I have a long history of working within the areas of banking regulation which have directly affected digital channels. PCI DSS (The Payment Card Industry Data Security Standard) and the capture of reference; FATCA (The Foreign Account Tax Compliance Act) and capturing ultimate beneficiary details; PSR-1 and immediacy. I have had my hands in quite a lot of these over the years.
This was before the time of the fintech, when banks had to build either their own legacy kit or partner with a huge implementer and software provider to resolve an issue. Platform migrations are probably the best example of the challenges that our banks faced when resolving transformation issues.
We now have a new landscape, the fintech scene is alive and vibrant. Many players have very clever solutions to very complex problems. If you want to see that in action, look at the Xero Conversion Toolbox .You can move accountancy software in a day. Dynamics have done it. The threat to a lot of these legacy players is immense. The blocker is the risk appetite of enormous organisations working with smaller fintechs who in some cases don’t have the revenue to be considered “safe”. Regardless that they can escrow their code and protect the end customer, a lot of resistance is out there to working with the smaller player.
Many fintechs have very clever solutions to very complex problems… the threat to legacy players is immense.
The opportunity of Request to Pay
The previous changes to the fundamental nature of a bank’s operation had one thing in common: they were replacing or improving the status quo. They were changing technology that would in effect make a historical record. Request to Pay (RtP) is a little different. For the first time we have a regulation that will affect what will happen. The consumers of the technology (the banks) will have to show a schedule or forecast of what will happen and allow customers a future view of their finances.
Let me expand on that a little. A bank’s primary role is to present a historical record of what has happened. They must be accurate and precise. We are not very patient with our money. Posting high volume transactions and getting it right every time is something that banks do exceptionally well. They must do as the same banks are still doing this in massive numbers year after year. But how can a bank show their customer the future in the same format as the past? That is a big ask.
How can a bank show their customer the future in the same format as the past?
Reports and listings are great, but what RtP really needs is a cashflow forecast with combined information within it from the bank’s records, accountancy packages and third party sources so we know where the money is and where it will go. It’s unfair to ask our banks to complete all this work – it would mean a fundamental change to the way they operate. They would need to begin recording and processing the future. This leads me to fintechs…
Fintechs: freedom from legacy tech and history
This kind of change is best developed and solutioned by people with no legacy technology or history to work with. I am not suggesting complete greenfield here, but I am suggesting an approach that is quite unencumbered with 30 years of technology platforms to work around. The most attractive part of a fintech is its ability to enhance existing technology by means of API or new presentation layers. You can show the legacy and new technology side-by-side by aggregating and connecting it in a new layer. That layer is consumer led. Underneath it is the partnering.
We are now in Fintech Central. They can do this! We at Slide can do this. Request to Pay is without doubt one of the most high-impact regulatory changes we will see. It addresses the key cause for business failure in the UK: getting paid. We have a commissioner set up to deal with this. If we can find a solution to allow the view of a bank account that shows yesterday, today and tomorrow in the same format, we may have a regulation that will have a tangible effect on the biggest cause of failure of business.
Slide and RtP
At Slide, we watch RtP very closely. It’s exciting to watch a regulation evolve which will make an invoice become a future-dated cash entry by the supplier, not by the customer. Talk to us to find out more.Contact Us