00:00 My name's David Stevenson and uh
00:03 I'll be mode moderating this uh webinar
00:07 uh today.
00:09 Let,
00:10 let me first uh ask for your attention for a couple of minutes,
00:13 just simply for some housekeeping uh
00:16 uh announcements.
00:19 One,
00:19 the,
00:20 the,
00:20 the webinar will be recorded,
00:23 and the plan is that,
00:24 uh,
00:24 it'll be made available on the um,
00:27 the World Bank uh website.
00:30 There'll be an opportunity for you to ask uh questions during the uh
00:34 the panel session.
00:38 Uh,
00:38 by using the,
00:39 there's a raise hand function in the Webex,
00:42 uh,
00:42 system,
00:43 or you could actually decide to address your ques question,
00:47 uh,
00:48 personally,
00:49 uh,
00:49 privately to,
00:50 uh,
00:51 one of the,
00:51 uh,
00:52 one of the speakers,
00:53 whose names are
00:54 up on the,
00:55 uh,
00:56 uh,
00:56 on the screen.
00:58 Uh,
00:58 that way,
00:59 you would,
00:59 uh,
01:00 be able to,
01:01 uh,
01:01 have a specific question to a specific speaker.
01:06 I can see that some of you have uh your video on.
01:11 Could I ask you to,
01:12 to switch it off?
01:13 I'm not talking to the speakers,
01:14 of course,
01:15 um,
01:16 but,
01:16 uh,
01:17 it would help us to preserve bandwidth because uh
01:21 we're,
01:21 we're looking to have around
01:24 200,
01:25 um,
01:25 participants
01:27 once the uh
01:28 uh the webinar gets underway.
01:31 Uh,
01:31 your microphones for the moment are all on mute,
01:34 um,
01:35 and they could be unmuted if one of the,
01:39 the hosts decides to,
01:41 uh,
01:41 um,
01:43 to give you the floor.
01:46 And of course,
01:47 if the uh
01:49 The fire alarm goes off wherever you are.
01:52 I suggest you calmly walk out to the nearest emergency exit.
01:58 That,
01:58 that was my,
01:59 my attempt at a joke to take us back into uh
02:02 uh pre-COVID uh conference uh times.
02:06 But anyway,
02:07 once again,
02:08 welcome to the webinar.
02:10 For those of you I haven't yet had the pleasure of meeting,
02:13 um,
02:14 I'm general secretary for the European Card Payment Association.
02:18 Uh,
02:19 ECPA,
02:20 in short,
02:21 and our members are.
02:32 Uh,
02:32 the European Economic Area.
02:37 The purpose of getting together today in uh in
02:41 this webinar is to discuss this year's report,
02:44 which was prepared by the Payments Innovation jury
02:47 with the support of the World Bank
02:50 and some contribution from uh ECPA.
02:54 As I mentioned,
02:55 there are,
02:55 we're hoping that there'll be a couple of 100 registered participants from
03:01 all over the world,
03:02 all 5 continents,
03:04 and they'll be representing domestic
03:06 and regional retail payments infrastructures.
03:11 Including card payments,
03:13 uh,
03:13 card payment schemes,
03:15 clearing and settlement
03:16 organizations,
03:17 uh,
03:18 switches and processing platforms,
03:21 uh,
03:21 central banks from around the world,
03:24 and other payment regulators.
03:27 So,
03:28 that's the,
03:29 the,
03:30 the scene for the webinar,
03:31 the um
03:33 Agenda is,
03:34 uh,
03:35 straightforward,
03:36 but,
03:37 uh,
03:37 should be uh
03:39 uh
03:40 interesting for everyone.
03:42 There'll be a,
03:43 a short introduction from uh Harish Natacharan from the World Bank.
03:49 Uh,
03:50 Harish is the um
03:52 The lead financial sector specialist in uh
03:56 on payments and market infrastructures in the uh finance,
04:01 competitiveness
04:03 and innovation global uh practice.
04:07 That will be followed by the presentation of
04:09 the 2021 report on domestic uh payment schemes innovation
04:14 by its authors,
04:15 uh,
04:16 John Chaplin and,
04:17 and Chris Hamilton.
04:19 Both,
04:19 uh,
04:20 John and Chris are
04:22 seasoned,
04:22 uh,
04:23 hands-on experts in the payment industry,
04:26 which,
04:26 uh,
04:27 with whom many of you have,
04:28 uh,
04:29 worked,
04:30 uh,
04:30 today and in the past.
04:32 John,
04:33 for example,
04:34 has had,
04:34 uh,
04:34 senior roles with Visa and First Data,
04:38 while Chris is a former CEO of,
04:40 uh,
04:41 Bank Serve Africa,
04:42 which is the largest African clearing and settlement organization.
04:47 And also the uh Australian Payments Network.
04:52 Both are now advisors to a number of uh
04:55 payment uh infrastructures and organizations throughout the world.
05:01 Uh,
05:01 this,
05:02 uh,
05:02 presentation will be followed by a,
05:04 a panel discussion on which,
05:05 uh,
05:06 Dave Birch will,
05:07 uh,
05:08 join the speakers I've already mentioned.
05:10 And Dave is well known globally as a
05:14 respected author and advisor on digital financial services.
05:18 And is recognized throughout the industry as a
05:21 perceptive pundit,
05:23 if I could put it that way,
05:25 on uh all things fintech
05:27 and uh
05:29 things beyond fintech.
05:31 So this gives us the ingredients for a lively uh
05:35 webinar and panel panel discussion.
05:38 Um,
05:39 I think that that's all I've said so far.
05:43 Uh,
05:44 and without any further ado,
05:45 I'd like to hand the floor over to,
05:48 uh,
05:48 Harish uh Natarajan from the,
05:51 uh,
05:51 the World Bank.
05:57 Harish,
05:58 the floor is yours.
06:06 I hope everybody heard my heard my opening speech.
06:10 Did they?
06:14 Yes,
06:14 thanks,
06:15 David,
06:15 it's good.
06:17 OK,
06:18 Irish,
06:18 can you hear us?
06:23 OK,
06:23 I hope you're able to,
06:24 uh,
06:25 hear me now.
06:26 There was uh we can we can see you.
06:28 Thank you.
06:30 Great.
06:30 And uh there was uh there was some,
06:32 uh,
06:32 challenges in,
06:33 uh,
06:33 in muting myself
06:34 and then David,
06:35 sorry for giving you a couple of tongue twisters,
06:38 um,
06:38 um,
06:38 uh
06:39 I'm so sorry about that.
06:41 um,
06:41 so thank you,
06:42 David,
06:42 for,
06:42 um,
06:43 for organizing this,
06:44 and then I think,
06:45 um,
06:45 over the last couple of years,
06:46 um,
06:47 the ECPA has done,
06:48 uh,
06:49 many such meetings in,
06:50 in,
06:50 in,
06:51 uh,
06:51 very,
06:52 uh,
06:52 in great locations,
06:53 uh,
06:54 unfortunately this time,
06:55 uh,
06:55 because of the,
06:55 uh,
06:56 because of the,
06:56 uh.
06:57 Uh,
06:58 the circumstances we are all in,
06:59 uh,
06:59 we're not able to do it in person,
07:01 uh,
07:01 but I'm sure,
07:02 um,
07:02 uh,
07:03 the webinar would be interesting nevertheless.
07:05 Um,
07:06 so it was my,
07:06 uh,
07:06 pleasure to welcome you to this webinar on behalf of the World Bank.
07:09 Uh,
07:09 in the past events organized with the ECPA
07:12 in partnership with the World Bank and other domestic infrastructures,
07:15 all of us have been making the point that,
07:17 uh,
07:18 detail payment systems are very important.
07:20 Um,
07:20 uh,
07:21 and,
07:21 and,
07:21 and also how it can contribute to the,
07:23 uh,
07:23 efficiency and the fair and,
07:24 the
07:25 efficiency and the function of the economy,
07:27 and this notion was,
07:29 was,
07:29 and is being put through some real life stress tests in the last 14 months or so
07:33 of the pandemic that has caused huge misery worldwide,
07:35 of course,
07:36 but it also has altered many things in life,
07:38 and I will say that the,
07:39 the world of payments has emerged stronger from this pandemic,
07:42 uh,
07:42 and much of the hard work put in by regulators.
07:44 And services who operators across the world has helped governments and society
07:48 to cope with the crisis in a,
07:49 in a very important way.
07:51 Uh,
07:51 additional payments,
07:52 uh,
07:52 were at the center of many government efforts across the world
07:54 in providing immediate relief to the most vulnerable individuals and businesses.
07:58 Allowed for a physically distance economy,
08:00 uh,
08:01 allowed international domestic remittances to continue flowing.
08:04 Um,
08:04 and the reason we issued G20 cross-border payments roadmap also refers to the role
08:08 of the well-functioning,
08:09 uh,
08:09 domestic payment systems and the,
08:11 and the international linkages,
08:12 uh,
08:12 can have on improving cross-border payments.
