Bankloch

  In recent years, the world of payments has been undergoing a   significant transformation . Historically, international payments were dominated by major players like SWIFT, VISA, MasterCard, and a handful of large international banks. However, this landscape is rapidly evolving due to the rise of new payment rails, Open and Embedded Banking, and the growing influence of global Big Tech companies entering the payment space. This evolution has resulted in   an even more complex web   of different payment methods, rails, and market infrastructure players. Coupled with the increasing speed of payments (with instant payments becoming the standard), heightened customer expectations (demanding faster payments, higher quality, more transparency and lower costs), and rising transaction volumes (driven by the digitalization of cash), this creates the perfect storm for a major transformation in the banking sector. Interoperability   among these diverse payment rails pose...

Digital threats top the agenda for every Chief Information Officer (CIO), especially in the Financial Services industry, where the consequences of breaches can be catastrophic. As financial services   increasingly rely on IT tools and systems , any digital disruption can have profound impacts not only on the institution itself but on the broader economy. Ensuring the operational resilience of these systems is critical and should be monitored by regulators similarly to traditional financial risks, such as capital adequacy. The   European Union’s Digital Operational Resilience Act (DORA - EU Regulation 2022/2554)   aims to significantly enhance the security and resilience of the financial sector, especially in the event of severe disruptions such as cyberattacks, natural disasters, or technological failures. As the first legislation of its kind at the European level, DORA establishes a harmonized and comprehensive framework for ensuring the digital operational resilience of...

Around the world, there are significant moves to transition from traditional electronic money transfers, which rely on batch settlement systems that can take several days for transactions to clear, to   instant, or at least near real-time, payment systems . These new innovative payment systems ensure that beneficiaries receive their funds within seconds, regardless of the day or time. Notably, developing countries are at the forefront of these efforts, while many developed nations are falling behind. Key success stories come from the BRICS nations, such as Brazil with its PIX system (launched in 2020), and India with the UPI initiative (launched in 2016), which now handles 46% of global instant payment volumes. For more information, see my blog post " The UPI Phenomenon: From Zero to 10 Billion " ( https://bankloch.blogspot.com/2023/09/the-upi-phenomenon-from-zero-to-10.html ). Other significant initiatives include WeChat Pay and AliPay in China, SPEI in Mexico, PSE (Pagos S...

With the successful rollout of PSD2, the European Union (EU) continues to advance innovation in the payments domain through the anticipated introduction of the   Payment Services Directive 3 (PSD3) . On June 28, 2023, the European Commission published a draft proposal for PSD3 and the   Payment Services Regulation (PSR) . The finalized versions of this directive and associated regulation are expected to be available by late 2024, although some predictions suggest a more likely timeline of Q2 or Q3 2025. Given that member states are typically granted an 18-month transition period, PSD3 is expected to come into effect sometime in 2026. Notably, the Commission has introduced a regulation (PSR) alongside the PSD3 directive, ensuring more harmonization across member states as regulations are immediately effective and do not require national implementation, unlike directives. PSD3 shares the same objectives as PSD2, i.e.   increasing competition in the payments landscape and en...