Almost everyone you talk to in the banking industry is in agreement that when it comes to digital banking and payments Australia is well ahead of the curve. Billy Bambrough speaks to the head of the newly formed Australian Payments Council Christine McLoughlin about what the council hopes to accomplish
Being seen as leading the world in digital banking and payments isn’t enough for Australia’s central bank. In June 2012 The Reserve Bank of Australia (RBA) laid out its plans for the creation of the Australian Payments Council due to its frustration with the slow pace of innovation in the industry.
This is a region that has pioneered some of the biggest steps forward the global finance industry has seen in digital banking and payments, and it is still being accused of moving too slowly by its central bank. If this doesn’t suggest that the financial services industry is bringing up the rear in terms of digital adoption, I don’t know what does.
With the big four Aussie banks – ANZ, CommBank, NAB, and Westpac – all signed up to the council, there is little doubt that the organisation will be able to make its voice heard.
Along with the banks the Australian Payments Clearing Association and the RBA; Visa, PayPal, eftpos Payments, First Data, Cuscal, and Woolworths are also on the council.
One of the biggest issues that the council will be looking to tackle is the delay to real time faster payments, a version of the system adopted in the UK and Singapore through Vocalink and most likely supplied by the same.
The industry developed a proposal for faster, data-rich payments through a special purpose real-time Payments Committee in 2012, which was accepted by the central bank in December 2012. The New Payments Platform Program was then established in June 2013 -a major industry initiative to collaboratively develop new new, fast flexible and data-rich payments infrastructure for Australia.
The RBA understandably believes that bringing the industry together through the payments council will help it to achieve faster payments by 2016.
Ahead of the council’s first meeting in October, Christine McLoughlin, newly appointed chairperson of the Australian Payments Council, told EPI that the council will be looking to provide a common ground for discussion on the digitalisation of the industry that is opening up to new players.
McLoughlin says: "The purpose of the first meeting will be to agree what those initial priorities might be and what some of the longer term priorities might be."
Adding value through collaborative action
Since she was appointed McLoughlin has been on what she calls a "listening tour" of the industry, getting to grips with the industry as it stands and meeting the nominees of each of the council participants.
McLoughlin says: "One of the things we heard a lot of was that we had to agree what success for the council would look like. We needed a common agenda and a value proposition.
"It’s also clear that the council must be totally transparent. As not everyone that is involved in the payments industry will be sitting on the council, I’ve worked to make sure that everything we do will be transparent and fully inclusive of the broader payments community.
McLoughlin outlined some of the topics that she is hoping to cover at the first council’s meeting.
According to McLoughlin the questions will cover:
- What is going to happen as a result of increasing mobility in how people transact and what does it mean for the payments systems?
- What does the move towards digital mean?
- How can payments better make use of big data?
- Do we need to look at security issues more closely and think about how security will balance with innovation?
McLoughlin says: "I’m hoping we can agree on two or three core priorities for the council for the following 12 months and then perhaps some other priorities that might follow after that period.
McLoughlin is keen to stress that the payments system in Australia is in extremely good shape. The opinion of the industry itself is that the PSB has done a very good job.
According to McLoughlin the council has not been created because there are any issues with the current system. It has been put in place to have a forward looking view of the industry given how quickly things are changing due to digital disruption and what the industry will eventually look like.
Australian central bank says the payments industry is in "good shape"
McLoughlin says: "We have an aspiration in Australia to go from good to great. Part of the role of the central bank is to shake the tree and keep everyone on their toes.
The UK has had a government funded payments council working along side the banks and payments industry for some time now, and despite some failings when it comes to understanding how people use cheques and whether a three day shorting of account switching time will make any difference, it has done good work.
The Paym innative to make every bank account in the UK connected to a phone number has pushed the UK into the fast lane of digital banking and payments and McLoughlin is keen to learn from the various UK successes.
The unveiling of Apple Pay, the tech giants long awaited move into financial services, has sparked unprecedented interest in mobile payments and NFC technology around the world.
McLoughlin wants to bring Apple within the fold she says: "Our payments community is open so we would welcome Apple as a member."
Although due to Apple’s stance on moving forward as an individual over moving as a community it seems Apple might not fit in with this collaborative approach.
"It’s not the purpose of the council to focus on just one player. The people who are coming to the council are coming with a holistic view of payments, not an individual one. We will be looking to focus on things that benefit the industry and the consumer, not any one company."
It is difficult to be forward thinking these days and not consider the implications of bitcoin and other alternative currencies.
McLoughlin says: "We have to look at all aspects of payments and alternative currencies certainly fall into that group, but I don’t think it will be an immediate priority."