Sibos 24: how DAs will go cross-border

Digital assets technology has a critical role to play in the cross-border payments space, according to ANZ’s Head of Industry & Innovation Hari Janakiraman — in a way that will complement evolving real-time payment technologies.

Speaking on an ANZ customer webinar ahead of the 2024 Sibos financial services conference, Janakiraman said the technology was not going to make real-time payments any faster — because they were “already quite fast”.

Instead, he said, the “real advantage of these new technologies is what is called ‘delivery versus payments’” — a settlement process that reduces risk on either side of the transaction.

“A simple example of that would be, if you are if you are an Australian customer who wants to purchase a security overseas, let's say a bond or a stock, you do it through an exchange… and the payment for that particular security goes through another platform,” Janakiraman said.

“What this technology is going to allow us to do, is enable the purchase and the settlement of the asset and the payment, [on] the same platform and in the same instant.

“That is how… this new technology can play a role in in cross-border payments. It's just not the payment, it's about what comes with the payment. That’s the key part.”

Janakiraman made the comments in discussion with Joanne Ong, Senior Payments Industry Engagement Expert, and Carl Garrett, Acting Head of Cross-Border Payments, TB at ANZ. The call was moderated by Jenny Hutchings, ANZ’s Head of Banks and Diversified Financials.

ANZ is currently working with other parties on the application of digital assets tech in the payments space, both in and outside its home markets.

In September, ANZ joined the Monetary Authority of Singapore’s Project Guardian to look into the potential impact of tokenised real-world assets in financial markets. The bank will work in partnership with Chainlink Labs and ADDX on the project.

ANZ has also partnered with Visa on a project that will explore cross-border payments and interoperability for asset investment through tokenisation, as part of part of the 12-month Phase 2 e-HKD pilot program in Hong Kong.

“Those two are examples of how we are progressing these use cases,” Janakiraman said. “And we are doing it in a way that is lock step with the regulator, so that as this technology is developed, the regulations develop along the way.”

Whole-of-industry approach

Speaking later in the webinar, Ong said the impact of fraud and scams in the payment space remained a complex issue. According to the Australian Competition and Consumer Commission, Australia reported total losses of $A2.74 billion to scams in 2023 alone.

The payments sector has worked closely to ensure users of new, real-time payment methods in Australia are safe from these concerns, Ong said.

“On the industry side, banks have collaborated to deliver an industry confirmation of payee service which will allow payers to validate the name of an account holder when making payment to an account number,” she said. “And we expect the majority of banks to have this capability rolled out to the payers by mid-2025.”

The system allows account names to be matched in real-time against data held by the financial institutions the account belongs to, Ong said.

“What that means is that there's actually no honeypot of data which could put account data at risk of data breaches,” she said. “And that was a key design principle.”

The goal is to create an “appropriate level of friction” in the system, Ong said, to better prevent against fraud.

“What we really want payers to do is to pause and consider whether they should proceed with a payment when they're getting notifications through the service, rather than becoming desensitised and clicking through it and really not pausing as part of the payment,” she said.

Still, Ong conceded the approach to combating scams would ultimately require a combination of approaches.

“We fully acknowledge that [confirmation of payee is] not the silver bullet that will bring that $A2.74 billion scams number down to zero,” she said.

Janakiraman said there was work underway in the payments space exploring the piloting the confirmation-to-payee capability for outward payments from Australia to select offshore markets – as well as several other security ideas.

“We will keep investigating the ways in which we can make our customers secure when they're transacting with ANZ,” he told the webinar.