08:15 Regulators across the world took several measures to enable the
08:17 smooth functioning and uh fostering usage of digital payments.
08:20 These included,
08:21 uh,
08:21 adjusting limits for contactless and mobile payments,
08:23 simplifying onboarding requirements for customers,
08:26 merchants,
08:26 and agents,
08:27 and then temporary reductions in the fees and charges for,
08:29 uh,
08:30 payment services.
08:31 Payments is a dynamic field.
08:33 Uh,
08:33 this crisis has only accelerated the major transformation
08:35 that was well underway in the payments market
08:38 and among other things like fast payment services,
08:40 open banking,
08:41 QR codes,
08:42 the ever increasing pace of the CBDC pilots and evolutions in the
08:46 crypto and digital currency ecosystems.
08:48 Uh,
08:48 many domestic payment systems are embracing these
08:50 innovations and setting themselves on a,
08:51 on a new trajectory.
08:53 This crisis has also challenged many do in the systems.
08:56 Some have struggled to handle a rapid surge in usage.
08:59 For some,
09:00 the effectiveness of the business continue plans,
09:02 uh,
09:02 was called into question,
09:04 and some have not been able to fully fend fend themselves off the,
09:07 uh,
09:07 increasing sophistication of
09:09 cyber threats and social engineering attacks.
09:11 And we need to bear in mind,
09:12 um,
09:13 that as digital payments become more widely used,
09:15 shortcomings of these areas will have an impact not just on the particular system,
09:18 but more broadly on the overall economy.
09:21 In order to position,
09:23 um,
09:23 the domestic payment systems,
09:25 uh,
09:25 and then the retail payment systems,
09:26 uh,
09:27 in the changing landscape,
09:29 I,
09:29 I,
09:29 I,
09:29 I think,
09:30 uh,
09:30 all of us would need to see the momentum and raise innovation,
09:33 keep the focus on customer and ensure operation reliability and resilience.
09:37 Let me conclude by
09:38 wishing you,
09:39 uh,
09:39 all a happy Heb Day,
09:40 um.
09:41 Perhaps we should reflect on what we can do as a
09:43 payment industry to contribute to the theme of this Earth Day,
09:46 which is
09:46 restore our Earth.
09:48 Uh,
09:48 and let me also wish Ramadan Kareem to those observing Ramadan,
09:51 and with this,
09:52 uh,
09:52 let me wish you a good,
09:53 uh,
09:53 webinar and let me pass it to John and Chris.
09:55 Thank you.
10:00 Thanks,
10:01 Harish,
10:02 uh,
10:02 and,
10:03 and good
10:04 morning,
10:05 afternoon,
10:05 evening,
10:06 uh,
10:06 and welcome to everybody.
10:08 Um.
10:10 As,
10:10 uh,
10:11 David just said,
10:11 this,
10:12 this has been a slightly unusual project for,
10:15 for,
10:16 for me,
10:16 firstly,
10:17 because,
10:17 um,
10:18 normally I've done these projects on my own,
10:20 and this year it's been,
10:21 um,
10:22 amazing to have a really talented collaborator in the form of Chris Hamilton.
10:27 Um,
10:28 and,
10:28 and two heads are very
10:29 definitely better than one on projects like this.
10:32 And the second one is,
10:33 of course,
10:33 normally,
10:34 um,
10:34 we,
10:35 when we get to this time of year,
10:36 we present it in some
10:38 fantastic location,
10:39 whether it be Mumbai or whether it be,
10:41 uh,
10:41 Istanbul last time and
10:43 various places in between.
10:45 Um,
10:46 and hopefully next time we'll,
10:47 we'll actually be able to do it,
10:48 uh,
10:49 face to face.
10:50 But when,
10:51 when we set out on this project,
10:53 um,
10:54 we actually sort of run a blog for domestic payment schemes and systems,
10:58 and we started to discuss in that
11:01 what was happening in terms of innovation,
11:03 um,
11:03 and,
11:04 and that made me
11:06 think about whether,
11:07 um,
11:08 as we saw the world falling apart last year in many,
11:11 in economic terms anyway.
11:13 What exactly had happened,
11:15 um,
11:16 and so we felt that this would be a very good subject for,
11:19 for a piece of,
11:20 for a piece of work and I was encouraged by
11:23 several of the people who participate in that blog to actually do this piece of work,
11:27 so therefore,
11:28 um,
11:29 we,
11:29 we,
11:30 we moved on to,
11:32 Um,
11:33 look at this as,
11:34 as a formal project.
11:36 So now I'd like to just,
11:37 uh,
11:38 introduce for the first time Chris.
11:40 Chris and I are gonna handle this presentation between us,
11:42 so you'll see it
11:43 change,
11:44 change hands a couple,
11:44 a few times,
11:46 um,
11:46 but now I'm gonna introduce Chris,
11:49 um.
11:52 Chris,
11:54 Thank you,
11:54 uh,
11:55 thank you,
11:55 John,
11:56 uh,
11:56 and thank you for those excessively kind words.
11:59 Um,
12:00 it's.
12:07 Been
12:08 a blast.
12:11 Um,
12:11 where we come a quite perspective,
12:12 um,
12:13 uh,
12:14 uh,
12:14 you know,
12:14 John's a very
12:18 I,
12:18 I'm not
12:21 Um,
12:21 from much
12:23 electronic Chris,
12:23 your network's not very good.
12:25 Payment's back.
12:27 Yeah
12:28 And then
12:29 interesting how I've interpreted.
12:32 30 and when you have to
12:35 Uh,
12:35 you know
12:36 If
12:37 I'm
12:38 Yeah,
12:39 let me
12:40 turn on.
12:42 After.
12:49 Um,
12:50 um,
12:50 about what we were,
12:52 um,
12:53 what we were,
12:54 uh,
12:54 going to find,
12:56 and the hypothesis was born of the
12:58 very difficult environment we all found ourselves in
13:01 early on.
13:03 Um,
13:03 we thought we'd probably find innovation
13:06 in domestic payments got severely curtailed,
13:09 um,
13:10 that was our guess based on the fact that,
13:13 Um,
13:14 uh,
13:14 you know,
13:15 uh,
13:16 the,
13:16 the world,
13:17 um,
13:18 is,
13:18 is battening down the hatches as it were.
13:20 So,
13:21 um,
13:22 uh,
13:23 John,
13:23 you want to talk a little bit about where the logic of that comes from?
13:28 Well,
13:29 I mean the logic really was,
13:30 and whenever you do a research project,
13:33 you,
13:33 you always have a hypothesis of what the answer might be.
13:36 Um,
13:37 it's not to say that you then don't look for other things,
13:39 but that's the hypothesis.
13:41 And on this one,
13:42 we just felt that
13:43 bank,
13:44 banks that own a lot of the payment systems were under pressure.
13:47 We know that they were,
13:48 their initial uh instinct was to slash their costs,
13:52 and we felt that innovation would be,
13:55 um,
13:56 the thing that would suffer.
13:58 So,
13:59 I don't,
13:59 we're gonna try and answer that,
14:00 whether our hypothesis was correct or not.
14:04 And that's so for the next 20 minutes or 25 minutes,
14:06 that's what we're gonna talk about.
14:08 We're gonna see whether our initial thought,
14:10 which
14:11 Chris and I dreamed up one afternoon last September,
14:14 uh,
14:14 whether it in fact was correct.
14:16 So,
14:17 so without um.
14:21 Any of you do,
14:22 let me tell you,
14:23 so,
14:23 um,
14:24 from today,
14:25 you can download,
14:26 um,
14:27 if you like,
14:27 the answer to that question.
14:29 You can look in a report,
14:30 we've produced another report,
14:32 um,
14:33 which is called To Survive or Thrive.
14:36 Specifically looking at domestic payments innovation,
14:40 but then as always broadening out into
14:42 a range of
14:44 um
14:44 bigger topics.
14:45 There's a 25 page report,
14:47 uh you can
14:49 download it.
14:49 Chris will tell you at the end,
14:51 you can download it from.
14:52 World Bank,
14:53 you can download it from
14:54 the Innovation Jury website.
14:56 It's free to air,
14:57 we don't,
14:58 this is not a commercial venture here that we're talking about,
15:01 this is,
15:01 this is industry leaders sharing best practice,
15:05 with the,
15:05 with the aim of making everybody better and smarter.
15:09 So,
15:09 you know,
15:10 we've looked at um how the world's changing,
15:13 we've looked at how innovation worked before and after the
15:16 the pandemic struck.
15:18 We've looked at what are the interesting ideas where people are doing things,
15:22 we'll look at the overall
15:23 structure of the industry.
15:25 So
15:25 we,
15:26 and we've tried to make it relevant for two audiences.
15:29 The two audiences we've,
15:30 we've been trying to
15:31 work with,
15:32 one is the industry itself.
15:35 Whether it be card schemes,
15:37 whether it be,
15:38 um,
15:38 ACHs,
15:39 whether it be infrastructure providers,
15:41 and the second one is
15:43 regulators are the central banks or or bespoke payment regulators.
