January 12, 2018

Instant payments: what are you waiting for?

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Valdis Janovs

Head of Retail Payments and Cards, Tieto

Edgars Bremze

Senior offering manager, Tieto

Closing of last year saw the launch of new instant payment schemes in the US and Eurozone. The main commercial banks in the US are behind RTP®, and nearly 600 payment institutions from eight European countries are participating in SCT Inst (SEPA Instant Credit Transfer).

Real-time or instant payment is not new though. It started with Zengin in Japan in the 1970s and has spread to every continent. There are now more than 25 instant payment schemes live worldwide, with more coming soon.


Yet why have only eight out of 34 European countries joined the first wave of SCT Inst? What are the others waiting for? And what is holding them back?

To have and to hold

Banks and PSPs across Europe may have been slow to join SCT Inst as many already have domestic real-time payment infrastructures. This includes the Nordics (Denmark, Finland, Iceland and Sweden), Poland and the UK. Furthermore several countries, such as Belgium, France and Hungary, are building their real-time capabilities.

There will also be more pan-European options as both EBA Clearing and the European Central Bank are working on real-time initiatives. Several banks and PSPs may have decided to take a wait-and-see approach to instant payment.

It’s also human nature to procrastinate. An important, far-away problem never seems to be urgent. However according to Eisenhower’s urgent/important principle, tasks that are not urgent but important help achieve own objectives as opposed to someone else’s.

If left unaddressed, important but not urgent problems become important, very urgent problems. These usually cost more in time, money and resource to fix. And that’s the best case scenario. In the case of instant payments, procrastination comes at a high opportunity cost. The payments landscape is being re-shaped. Late-comers may be disintermediated by more nimble competitors, including Big Tech companies, retailers and others outside financial services.

Calling all banks…

Our message to banks is to initiate change. There is a significant competitive advantage to be taken by embracing instant payments early. Consider the additional business from displacing existing payment mechanisms, such as cash. But also address un-met consumer and business needs with new value propositions.

To large banks we say define your strategy and be prepared to fail and learn fast in the months of trial and error to come. Consider new business and revenue-sharing models, taking inspiration from the telco, retail and entertainment sectors. Ability to execute payments faster or instantly with better data is transformational. It opens up new use cases for customers and revenue streams to share.

How Tieto can help

When it comes to designing business cases and migrating to instant payments, Tieto has strong relevant experience with multi-stakeholder groups across Europe and Africa.

We have designed and built Siirto, Finland’s first real-time multi-bank platform for mobile payments. We are also now operating, managing and developing new functions for the Swedish equivalent instant payments scheme Swish. We are currently working with the Kenya Bankers Association on building out the first real-time interbank transaction platform in East Africa thus opening completely new level of financial services accessibility and value for Kenya.

For more client references or to find out more about how Tieto could help you take advantage of instant payments, what are you waiting for? Please contact Valdis Janovs, head of Retail Payments & Cards or Edgars Bremze, senior offering manager at Tieto


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