutions is a logical consequence. With PayID the client will be able to make an instant payment to someone in their contact list instead of using an account number. It makes it more easier and faster to do a payment and enables the client to use less cash.
7) ING CEO Ralph Hamers recently said, “If you truly want to empower customers, you have to provide them with the most relevant offering – even if some of the products and services are not your own”. How much do you think the industry is genuinely moving towards becoming more customer-centric?
The client is key to our payment strategy. We want to empower our clients to stay a step ahead in live and in business by creating a differentiating client experience. This does not mean that ING needs to provide all relevant services and products in-house, rather be a ‘one-stop-shop’ for our clients by collaborating with innovative, value add partners. Our clients expect us to provide them the most relevant, suitable solution to their needs which can go beyond those solutions offered by ING. Being customer centric and agile to their demands and needs is key in staying relevant in the long run.
Evelien Witlox, Global Head of Product Management, Payments and Cards, ING