15:47 So,
15:48 um,
15:48 you'll be able to download this,
15:50 um,
15:50 as soon as the meeting is finished,
15:53 um,
15:53 but what I'm going to do is,
15:55 for those of you who are a little bit busy and think,
15:57 well,
15:58 just tell me what the answer is.
16:00 So I'm gonna quickly tell you
16:02 what the executive summary of this,
16:03 of this report says,
16:06 and there's a lot of data in the report,
16:08 but what you'll see is,
16:10 and I picked out 10 things,
16:11 transaction volumes fell.
16:13 But bounced back
16:15 um
16:16 pretty,
16:16 pretty quickly and pretty substantially,
16:18 some people now trading above where they were a year ago.
16:22 We found that domestic payments,
16:24 infrastructures and schemes
16:26 were really supportive of government initiatives.
16:28 Government turned to domestic payments organizations
16:32 and by and large got what they wanted.
16:34 Um,
16:35 innovation did continue,
16:38 especially round about digitalization.
16:40 So digital innovation was seen as something in the end that couldn't be sacrificed.
16:47 We saw domestic card companies,
16:49 and I use the word deliberately here,
16:51 diversifying fast away from just being card companies.
16:56 Um,
16:56 we know the form factor is changing,
16:59 and they decide,
17:00 decided that not only the form factor,
17:02 but the business model
17:04 needed to evolve.
17:06 Um,
17:07 follows from that,
17:08 that,
17:08 that in the first few years of everybody talking about mobile payments.
17:13 People were working out how to retrofit mobile into
17:16 their existing business model,
17:19 and now what we're seeing is that we are in a mobile first world,
17:23 uh,
17:23 with people thinking first and foremost about,
17:26 about the mobile,
17:28 and then and then working out how to
17:31 uh handle some of their legacy business models.
17:34 We're gonna talk as well about domestic payments,
17:37 and are they any longer domestic?
17:40 Because in fact it seems that lots of organizations are going international,
17:44 and we're gonna have a look at that.
17:46 Um,
17:47 we're gonna report on the fact that real-time account to account is growing,
17:52 um,
17:52 but it's by no means clear what the right business model for that,
17:55 and there's a real,
17:57 a real area of,
17:58 of uncertainty about,
18:00 about,
18:00 if you like,
18:01 the business
18:02 consequences of that technology shift.
18:05 Um,
18:06 we're seeing that as you get tech
18:08 technology,
18:09 uh,
18:09 is tending to bring economies of scale,
18:11 which then brings,
18:13 um,
18:14 Uh,
18:14 the risk of competition problems,
18:16 and we're seeing technology and competition law are now starting to collide,
18:21 uh,
18:21 and causing problems,
18:23 particularly for,
18:23 for regulators.
18:25 Um,
18:27 you're gonna see the fact that,
18:28 that the number of people who are
18:31 buying services from payments companies are no longer just,
18:34 it's no longer just banks,
18:36 and that's creating big pressure for ownership and governance changes,
18:40 um.
18:42 And lastly,
18:43 um.
18:45 That I think um
18:46 there's increasingly difficult choices for regulators,
18:49 I think,
18:51 you know,
18:51 spare,
18:52 spare a little bit of sympathy for regulators because
18:55 it's an increasingly difficult industry to regulate
18:59 for some of those factors that we've talked about and we
19:01 are going to talk about and explore it in a,
19:03 in a little while.
19:05 Um,
19:06 but
19:06 lastly,
19:07 and what I would say though is that overall,
19:10 um,
19:11 confidence in the sector remains pretty high,
19:14 and,
19:14 and,
19:14 and I was perhaps surprised actually to,
19:17 to,
19:18 to see
19:19 how confident people were about,
19:21 about,
19:21 you know,
19:23 where their,
19:23 their prospects were
19:25 as we went through what has been the most economically challenging time for,
19:29 you know,
19:30 uh,
19:30 since any of us were born.
19:32 So in that's the executive summary,
19:34 and effectively we're now going to explode that,
19:37 and
19:37 Chris and I between us will actually share some thoughts on each of those.
19:41 And we're probably gonna share 20% of what we've done because
19:44 the 80% is in the report that you can download,
19:47 and of course we'd love to,
19:48 the four of us would love to take your questions in the Q&A at the end.
19:52 So,
19:52 um,
19:54 Chris,
19:54 I'm gonna pass it back to you now.
19:56 Sure,
19:57 thanks.
19:57 Am I coming through OK?
19:59 Yeah.
20:00 OK,
20:01 so we thought we'd just briefly cover um who answered um our survey,
20:05 who's on the jury.
20:07 Um,
20:07 this,
20:07 we got really good response,
20:09 um,
20:09 48 organizations,
20:11 significant increase on,
20:12 on um previous reports.
20:15 Several things going on there.
20:16 One is that there are more domestic payment organizations in the world over time
20:22 because developing countries have new payments organizations
20:25 and because existing markets have different types of payment
20:29 organizations.
20:30 Um,
20:31 on top of that though,
20:32 it's pretty clear that this topic was of great interest because,
20:36 um,
20:37 not only did we get good response numbers,
20:39 and you can see that that's spread across the world,
20:42 um,
20:42 with a significant increase out of Africa,
20:45 Um,
20:46 but also,
20:47 um,
20:48 the level of,
20:48 of engagement,
20:49 the detail in the responses was quite impressive.
20:52 We learned a lot between us
20:54 about what's going on across the world.
20:56 So,
20:57 um,
20:57 little shout out to World Bank and the ECPA for
21:00 doing great work helping us reach out to people,
21:02 particularly where there was a language challenge,
21:04 which often slows a lot of this stuff
21:06 down,
21:07 um,
21:07 and that helped us get a good result.
21:09 I'm,
21:09 I'm looking forward to having another go at this because
21:11 I think we can improve on that significantly even further.
21:15 Uh,
21:15 thanks,
21:15 John,
21:16 that's probably enough on that one.
21:17 So,
21:18 so quickly on,
21:19 on the point about volumes,
21:21 um,
21:22 it's not rocket science that,
21:24 um,
21:24 COVID really,
21:25 um,
21:26 had a bad impact on payment of volumes.
21:28 Everybody stayed home for a while in most countries.
21:31 Um,
21:32 that,
21:32 that,
21:33 uh,
21:33 you can see coming through the,
21:34 the data very clearly,
21:35 and there's a bit more in the report about that.
21:38 Um,
21:38 more than half the jury saw very major drops in volumes,
21:43 uh,
21:43 down to the worst point.
21:45 But what I didn't realize uh would be so obvious is that the bounce back was quick,
21:51 and well ahead of broader economic bounce back,
21:54 and I guess what's going on there,
21:56 uh,
21:56 is that,
21:58 um,
21:58 domestic payment systems have done enough over the years,
22:02 in previous years,
22:04 to be ready for a switch,
22:07 from physical to digital,
22:08 because of course that's,
22:09 as we all know,
22:10 pretty much what happened.
22:12 Uh,
22:12 as a consequence of the economy going to lockdown but having to keep working.
22:17 So in countries where digital was possible,
22:20 particularly digital payments,
22:22 there was a big shift to digital payments,
22:24 and what we can see from the data,
22:26 is that the domestic payments organizations took,
22:29 um,
22:29 or supported I should say,
22:31 their share
22:32 of that increase,
22:34 um,
22:34 their volumes came back quite strongly,
22:36 uh,
22:37 and,
22:37 and,
22:38 um,
22:39 Uh,
22:40 and,
22:40 uh,
22:40 it looks like,
22:42 um,
22:42 the long-term,
22:44 uh,
22:44 impact in terms of sheer volume of activity is going to be relatively marginal,
22:50 uh,
22:50 with the benefit of a little bit more time.
22:52 Uh,
22:53 next,
22:54 I think,
22:55 John.
22:56 Um,
22:57 we mentioned that the domestic organizations were helpful to their governments.
23:01 John mentioned that a little while ago.
23:04 Just to expand on that a little bit,
23:06 um,
23:07 because I think this is an interesting point about the,
23:10 uh,
23:10 unusual if not unique nature of domestic organizations.
23:14 They,
23:15 uh,
23:15 their strongest point is that they know their
23:17 own communities and that they are highly responsive
23:20 to their own communities.
23:22 And,
23:22 uh,
23:23 in a crisis,
23:24 that comes through,
23:26 uh,
23:26 in COVID,
23:27 we found a lot of organizations,
23:30 Um,
23:30 uh,
23:31 2/3 of the respondents,
23:33 uh,
23:33 providing support
23:35 to their governments and their communities to,
23:38 um,
23:39 respond to the special needs of their,
23:42 uh,
23:42 countries in the COVID crisis.
23:44 Um,
23:45 and,
23:45 and so this ranged from simply using the
23:48 established rails to get money out to people,
23:51 um,
23:52 to respond to the economic crisis.
23:54 Uh,
23:55 to actually developing new bespoke solutions to help government,
23:59 uh,
23:59 do what it felt it needed to do.
