Quickly, more quickly, at a much faster pace! - Opinion of our expert
21 November 2017 will be remembered for being the day on which the pan-European instant payment system has gone live. The system (known as EBA CLEARING’s instant payment system RT1) will enable customers to access multiple instant payment clearing and settlement mechanisms and hence will make the funds available immediately for use by the recipient (within seconds of payment initiation). This infrastructure solution for the processing of instant SEPA credit transfers at a pan-European level has not yet gained broad ground. But the entire banking sector and we, Baltic International Bank, are actively working on implementing the new opportunities. At the same time, we place special emphasis on the most central aspect which is keeping our customers and their money secure.
Kaspars Kravčuns, Head of Payments and
E-Commerce at Baltic International Bank
Kaspars Kravčuns, Head of Payments and E-Commerce at Baltic International Bank states, that the question can arise whether the system-guaranteed lightning-speed payment processing is so important? And you’ll get a strong yes. Without such a system in place, it was problematic to ensure speedy euro payments due to speed limiting factors, such as the number of settlement cycles, operating hours of banks, days off and statutory holidays. Most of us have encountered situations where the money transferred on a working day preceding the holiday the money has not been received at the beneficiary bank on that day.
Banks have the task of matching up with the ever-increasing requirements in respect of faster, cheaper and more efficient payments. The fact that the activity of various alternative payment service providers is constantly growing clearly indicates that banks therefore have to focus on reshaping their traditional business model while providing customers with much-needed personalised service and customised solutions to tackle essential money matters. Also, banks have to ensure the required speed and convenience to satisfy customers’ daily financial needs. And banks should always stay focused on safety, security and transparency of data, technologies and transactions.
The newly-launched RT1 provides banking customers in the Single Euro Payments Area with a real-time payment processing facility and the opportunity to make fast payments through the system to any financial institution, which has joined RT1, in Latvia or throughout the euro zone. In the foreseeable future, cross-border interbank payments (among different financial institutions in Europe) will be executed as quickly and efficiently as intra-bank payment (transfers from one account to another at the same bank).
It should be emphasised that the implementation of instant payments is a testimony to the fact that a customer represents the greatest value to every bank and that customer’s needs can substantially impact the process of implementing faster and more qualitative services by banks. Also, the impressive implementation of instant payments is proof that banks are able to jointly compete with different settlement external payment platform providers offering settlement opportunities. At the same time, banks are able to meet customers’ security requirements, guarantee the execution of payments and ensure data protection.
By developing the opportunities provided by instant payments, banks will be able in the future to execute payments online not only throughout the euro zone and in euro but also on a worldwide scale, regardless of the whereabouts of the sender or the beneficiary and regardless of the payment currency.
It should, however, be pointed out that the limitless development will be decisively influenced by the following considerations. Will the payment service providers be equally interested in providing secure, fast and law-compliant financial products and services? Will financial institutions be able to cooperate instantly and efficiently both at national level and internationally?