bobsguide spoke to Lu Zurawski, Solutions Practice Lead, Consumer Payments EMEA at ACI Worldwide about what fintech actually means, what the future holds for the payments landscape and why some countries have picked up on new technology faster than those in the developed world prior to Sibos.
What does your role entail at the moment?
In my role, I work with the product development team and also liaise with our customers and sales teams to make sure that we are fully aware of what’s out there, what’s coming and what needs to be adopted by our products and services. At the moment, my role is highly strategic because there is a lot happening externally and at a rate of change that is much faster than ever before. For example, with open APIs and PSD2, the compliance window of 2018 that companies have been given is precious little time for an industry to work out its new business model and implement new systems so that this new regime can be taken advantage of.
Would you consider ACI Worldwide a fintech?
Fintech means a lot of things to a lot of different people. Some people refer to ACI Worldwide as a fintech in the sense that we are a financial services technology company however, others refer to fintechs as new entrants who are challenging existing banking models and act as regulated companies that take advantage of PSD2. We are not a regulated payments service provider: we are a supplier to financial services organisations of all shapes and sizes, including well established banks and also new fintechs.
How can you service both sides of the financial industry?
In order to be relevant to both big established banks and new fintechs, we are aware of the need of a two speed approach for persistence. One is a core payment, clearing and settlement system, but we know that a lot of these things can’t just be magicked over a few weeks and months and some things require a robust approach to work. The second speed requires interfaces, access methods and the ability to orchestrate different services and that has to happen at a far faster speed than before.
Do you think adoption of open banking is achievable by 2018?
It is achievable but I think that a large chunk of our industry is waiting for greater clarity on technical standards. However, we will be waiting indefinitely because we are expecting there to be an old prescribed way of doing things that gets agreed over a period of time through consensus and then, people will start their build projects in order to comply. That is not the way in which the current regulatory world is working and that applies to PSD2 at the EU level.
Why has there been such interest in APIs this year?
Application programming interfaces have clearly been around for a long time, but the current regime that use open APIs is something slightly different. APIs were historically a tech way of making systems easier to use and communicate with, and this is the new way organisations make themselves more efficient. Open APIs are as much a business construct as a technology construct and this is how you can create a front door to your operation which can then be accessed by any developer in the world.
It could be a student in their bedroom in San Francisco or a developer in a workshop somewhere in Luxembourg. They need to be able to work out and play with your tech so that if they are become a licensed payment services provider, which they can do completely independently of you as a bank, they have the right to send you transactions. That is the whole construct of the open API, you cannot say no. In my opinion, this is a radically different thing to what has been around for a long time.
Do you think there is more room for new tech in the emerging markets?
The short answer is yes, especially for countries where banking has become irrelevant and there have been barriers for why banking has not expanded to the larger banks. These barriers are typically based on the way that the existing banking systems have worked and now, no longer work. Although, with the network effect kicking off, when a new system is introduced, the emerging market picks up on it quicker because they do not have an alternative. As well as this, the new applications are user friendly and meaningful to the consumer, so banks and older payments companies will have to fill the demand behind this way of banking if an mPesa equivalent becomes popular.
How does this tie into what you’ll be discussing at Sibos?
In the near future, there will be a big shift to real time immediate payments and we are going to have to get used to the idea of consumers being encouraged to use different forms of payments instruments. However, the nuance to this is that it is not just a simple shift where a bank would offer a new type of payment, the big change here is that through the regulatory regime that is PSD2 and the UK Treasury, we are going to have an explosion of new payments service providers. I predict a hell of lot of confusion over the next year as people try to work out what their strategic position is and I think it is going to be a field day for journalists as they try to explain what this new landscape for payments looks like.