24:01 So,
24:02 uh,
24:02 it's a,
24:02 it's a good news story for the domestic payments industry overall
24:05 that it was able to respond and help in that way,
24:08 and I suspect,
24:09 um,
24:10 and we'll talk a little bit about this later on,
24:12 that that's led to an improvement in terms of sentiment,
24:16 um,
24:16 the,
24:16 the perception of value of domestic payment systems is enhanced
24:20 by their ability to respond in a crisis like this.
24:24 Next,
24:26 So,
24:27 um,
24:29 John's given us the,
24:30 the t-shirt there,
24:30 keep,
24:31 keep calm and keep innovating,
24:33 uh,
24:33 always true.
24:35 Um,
24:35 this one resonates with me strongly because
24:37 of the practical experience of writing.
24:41 Sorry,
24:41 can you hear?
24:42 Yep,
24:43 yep,
24:44 uh,
24:44 this one resonates with me strongly,
24:46 uh,
24:46 because of the
24:47 practical
24:49 experience of,
24:50 of running a national payments organization,
24:52 uh,
24:53 and,
24:53 you know,
24:53 talking to my colleagues who do that around the world.
24:57 It seems like a similar,
24:58 um,
25:00 situation played itself out in many countries
25:01 where the initial reaction of the community,
25:04 usually,
25:05 but not always banks,
25:07 Um,
25:08 to the crisis was to batten down the hatches.
25:10 We can't spend money on
25:12 complex industry work right now,
25:13 we've gotta focus on our own businesses,
25:15 we've gotta focus on surviving.
25:16 And so let's just can all the innovation until,
25:19 um,
25:20 uh,
25:21 until we're,
25:21 we're through the worst of it.
25:23 Um,
25:23 if that was the first reaction,
25:25 it didn't take long for a reassessment to set in,
25:28 and certainly our data demonstrates
25:30 that while there was some cutback of innovation in,
25:33 in a number of countries,
25:35 overall,
25:36 and with a bit of thought,
25:38 The communities um who are involved in their
25:42 national payment systems recognize the need to keep
25:45 building digital
25:46 uh enhancement,
25:47 to keep innovating in order to provide a strong
25:50 platform for whatever was in the unknown future.
25:54 So it,
25:55 um,
25:56 we saw a much better reaction,
25:58 um,
25:59 in terms of keeping on
26:01 doing the hard yards of systemic innovation in domestic payments.
26:06 Than we expected in the,
26:08 the sort of,
26:09 in the midst of a pandemic crisis,
26:11 and you can see the data there around the extent to which,
26:14 um,
26:15 in fact,
26:16 not only were many programs continued,
26:18 but in fact in some cases there was an increase,
26:21 uh in the level of innovation required of the central processor.
26:26 Um,
26:27 and,
26:27 um,
26:28 er,
26:28 it's interesting to note that while there was some change in priorities,
26:32 overall,
26:34 um,
26:34 there was a,
26:35 a continuation of the clearly digital first,
26:38 uh,
26:38 mobile first type innovation programs that were
26:41 already going on in domestic payments.
26:44 So that's a validation of the need for,
26:46 um,
26:47 er,
26:48 the sort of systemic innovation to keep going,
26:50 notwithstanding the crisis.
26:53 Uh,
26:54 I think that's probably enough on that one,
26:55 and this is over to you now,
26:57 John.
26:59 Yeah,
26:59 so,
26:59 so one of the areas that we,
27:01 we discussed with the,
27:03 with the 48 organizations is where,
27:05 where,
27:06 where they saw the most benefit or the most need to,
27:09 to innovate,
27:10 um.
27:12 Because I think every,
27:13 everybody subscribed to the theory that
27:16 having all your eggs in one basket,
27:18 to use an old English phrase,
27:20 is probably not a good thing,
27:21 uh,
27:22 and therefore you need,
27:23 people need to and organizations need to diversify.
27:27 So,
27:28 no
27:28 uh surprise that that the mobile first model,
27:32 and,
27:32 and getting to grips with,
27:34 you know,
27:35 with the mobile being the increasingly the,
27:37 the device of choice and the form factor of choice,
27:40 that became top,
27:42 so for organizations that haven't yet,
27:44 Uh,
27:44 fully,
27:45 um.
27:47 Accommodated the mobile,
27:48 then they need to do it,
27:49 for those who've already done it,
27:50 they need to do it better,
27:52 faster,
27:53 um,
27:54 etc.
27:55 uh,
27:56 so that,
27:56 that,
27:57 that was out in front,
27:58 then we saw real-time,
27:59 um,
28:00 accounts to accounts,
28:02 um,
28:03 some innovation,
28:04 uh,
28:04 pressures around about making the card form factor more usable through,
28:09 um,
28:10 tap and QR codes,
28:12 things like that.
28:13 Digital identity came out very strong as as
28:16 something that had a real long-term future,
28:19 um,
28:20 and some of the things that are,
28:21 were less popular,
28:22 um,
28:24 Things that have been popular in the past,
28:26 like,
28:26 you know,
28:26 loyalty programs,
28:28 and consumer loyalty,
28:30 uh,
28:31 suddenly a lot significantly less important than this much more structural stuff,
28:35 um,
28:36 and although,
28:37 um,
28:38 You know,
28:39 central bank digital currencies are all,
28:41 all the rage at the moment,
28:42 at,
28:43 at the moment that,
28:44 I think um very much a sort of wait and see attitude,
28:48 probably correctly from
28:49 domestic payments companies,
28:51 cos they've got all this other stuff to do.
28:53 So,
28:54 so this,
28:54 this was the sort of,
28:55 uh,
28:56 Pecking order and we're,
28:57 we're actually gonna pick out now,
29:00 two or three of those areas and we're gonna talk about each of those
29:03 to give you at least an initial view of what the research says,
29:07 in those particular areas
29:09 and,
29:11 We're picking out digital identity,
29:13 um.
29:15 Actually,
29:15 I want to ask
29:17 uh Dave Birch to say a few words,
29:19 cos
29:20 um.
29:21 Dave knows an awful lot about this,
29:24 and so he actually for the first time helped us,
29:26 uh,
29:26 you know,
29:27 to,
29:27 to look at this and and write a piece for the report.
29:30 So I think it'd be great if we just got Dave to say um a few words on how he sees
29:36 domestic payments organizations having a role to play in,
29:41 in digital identity,
29:42 and of course he's gonna join the panel later.
29:45 Dave.
29:46 Sure,
29:47 very,
29:47 very happy to,
29:48 John,
29:48 and um
29:49 I can say,
29:50 you know,
29:50 in a way I wasn't surprised to see digital identity going,
29:54 going up the charts,
29:55 so to speak,
29:56 this year,
29:56 because,
29:57 you know,
29:58 the pandemic has thrown into pretty
30:01 sharp relief,
30:02 um,
30:03 the impact of not having a digital identity infrastructure,
30:06 you know,
30:06 a a couple of years ago we were talking about the costs and benefits
30:10 of,
30:10 of building this kind of infrastructure.
30:13 Um,
30:13 and of course the benefits are a little hard
30:16 to quantify to people when you,
30:17 when you sit in front of,
30:19 uh,
30:19 you know,
30:19 the owners and shareholders and talk about what the new
30:23 businesses might be,
30:24 hard to quantify.
30:26 But the other way round,
30:27 of course,
30:27 what's happened is we've gone through the pandemic,
30:30 and we've seen
30:32 millions,
30:32 billions lost,
30:34 uh,
30:34 in,
30:34 uh,
30:35 well,
30:35 in fraud,
30:36 for example,
30:36 for
30:37 fraud in pandemic support.
30:39 We've seen great inefficiencies in government,
30:43 uh,
30:43 support to individuals and to families because
30:46 of the absence of identity infrastructure.
30:48 So in a way,
30:49 what the pandemic has done has shown just how high the costs
30:52 of not having an identity infrastructure are,
30:54 it's a kind of,
30:55 and it's an interesting.
30:56 Inversion,
30:57 now,
30:58 if you'd have asked me a couple of years ago,
31:00 I,
31:01 I would have said,
31:02 well,
31:02 in fact I did say to you that um,
31:04 I was surprised in a way the banks hadn't
31:07 grasped the nettle with this and started to develop more sophisticated
31:11 infrastructure,
31:12 but for one reason and another they didn't.
31:14 What's happened in that meantime is you've
31:16 seen people like EFTPOS and Interact VPs.
31:20 Basically
31:21 do it on the bank's behalf,
31:23 and say,
31:23 you know,
31:23 look,
31:24 actually,
31:24 why build
31:25 a separate network that we're going to
31:28 use to essentially switch identity transactions,
31:31 when we already have the network,
31:33 we're already connected to the banks,
31:35 we already have the security in place.
31:38 And so you've seen an acceleration in this.
31:41 I,
31:41 I,
31:41 I,
31:42 you know,
31:42 I would say in,
31:43 in,
31:43 in this very promising way
31:46 forward,
31:47 which gives the domestic schemes,
31:49 um,
31:50 you know,
31:50 not only,
31:51 uh,
31:51 you know,
31:51 potential new,
31:53 new kinds of business in the,
31:54 in the future from the banks that they work with.
