While regulators demand greater openness, interoperability and financial inclusion, real-time transactions and mobile payments have already become mainstream. The background to this transformation is a changing customer base and a shifting competitive landscape where trust and loyalty are hard to win – and easy to lose, and where digital-first market entrants are challenging traditional business models.
Open, instant, interoperable
Next-generation financial infrastructure is laying the foundation for digital, personalised, financial services for this changing landscape. Success stories like Sweden’s Swish payment platform and Mobile Pay in Denmark already demonstrated that there is demand for new types of payment service. Both have shown classic, hockey-stick growth curves for customer and transaction volumes. And both have expanded beyond P2P payments into the consumer-to-business space.
In Finland, Tieto has developed Siirto, the country’s first real-time payment service and cross-banking mobile payment platform. When using Siirto, consumers no longer need a credit or debit card for sending or receiving money in real time. A mobile phone number is all that is necessary.
The primary characteristics of these platforms is that they are open, instant and interoperable. Siirto, for example, is the result of collaborative effort between Tieto, infrastructure provider Automatia, and the Finnish banks, and represents a significant departure from the traditional ‘closed-shop’ models of platform development. This is the future of banking and payments in the EU, where the revised Directive on Payment Services (PSD2) requires banks in the 28 member states to open up data to new market entrants. As the first mobile payment platform to comply with PSD2, Siirto allows any EU-licensed service provider to offer payments across the platform. The goal is to facilitate innovation and enable consumers to benefit from a more dynamic, competitive and responsive financial sector.
We are seeing similar digital platforms in developing economies, even though the drivers are more focused on financial inclusion and economic efficiency. For example, Kenya has one of the more advanced financial ecosystems in East Africa but is highly fragmented. Services offered by various market participants are often based on closed networks – making each one accessible to only a limited group of customers.
Tieto has designed a new P2P transaction service, called PesaLink, to overcome this problem. Developed for the Kenya Bankers Association (KBA), PesaLink is the first real-time interbank transaction platform in the region, and will enable real-time money transfers, 24/7, among the KBA’s 45 members. For customers, it means sending money to anyone, at any bank, through any channel in a matter of seconds.
Read the entire article in our newest guide, explore the evolving world of transaction banking, B2B payments, SCF & e-invoicing: B2B Fintech: Payments, Supply Chain Finance & E-invoicing Guide 2017.
About Sheri Brandon:
Sheri Brandon currently is head of Transaction Banking for Financial Services at Tieto, a global leader in payment solutions. Sheri has been in the Payments & Cards industry for more than 2 decades, having worked in the banking industry and in payment technology companies. Sheri is a thought leader in the corporate payments, retail payments, cards business as well as in mobile payments.
About Tieto:
Tieto aims to capture the significant opportunities of the data-driven world and turn them into life-long value for people, businesses and society. We aim to be customers’ first choice for business renewal by combining software and services capabilities with a strong drive for co-innovation and ecosystems.
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