NPP, security & making the jump

New opportunities on Australia’s New Payments Platform are constantly emerging, an ongoing stream of new ideas which solve problems for the industry and its customers – as well as the peace of mind which comes with modern security measures, for both businesses and their customers.

Ahead of the Sibos 2020 financial services conference, we sat down with Leigh Mahoney, Head of Wholesale Digital, Carolyn Young, Head of Domestic Payments & Receivables, and Jackie Kallman, Head of Payments Industry at ANZ, to pick apart the outlook for the NPP. Below is an edited section of that conversation. You can read the first part HERE.

They started by addressing the security benefits provided by running payments on modern tech services like the NPP.

LM: I think it’s worth making a point about data and the NPP, as it relates to financial crime; screening, AML, CTF compliance and the like. At ANZ, we think this is a critical part of the NPP experience as we want what is best for our customers.

But you could, I suppose, make an argument that others banks are just not going to invest in the NPP because their customers are happy where they are. But I think there is a huge and underrated step up in payment safety, security and compliance piece that can be secured by businesses through use of the NPP.

The NPP can help ensure payments are legitimate, not fraudulent and - if fraud occurs -  can pick it up straight away. I think this is where the NPP offers another leg up from a regulatory and compliance standpoint that really can't be ignored.

CY: I agree. With the NPP, if we have infrastructure that can provide context to payments, what they are being used for, and an easier way to access that information, we're going to be in a far better place to provide a system that is credible, maintains integrity, and offers insight into whether those payments are appropriate.

I think that’s a really important part of what the sector needs for our entire payment system.

JK: What's really interesting is we don't have to have a trade-off. I think in the past if something needed to go in a sanctions queue, there was a significant slowdown which was basically out of the hands of both banks and customers; speed and certainty in payments ran a risk of non-compliance.

With the NPP, you’ll get, in 99 percent of cases, both the really great experience but also the compliance and safety.

Broadly, the potential of the NPP starts to open the door for some creative solutions where,  we may be able to just look at a customer problem and say, ‘what is the best technology or payment system or infrastructure that can solve this?'

And that convergence is not necessarily one of rails or the infrastructure itself, but more around the solutions that best meet the needs of the customer.

While you may have more overlap between services, you also have more room for choice, with less technical demand required.

LM: NPP started as P2P payment mechanism before moving into the institutional landscape. But traditional methods remain quite popular in both of those markets, handling the vast majority of payment volume.

What do we think are the things we need to change as an industry to help businesses move from these more traditional mechanisms to using NPP as the primary solution? If you look at it as a scale, even securing 50 per cent of volume on the NPP would be massive.

JK: It's not a small piece of work, for sure, and we can't underestimate it. We just have to go back to the customer and use cases. Why are they using the old systems? What are they using it for?

We have similar conversations about cheques as an industry and say, look, why are people still using cheques? And we find some really genuine reasons why people are using cheques that we don't have alternatives for. We may have ideas but we haven't built them yet. A move away from existing systems like direct entry has similar challenges that the industry will need to address

CY: There are definitely still gaps to close on the NPP, whether around reach or accessibility. Certainty in the future, to support the level of volume direct entry does right now, the NPP infrastructure will need ramping up.

As banks, we need to better identify what customer problems can be solved by connecting to the NPP.  To give one example, we’ve seen insurers find opportunities accelerating customer payments. They see that as a way to differentiate themselves from their competitors, in an environment where insurance payment speeds are quite important.

LM: And that’s because it can close the loop. In a normal insurance claim you put the paperwork, you answer some clarification questions and then wait for the money to come. If your claim is approved, through the NPP, you can have your money in 10 seconds.

For me, that’s a strategic differentiator in terms of customer experience that ANZ hopes to help our customers give their customers.

Arun Kayal is Associate Director, Communications & Shane White is Content Manager, ANZ Institutional

You can read the first part of this conversation HERE.