31:57 But one thing to flag up.
31:59 I think is to say that,
32:01 of course,
32:02 digital identity offers
32:04 opportunities out beyond
32:06 payments.
32:08 And to just touch on something you passed over quite quickly,
32:12 um,
32:13 the issue of central bank digital currency,
32:15 uh,
32:16 uh,
32:16 you know,
32:16 in the last few weeks,
32:18 that's become a really significant,
32:21 um,
32:22 issue,
32:22 you probably saw the Bank of England announcement on
32:24 Monday about launching the Central Bank digital currency taskforce.
32:28 There is a lot of academic literature which says that.
32:31 The impact of central bank digital uh currencies,
32:35 um,
32:36 on foreign,
32:37 in,
32:37 in other words,
32:38 um,
32:39 not the issuing countries,
32:40 but other countries is pretty significant.
32:42 So the question is,
32:43 if,
32:44 if we start moving into,
32:45 and I'm using this as an example,
32:47 if we move into that central bank digital currency world,
32:50 what are the banks going to do?
32:52 And the truth is,
32:54 it's a wallet play,
32:56 and that's all about identity.
32:58 It's not about the currency,
33:00 it's about,
33:00 it's about the wallets and it's about the identity.
33:04 So I think digital identity isn't just about supporting the existing businesses,
33:08 I think the reason why you've seen it go up
33:11 that agenda is twofold,
33:12 costs and benefits.
33:13 On the cost side,
33:14 we've seen the cost of not having an infrastructure.
33:17 On the benefit side,
33:18 we're starting to see areas beyond
33:21 traditional payments where it might have real value,
33:23 so I think that,
33:24 that's why it has that positioning,
33:26 John.
33:27 Great.
33:28 Well thanks Dave,
33:28 we can come back to that in the,
33:30 in the Q&A um in a few minutes.
33:32 Absolutely.
33:33 So,
33:33 so,
33:33 so moving on to the,
33:34 the,
33:35 the,
33:35 um,
33:36 um,
33:37 the next area of innovation that we looked at,
33:39 we looked at,
33:40 uh,
33:41 and the report looked into
33:43 sort of new directions in mobile commerce,
33:45 and when you talk about mobile payment and mobile commerce,
33:49 I think it's always,
33:50 I've always had a problem that it means
33:51 so many different things to different people.
33:54 But I think there's now some commonality coming there and we
33:58 can see that I included a phrase here from the report that
34:02 effectively behind the mobile device,
34:05 there's gonna be a whole range of different funding sources,
34:07 they could be card accounts,
34:09 they could be bank accounts,
34:10 they could be bank wallets,
34:12 could be telco wallets,
34:13 telco um money accounts even,
34:16 er retailer wallets.
34:17 So there's gonna be a whole range of different funding sources,
34:20 but there's gonna be a lot less
34:22 ways to get,
34:23 to get that sort of transaction done,
34:26 so
34:26 a more limited number of payment solutions
34:29 with,
34:29 with a whole array of different funding sources behind it.
34:33 And if you think what domestic payments infrastructures do,
34:36 they're in the business of enabling,
34:39 they're the enablers here,
34:40 they're the payment solutions.
34:42 And you're going to have to make sure that
34:44 you're connected to all these different funding sources.
34:47 And the other thing is if you go around the world,
34:49 then
34:50 in some developing markets,
34:52 there's a real risk that we end up with
34:55 two parallel ecosystems,
34:57 one for,
34:58 one that's bank centric and the other
35:00 that's effectively mobile money or telco centric,
35:04 and then you,
35:05 you end up with no interoperability.
35:08 And then as we've seen in,
35:09 in some of the African markets,
35:11 you then have a,
35:12 a really complicated um
35:15 exercise to work out how to get
35:17 interoperability established.
35:19 So we picked out from,
35:21 from,
35:21 from our,
35:22 um,
35:23 from our study,
35:24 we picked out 3 people,
35:25 we just,
35:26 again,
35:26 pioneers,
35:27 they've had 3 pioneers in the digital
35:29 ID space.
35:30 I,
35:30 I'd,
35:31 I'd have 3 different solutions here that are
35:34 interesting,
35:34 in Angola,
35:35 where they have a domestic card scheme.
35:38 Um,
35:39 the EMIS,
35:40 which is the domestic
35:42 provider,
35:42 has actually
35:44 developed a multi-bank,
35:47 uh,
35:47 and multi-provider,
35:49 uh,
35:49 mobile solution,
35:51 so they,
35:52 they,
35:52 uh,
35:52 which they then added onto
35:55 into that existing card scheme.
35:57 So they started off with effectively a domestic card scheme.
36:00 And then they've developed,
36:02 er with the help of SIPs in Portugal,
36:03 they've developed a
36:05 um a multi-bank app,
36:08 which they've very successfully and cleverly
36:10 ported onto that system.
36:13 If you,
36:14 if you then take as a,
36:15 a contrast to that,
36:16 in Belgium,
36:17 er in Belgium there was a long established domestic um debit card system.
36:23 Bank contact Mr.
36:24 Cash,
36:25 they did in fact introduce their own app,
36:28 and that didn't go particularly well,
36:30 um,
36:31 and then there was the,
36:33 there was a,
36:33 a,
36:34 something called Payconic which became the de
36:37 facto wallet that the market preferred,
36:39 mobile wallet.
36:41 And
36:42 what they actually decided to do in Belgium is,
36:44 why don't we just merge the two organizations.
36:46 So now they've created an organization there,
36:49 um,
36:50 that
36:51 could well be the signpost for many,
36:53 many developing markets where,
36:55 uh,
36:56 you know,
36:56 a a de facto market leader appears in the wallet space,
37:00 um,
37:01 that actually gets together commercially and in ownership structure
37:05 with,
37:06 with,
37:06 with the card organization and the payments organization.
37:09 So you,
37:10 so there they've avoided the interoperability crisis,
37:13 if you like,
37:14 by,
37:15 uh,
37:15 by physically merging the organizations.
37:18 So that's another one for other people to look out for,
37:21 and the third one I'd pick out for is Morocco,
37:24 um,
37:25 and,
37:26 and in Morocco,
37:26 I think there's a very,
37:28 um,
37:28 enlightened central bank,
37:29 the Ban Al Maghreb.
37:31 And they've worked with their,
37:32 their,
37:33 their infrastructure provider who's HPS Switch,
37:36 and what they've done is they've made sure
37:38 that all transactions between mobile money operators and banks
37:43 go through 11 central infrastructure.
37:47 Um,
37:48 and technically it's done by having a,
37:49 a virtual card number,
37:51 uh,
37:51 to make sure they've got technical interoperability,
37:54 and eventually that will,
37:55 I'm sure,
37:56 become full commercial interoperability,
37:58 but what they're trying to do there
38:00 is design out the interoperability problem before it ever occurs.
38:05 So,
38:05 we thought of some really interesting examples that have come up from you,
38:09 the,
38:10 the,
38:10 you know,
38:11 the,
38:11 the runners of the world systems,
38:13 and there are different cuts on it,
38:15 so there,
38:15 there are clearly are gonna be different solutions.
38:18 So,
38:19 the next one,
38:20 and,
38:20 and I'll put it in the exact summary,
38:22 was this,
38:23 uh,
38:24 idea that domestic payments might move beyond national borders.
38:28 Um,
38:29 and what the chart shows you here in the middle of this slide,
38:33 um,
38:33 is that half the organizations roughly still only do business in one country,
38:38 but there's a quarter of them doing business in between 2 and 5,
38:43 and,
38:43 and close to 20%
38:45 doing business in 6 or more countries.
38:48 That is a huge change from how the world was
38:51 organized and these organizations were organized 5 years ago,
38:55 um.
38:57 And I,
38:57 again,
38:58 just to give you an example,
39:00 because you,
39:00 I think you need to read the report in these areas,
39:02 but the,
39:03 uh,
39:04 there are several different ways of doing it.
39:06 So if you take the um the Russian organization,
39:10 so the MEC scheme and the NSPK which is the infrastructure and parent company,
39:16 they,
39:16 they've actually taken their,
39:17 their
39:19 technology specifications and they've made those freely available to,
39:23 Um,
39:23 other markets,
39:24 surrounding markets,
39:26 their brand is available if required or they're very
39:29 happy to work with other people's national brands,
39:32 and then they've actually also
39:34 put together a centralized clearing and settlement,
39:37 international clearing and settlement system.
39:39 And,
39:40 and as a result of that,
39:41 I mean,
39:41 MEA wasn't formed that long ago,
39:44 and they've already got 7 surrounding markets and,
39:47 and another one in Vietnam.
39:49 So actually,
39:50 it's no longer,
39:51 in my view,
39:51 just a,
39:52 a domestic organization.
