Sibos 23: the game changer in payments

Australia is on the precipice of a real-time, cross-border payment experience, according to Luke Perkins, ANZ’s Head of Global Cross-Border Payments Product - and the sector is ready for the gamechanger that will be.

Speaking to ANZ On Air on podcast ahead of the upcoming 2023 Sibos financial services conference, Perkins said the upcoming release of the New Payments Platform’s (NPP) international payments service (IPS) - allowing near-instant cross-border payments - would be a significant step forward for the sector.

“I think the industry itself is getting to the point where it really is ready to start embarking on a cross-border, real-time capability,” Perkins told Carolyn Young, ANZ’s Head of PCM, Australia, on podcast.

“There are still considerations that we have to work through. But for the most part... we're just about on the precipice of having a real cross-border payment experience.”

Perkins said the NPP rails have had that capability in place for years now, but access would expand through December until mid-2024. Things will be markedly different after that – for participants right across the value chain, he said.

“It's going to really change, in my opinion, the fundamentals of being able to transfer money internationally into Australia,” Perkins said. “And it gives an opportunity for counterparts overseas to really change the way they interact with their clients.”

You can listen to an edited version of the conversation on podcast below.

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Reach

Young said IPS had been part of the NPP roadmap for “quite some time” and comes at a time when the service is starting to achieve a high level of reach.

“It's a very natural evolution for the domestic rails, particularly for real-time payments, to be built out to enable the convergence of cross-border transactions into the NPP,” she said.

“[IPS] is addressing and meeting the demands that are being driven by customers. They're telling us they want a faster, more-certain payment to be made or received from a cross-border perspective. They want it to be efficient.”

Institutional players are beginning to recognise the benefits the NPP IPS will bring around compliance, efficiency, and costs, Perkins said.

“And certainly, they want a lower cost option, particularly where payments are being made for a lower value,” she said. “The timing is right.”

For Perkins, an underrated element the IPS will bring is predictability. When it comes to international payments, businesses “need to be able to know what's going to happen with a level of certainty,” he said.

“International payments have typically been the ones that are hardest to predict,” he said. “Hardest to predict by time, by cost, by value in the customer's hand at the end of the transaction.”

The IPS will “help bring down that uncertainty around it [and] make it much easier to predict the outcomes, which I think is a critical piece”, Perkins said.

Betterment

As well as efficiencies for business, IPS will help improve financial accessibility in Australia, Perkins said.

“I think that's an important [role] that we as financial institutions play - making sure we are undertaking initiatives for the betterment of the general population,” he said.

The increasing take up of digital payments in Australia - intentionally or otherwise – shows how expectations are changing, and why services like IPS are necessary, according to Young.

“Consumers and retail participants are really driving payments much more than ever,” she said. “The profile of payments is really quite different to where it was a couple of decades ago.

“That demonstrates why payments at an infrastructure level as much as at a participant level [are so important].”

In many ways the NPP IPS is the start of a “new wave of transacting”, Perkins said.

“It's not going to solve all the world's problems, in terms of removing friction from payments,” he said. “But it is a pathway to get us to an end state. And I think it's a big step.”

The experts also touched on why reachability has been the catalyst for NPP IPS, and Australia’s unique position in the market. Listen to the podcast above to find out more.

This is part one of a two-part discussion. Follow ANZ Institutional to hear part two.

This note reflects the edited version of the conversation as it appears on the podcast.