39:55 If you go to Africa,
39:56 you see Verve,
39:57 which is the leading debit card in,
39:59 in Africa,
40:00 in Nigeria,
40:01 and therefore,
40:02 because of the size of Nigeria,
40:04 um,
40:04 it,
40:04 it's the leading African card.
40:07 So they,
40:07 they've been following their infrastructure parent,
40:10 a little bit like NSPK in a way.
40:13 They've been following their interswitch parent and they are already,
40:17 uh,
40:17 working in 4 different countries.
40:20 And,
40:20 and they've got another 4 countries going live this year
40:24 where they're following major banks,
40:26 and if a major international bank goes and picks up their product,
40:29 takes it to a market,
40:30 that then creates an impetus for local markets to pick it up.
40:35 So,
40:35 a question,
40:36 are we,
40:36 are we seeing an African
40:39 debit card or payment scheme starting to,
40:42 to,
40:42 to arrive based around Verve?
40:45 If you go to Asia and Southeast Asia,
40:47 what you're seeing there,
40:48 the ASEAN markets have done,
40:50 er
40:51 set up something called the APN,
40:53 the Asian Payment Network.
40:55 Which has got some similarities to the sort
40:58 of separate kind of initiatives in Europe,
41:01 uh,
41:01 but they've gone further in actually connecting,
41:04 uh,
41:05 individual er markets,
41:07 um,
41:08 initially for debit card transactions,
41:10 but later on for
41:11 real-time funds transfer.
41:13 And that is actually against the background of it being
41:16 slightly more difficult than in Europe because there are less,
41:19 uh,
41:20 you know,
41:20 there's no single currency,
41:22 uh,
41:22 it's harder to make standards equivalent.
41:26 So,
41:26 but it's interesting that you're seeing this Asian payment network,
41:29 not very well recognized,
41:31 but actually I would,
41:32 I would argue that it's turning,
41:34 um,
41:35 Southeast Asia and the ASEAN markets in,
41:38 in,
41:38 into a regional marketplace.
41:41 And then you've got a different approach from
41:43 uh Interac in Canada,
41:46 um,
41:46 they've been exporting their chip technology and providing chip technology to,
41:51 uh,
41:52 to cold countries like Norway and hot countries like Jamaica,
41:55 uh,
41:56 and,
41:56 and they've got particular expertise there,
41:58 and I think they,
41:59 they're obviously looking to,
42:00 to,
42:01 to have more relationships.
42:03 And then,
42:04 um,
42:04 SIBS from Portugal,
42:06 uh,
42:06 one of the smaller European organizations,
42:09 has very quietly been building it's an international portfolio
42:13 of processing relationships,
42:15 um,
42:16 and now does business in six different markets,
42:19 some of them in Africa,
42:20 some of them in Europe.
42:21 But I think the picture here though,
42:23 is,
42:24 is that
42:25 organizations in domestic payments saying I have to have a strategy.
42:29 And I'm not just going to any longer be pinned into one individual market.
42:34 I am going to look,
42:35 whether it be through technology,
42:37 whether it be through brand,
42:38 whether it be through processing,
42:40 I'm looking to actually be involved in more markets than,
42:43 than just my home territory,
42:45 um,
42:46 and that of course has always been one of the
42:48 so-called weaknesses of domestic schemes that you're all in one market,
42:52 and now we're starting to see that changing.
42:56 Chris,
42:56 back to you.
42:58 Thanks,
42:58 John.
42:59 So,
43:00 um,
43:01 the other,
43:02 uh,
43:02 we've heard that that mobile is,
43:05 um,
43:06 key to the future,
43:07 uh,
43:07 and,
43:08 um,
43:10 we saw,
43:10 uh,
43:11 evidence that the real-time account to account businesses,
43:20 Rapidly,
43:22 that is a.
43:25 Uh,
43:25 OK.
43:27 And
43:28 Um,
43:29 OK,
43:29 all things are coming together to create,
43:32 um,
43:32 an enormous amount of competition to deliver an instant
43:35 payment to the mobile in multiple different ways,
43:39 uh,
43:39 John's talked about,
43:40 um,
43:41 both,
43:42 um,
43:43 Uh,
43:43 bank,
43:44 you know,
43:44 card-based and,
43:45 and mobile-based solutions,
43:47 but,
43:48 um,
43:49 at the same time in many developed
43:51 markets and increasing numbers of developing markets,
43:55 there are real-time account to account services developing.
43:58 Mostly their focus is not on consumer retail,
44:02 um,
44:02 but,
44:03 uh,
44:03 once they,
44:04 uh,
44:04 are brought into being,
44:06 that is a natural evolution path for them,
44:08 and so,
44:09 We can see a lot of complexity here as a range of different ah network solutions,
44:16 in a way compete for volume onto the mobile,
44:19 and it's far from clear yet
44:22 exactly what that looks like.
44:24 There is,
44:24 um,
44:25 some evidence of convergence of different payment streams,
44:28 so for example,
44:29 the national card system,
44:30 either starting up or merging with the national
44:34 real-time account to account service,
44:36 um,
44:37 And a lot of people examining that possibility,
44:41 but different views on whether that's a great idea or not,
44:43 um,
44:44 a number of,
44:45 uh,
44:46 the respondents felt that that would tend to reduce innovation and competition,
44:51 um,
44:52 uh,
44:52 and thereby be less beneficial,
44:55 um,
44:56 and then others felt that consolidation provided
44:58 an opportunity to deliver a very efficient,
45:01 uh,
45:02 network with very high,
45:03 strong positive network effects,
45:04 ubiquity if you will.
45:06 So,
45:07 um,
45:07 this is gonna be a space that will play out over time,
45:10 um,
45:11 uh,
45:12 and will take some years to,
45:14 uh,
45:14 to emerge as a sort of a stable framework.
45:17 It may well be quite different in different
45:19 jurisdictions as their economies have different needs.
45:23 Um,
45:23 we'll talk in a minute about the implications for regulators,
45:25 but they're quite significant as you can imagine.
45:27 Thanks,
45:27 John.
45:31 So,
45:32 um,
45:33 regulators have got a,
45:34 a lot on their plates now,
45:35 um,
45:36 and,
45:37 uh,
45:37 um,
45:38 they,
45:38 they really have to think through a lot of complicated issues.
45:42 Um,
45:42 some of them are reasonably clear,
45:44 there's a,
45:45 a position has to be taken and is being taken in many countries around the world,
45:48 and we've mentioned some of those here,
45:49 so for example,
45:51 It's quite clear that,
45:53 um,
45:53 many,
45:54 many domestic payments schemes are now
45:57 facing or already including non-bank participants of various kinds,
46:02 uh,
46:03 telcos,
46:04 um,
46:05 sometimes retailers,
46:06 sometimes fintech,
46:07 uh and so forth,
46:09 and,
46:09 um,
46:10 the regulatory positioning on that,
46:12 uh,
46:12 needs to be,
46:14 uh,
46:14 needs to be thought through.
46:16 Uh,
46:16 it doesn't seem logical that the domestic organization can continue to be
46:20 owned and directed by banks if it serves a much wider community.
46:24 Uh,
46:24 but exactly what the path for that is,
46:26 is,
46:26 it varies from country to country.
46:28 Um,
46:29 there are real technology challenges in terms of,
46:33 uh,
46:34 different players trying to use their
46:36 technical capabilities and sometimes their,
46:39 um,
46:39 network
46:40 power if you like,
46:42 um,
46:42 to,
46:43 um,
46:44 challenge,
46:45 to make it harder for competition to occur,
46:47 uh,
46:48 and the whole issue of competition amongst networks is a difficult one,
46:52 and there's a lot of academic literature on the subject.
46:54 Regulators are gonna have to try and pick that apart as well.
46:58 That,
46:58 that long-term challenge though of what in your
47:01 particular market do you want to see,
47:02 do you wanna see highly consolidated,
47:04 very efficient networks,
47:05 or do you want to see lots of competition with a risk of fragmentation,
47:09 that fundamental dichotomy uh runs through this entire area as a thread,
47:14 and regulators are gonna have to come to grips with it.
47:16 By implication,
47:17 of course,
47:17 participants need to think about how they present their
47:20 views to their regulators on those complex issues.
47:23 So,
47:24 um,
47:25 there are many,
47:26 uh,
47:26 implications of that,
47:27 just to mention one very very quickly,
47:30 um,
47:31 the,
47:31 the idea of separating scheme from processing,
47:35 which has been a,
47:36 uh,
47:36 regulatory concept in Europe in particular and,
47:39 and,
47:40 uh,
47:41 the UK
47:42 has not,
47:42 uh,
47:44 become a universal concept,
47:46 so it's one answer to this challenge of competition versus efficiency.
47:50 But doesn't seem to be the only one,
47:51 and not,
47:51 and perhaps not the preferred one when you look at a global level.
47:54 So,
47:55 so that separation may or may not continue as a regulatory
47:59 um expectation.
48:01 That's probably enough on that there,
48:03 John.
48:04 I think it's you next.
48:05 Yeah.
48:08 So one thing,
48:08 one thing we tried to do is,
48:10 and we've done this for the last 8 years that we've been doing these reports,
48:14 is to,
48:15 is to almost just monitor and measure the sentiment of,
48:19 of
48:20 how people are feeling about their business.
48:23 So if you look at the left-hand chart there,
48:26 what you'll see is,
48:27 is,
48:27 is,
48:28 is that,
48:29 um,
48:30 The users of domestic systems and domestic payment networks
48:35 basically felt
48:37 more positive,
48:38 um.
48:40 Then,
48:40 you know,
48:41 it's a,
48:41 you know,
48:42 the,
48:42 the yellow bar here is a positive score,
48:45 um,
48:46 so there were very fewer schemes and systems reporting that their users,
48:51 er were less supportive of them,
48:54 er,
48:54 so it,
48:55 it seems to be that local has been good
48:57 during the pandemic,
48:59 um,
49:00 as Chris said as well,
49:02 regulators seeing that in fact that governments,
49:05 the place that governments could go when they wanted quick support,
49:09 I mean,
49:09 to be honest,
49:10 it,
49:10 it wasn't to Washington or it wasn't to San Francisco,
49:13 it was to the local,
49:15 uh,
49:15 it was to the local payment organization,
49:18 and those were the people who could help you out in a,
49:20 in quickly,
49:22 and therefore,
49:23 what we're seeing is that regulators were either
49:26 kind of um,
49:27 Almost none of them were negative,
49:29 and they were either
49:30 positive or or no change,
49:32 so what that actually says is that overall I think domestic payment systems
49:37 have actually had
49:38 quite a good pandemic in a way,
49:40 if you can think of such a concept,
49:43 uh,
49:43 and if you put it all together and say,
49:45 well how,
49:45 how do you think,
49:46 um,
49:46 the chart on the right,
49:47 how do you think your prospects are actually,
49:50 um,
49:51 faring,
49:51 then,
49:52 um,
49:54 But round about 2/3 of the people of the
49:57 organizations think that their prospects are actually improving.
50:01 But go back to something how Reece said at the beginning,
50:03 you know,
50:04 it is true that there are
50:06 around about sort of 20,
50:07 25% of the organizations that,
50:09 that are
50:11 not feeling so good,
50:13 um,
50:14 on a weighted average,
50:15 that's a pretty good score,
50:17 um,
50:17 but there are some organizations that have struggle,
50:20 and I think Chris and I both feel that those
50:22 are the ones where they've not really managed to keep their
50:25 innovation agenda on track.
50:29 So
50:31 We
50:35 Sorry.
50:36 So we wanted to just finish up this,
50:39 this presentation,
50:40 get into the discussion,
50:41 and so
50:42 I picked out
50:43 5 implications for what I think there are in this report for regulators,
50:47 and then Chris is gonna finish
50:49 up
50:49 and say,
50:50 what are the 5 implications for
50:52 domestic uh providers.
50:54 My fight for the regulators is that I think it,
50:58 it's clear now that that payments really are,
51:01 basic,
51:02 what I call plumbing,
51:03 they're really infrastructure for an economy.
51:06 Um,
51:07 and they're absolutely critical for whatever you're trying to do,
51:09 uh,
51:10 in terms of economic development.
51:12 What that means is,
51:14 you cannot be relaxed about ownership,
51:17 governance,
51:18 or transaction costs.
51:19 All of those are absolutely critical
51:21 because payment is,
51:23 is in a way the,
51:24 you know,
51:25 the lifeblood,
51:25 it should be hidden,
51:26 it shouldn't be obtrusive,
51:27 but it is the lifeblood of the economy.
51:30 There's been a question for a long time as to whether it matters whether you have your
51:35 uh payment infrastructures within a market or,
51:38 or you can sort of safely outsource them.
51:41 I don't wanna
51:42 take too hard a view on that,
51:43 but I think
51:44 what is clear from this,
51:46 from,
51:46 from these developments recently is that you cannot ignore
51:50 a desire for national self-determination,
51:53 and,
51:54 and the desire to make sure for yourself that things are OK
51:58 and being run appropriately.
52:01 The third implication
52:03 is,
52:03 is,
52:03 is that as you get new entrants and new competing services,
52:08 um,
52:09 it,
52:09 it,
52:10 they're gonna create really hard
52:12 policy choices and sometimes it's going to not be,
52:16 uh,
52:16 uh,
52:16 an attractive choice,
52:18 um,
52:19 but you,
52:20 to make that choice as a regulator,
52:22 you do have to understand the technology.
52:25 Things are now,
52:26 you know,
52:26 like tokenization of payments and,
52:29 you know,
52:29 which wasn't around 2 or 3 years ago,
52:32 um,
52:33 and you're gonna have to understand that because if you don't understand that,
52:36 you can't make those really hard policy decisions.
52:40 Fourth one is that there's a really difficult balance between improving,
52:46 Markets by having competition and innovation,
52:49 and efficiency,
52:51 and
52:51 you can tell yourself that you would like,
52:53 and a regulator can tell themselves that they want all of those.
52:57 But I think that that's difficult,
52:59 so you've got sometimes again to choose between efficiency
53:03 and,
53:03 and competition,
53:05 cos competition
53:06 may or may not lead to the,
53:08 the,
53:09 the,
53:09 the most optimal outcome,
53:11 but
53:12 you really need to think about what works for your,
53:14 for your economy.
53:15 And the last one is that payments regulation and
53:18 competition law these days have to be closely coupled.
53:22 I know certain work in some jurisdictions where
53:25 payments regulator would sort of say,
53:26 well,
53:27 the competition is something completely different,
53:29 uh,
53:30 that they must opine on that,
53:32 and I think what we can see,
53:34 we've seen it from Europe,
53:35 we've seen it from the US is the payment regulation and competition law
53:40 have to be incredibly closely coupled,
53:43 um,
53:44 because it,
53:45 because when payment regulation goes wrong,
53:46 it's usually because,
53:48 uh,
53:48 competition law is,
53:50 is being infringed or bent.
53:52 So,
53:53 those would be my 5 takeaways if you're,
53:55 if you're on the call today and you're a regulator,
53:57 and Chris,
53:57 you,
53:58 you're gonna have 5.
54:01 Implications for schemes and operators.
54:04 Yes,
54:04 indeed,
54:05 this is obviously pretty close to my heart.
54:06 I've been
54:07 in this game,
54:08 trying to run a scheme or an operator of some kind for 15 years or so,
54:13 and in that time,
54:14 I think
54:15 the challenges of the job have fundamentally changed,
54:18 um,
54:20 your biggest problem in the good old days,
54:22 and I'm generalizing wildly here,
54:24 but I,
54:24 but I don't mind being corrected by others on the call,
54:27 there's a lot of expertise around this table,
54:29 um,
54:30 was that it's hard to get change to happen,
54:34 if you're a domestic payments network,
54:36 and so you had to find clever ways of getting innovation,
54:39 getting change to happen.
54:41 And that was probably for two reasons.
54:42 One was,
54:43 uh,
54:44 anything that's communally governed changes slowly
54:46 cause decisions are hard to make,
54:48 right?
54:48 And then the second part of it was,
54:50 the network effects are so large,
54:52 that if you've got everybody signed up to a single network,
54:55 it's very hard for that network to be displaced,
54:58 uh,
54:58 and that tends to breed complacency,
55:00 not a universal truth,
55:01 but often the case.
55:03 I don't think either of those things apply very strongly anymore to um
55:08 schemes and operators operating in a domestic market.
55:11 Um,
55:12 the,
55:12 the,
55:13 the ecosystem is changing around them so quickly
55:15 the opportunities that arise from new technologies,
55:18 new players,
55:19 and new regulation,
55:21 um,
55:21 are coming along thick and fast,
55:24 and COVID is,
55:25 uh,
55:25 only an accelerant of that.
55:27 The net effect of it will be to make stuff happen faster,
55:29 make change happen faster.
55:32 Um,
55:33 invest in systemic innovation therefore becomes what you've gotta do.
55:37 It,
55:37 it,
55:37 it's no longer something that you do,
55:40 um,
55:40 once you've made sure the,
55:42 the network is operating with complete reliability,
55:45 which was the old way of thinking about things.
55:47 Um,
55:47 it's something you have to do continuously and
55:49 internalize as the way the organization works.
55:52 Um,
55:53 that's not a great surprise to pure commercial organizations,
55:56 but if you,
55:57 um,
55:58 if you come from the world of being the basic platform for everybody,
56:01 um,
56:02 that's a challenging,
56:03 uh,
56:03 world to live in.
56:05 So,
56:06 um,
56:06 you know,
56:07 there are big strategic issues that have got to be,
56:09 um,
56:10 addressed,
56:10 and we go into this in rather more detail in the,
56:12 in the report.
56:14 um,
56:14 what is your international positioning?
56:16 How do you manage the challenge of,
56:17 of both cross-border payments and,
56:20 uh,
56:20 domestic uh activity in neighboring countries or countries
56:24 that have a natural connection with your economy?
56:26 What do you do about that?
56:27 How do you deal with participation by a
56:29 much wider community than your traditional banking,
56:32 uh,
56:33 owners,
56:34 uh,
56:34 and what new services ought to be developed
56:36 alongside your classic card
56:39 solution.
56:40 Um,
56:41 I,
56:41 I strongly believe that the unique value proposition of
56:44 domestic organizations remains their closest to their community,
56:47 and it doesn't matter whether they're a commercial organization
56:50 or a mutual or even a government-owned organization,
56:53 the value they add is about knowing their own community
56:56 better and being able to serve that community better.
56:59 Um,
56:59 so how do you capitalize on that,
57:01 and that,
57:01 that needs to be a key aspect of strategy,
57:04 um.
57:05 And then probably the hardest one is,
57:08 how do you establish a governance framework long-term,
57:11 which puts the organization in the best possible
57:13 position for a complex and fast changing future.
57:17 Um,
57:18 there is no perfect answer to this.
57:20 It's incredibly hard to change governance frameworks in mutuals,
57:23 which most,
57:24 uh,
57:24 schemes and operators still are.
57:27 Um,
57:27 and,
57:28 um,
57:29 uh,
57:29 you know,
57:31 trying to win a consensus is a,
57:32 is a painful process,
57:34 but it can't be ignored because that ability to make the
57:37 right decision and to make it quickly and have it stay made
57:41 is one of the key success factors for the organization of the future.
57:44 So there are,
57:45 that that's just a little guide of the things I think
57:49 really need to be pulled out and thought
57:50 about in the strategic planning workshops of the,
57:53 of the schemes and operators.
57:55 No doubt there'll be other views and I'm looking forward to hearing them.
57:57 Thanks John.
58:01 So that,
58:01 that takes us to,
58:02 yeah,
58:03 yeah,
58:03 it takes us to the
58:04 right,
58:05 there we go.
58:06 You,
58:06 you go,
58:07 mate.
58:08 Um,
58:09 OK,
58:09 well,
58:10 I mean,
58:10 that,
58:10 that,
58:10 that's the end of the presentation we're gonna go in,
58:12 so,
58:13 just,
58:13 just to make it clear,
58:14 you can,
58:16 uh,
58:16 the report itself,
58:17 uh,
58:17 and the presentation today,
58:19 you can download from the innovation jury,
58:22 uh,
58:22 it's free to download,
58:24 um.
58:25 Um,
58:26 World Bank will be sending out a link as well,
58:29 where you can also download it,
58:30 and this is gonna be hosted on the World Bank,
58:33 uh,
58:33 site because they've,
58:34 you know,
58:34 they've been amazing in sponsoring us to,
58:37 to get this up and running.
58:38 Um,
58:39 if you want to talk to Chris or myself or to Dave,
58:42 then there are emails,
58:45 and,
58:45 and,
58:46 you know,
58:46 our view is this,
58:47 this information is,
58:48 is there to be used,
58:50 um.
58:51 Feel free to use it externally to quote from it,
58:54 and the only thing we'd ask is that if you do it,
58:57 uh,
58:57 just give us a mention,
58:58 because,
58:59 um,
59:00 you know,
59:00 that actually keeps this project fresh that we've been running for 8 years,
59:05 and,
59:05 and also,
59:06 if you,
59:07 as,
59:08 as organizations think there are
59:10 further areas that we should be looking at,
59:13 and using this innovation jury format,
59:15 then we'd be,
59:16 you know,
59:17 Uh,
59:17 we do this because we think it,
59:19 it helps the industry to grow,
59:21 uh,
59:21 and so we're always open for ideas and suggestions.
59:25 So look,
59:26 uh,
59:26 Dave,
59:27 I'm,
59:27 uh,
59:27 David,
59:27 I'm gonna pass it back to you now,
59:30 uh,
59:30 for the panel discussion.
59:33 Thanks very much,
59:33 John.
59:34 So,
59:35 um.
59:37 Mr.
59:37 Stevenson.
59:38 I,
59:39 I didn't want to short circuit everybody else by just
59:42 posting all of my questions into the chat channel,
59:44 but you did make me think of some things while you were talking,
59:46 which I guess is the point.
59:49 OK,
59:49 Dave,
59:50 we,
59:50 Dave,
59:50 we'll have a,
59:50 we'll have a chance to get your point of view in a,
59:53 in a couple of seconds,
59:54 I promise.
59:58 OK.
59:59 Uh,
59:59 thanks a lot,
1:00:00 Chris and,
1:00:01 and John.
1:00:01 Uh,
1:00:02 I can certainly echo what you said,
1:00:04 that,
1:00:04 that,
1:00:05 uh,
1:00:05 your presentation actually is only the
1:00:07 tip of the iceberg of the information that's,
1:00:10 uh,
1:00:10 uh,
1:00:11 in the report.
1:00:11 So I'd encourage everybody to,
1:00:13 uh,
1:00:14 not
1:00:15 immediately,
1:00:16 but once we finished,
1:00:17 to,
1:00:17 uh,
1:00:18 to download the,
1:00:19 the report.
1:00:20 So let,
1:00:21 let's move into the panel session.
1:00:22 I won't reintroduce the panelists again because they've all had their say.
1:00:28 Or,
1:00:28 or part of their essay already.
1:00:31 Um,
1:00:32 but
1:00:33 let,
1:00:33 let me kick off the,
1:00:34 the session,
1:00:35 uh,
1:00:35 with a question,
1:00:37 uh,
1:00:37 and if any of you have a,
1:00:39 a,
1:00:40 a question yourselves from the floor,
1:00:42 please raise your hand or type it into the,
1:00:44 uh,
1:00:45 specific speaker.
1:00:47 So,
1:00:47 my,
1:00:47 my,
1:00:48 my question,
1:00:48 let me kick off with one for,
1:00:50 let's say,
1:00:51 uh,
1:00:51 John and Chris.
1:00:52 Um,
1:00:53 listening to,
1:00:54 uh,
1:00:54 the presentation,
1:00:55 uh,
1:00:56 despite the pandemic,
1:00:58 or perhaps because of it,
1:01:00 you've explained there's a lot going on in the,
1:01:02 uh,
1:01:03 uh,
1:01:04 field of innovation,
1:01:06 uh,
1:01:06 throughout the world in domestic,
1:01:08 uh,
1:01:09 payments.
1:01:10 But it would be useful to understand,
1:01:13 uh,
1:01:14 whether or not
1:01:15 everybody is doing their own thing,
1:01:17 or whether or not,
1:01:18 uh.
1:01:20 The
1:01:22 whether we or they are in fact pursuing,
1:01:26 um.
1:01:28 The same general innovation path.
1:01:31 I mean,
1:01:31 is there,
1:01:32 is there a common thread in the innovation that you've observed,
1:01:36 uh,
1:01:36 or is it,
1:01:37 is it perhaps different uh in,
1:01:39 in local or regional markets?
1:01:41 I know it's a general question.
1:01:43 I don't know whether
1:01:44 Chris or John,
1:01:45 you want to pick the ball up first.
1:01:48 Sure,
1:01:48 uh,
1:01:49 John,
1:01:49 do you mind if I have a go first,
1:01:50 do you?
1:01:52 And you,
1:01:52 and uh,
1:01:53 yeah,
1:01:53 so,
1:01:54 um,
1:01:54 there are some really big trends that can't be ignored,
1:01:57 there's no doubt about that,
1:01:58 right?
1:01:58 So,
1:01:59 um,
1:01:59 and,
1:02:00 and that,
1:02:00 that we've talked about the key ones,
1:02:02 um,
1:02:03 you've gotta know what you're doing about mobile,
1:02:05 and,
1:02:05 and that's,
1:02:06 that's gonna be a strategy that's beyond
1:02:09 the services that the organization supplies today,
1:02:12 because there'll be other people wanting to play in the mobile space.
1:02:15 So,
1:02:16 so,
1:02:17 um,
1:02:17 there are a lot of,
1:02:18 um,
1:02:19 big,
1:02:20 uh,
1:02:20 generational trends around
1:02:23 delivering services onto the mobile,
1:02:24 and,
1:02:26 and
1:02:26 I,
1:02:26 I think a limited number of solutions will prevail,
1:02:29 not because of the technology,
1:02:30 but because of the network effects,
1:02:32 um,
1:02:32 that only a certain number of networks can
1:02:35 successfully operate,
1:02:36 right?
1:02:38 Um,
1:02:39 there's certainly a need to look at real-time account to account payments,
1:02:42 that is a,
1:02:43 a,
1:02:43 a,
1:02:43 a big global trend,
1:02:45 and there's an associated
1:02:47 development,
1:02:47 I think around APIs.
1:02:50 Um,
1:02:50 and the need to look at,
1:02:52 uh,
1:02:52 real-time data transfer between different networks using
1:02:56 APIs as a way of facilitating really efficient
1:02:59 payments.
1:03:00 Um,
1:03:01 but then that said,
1:03:03 Um,
1:03:03 and,
1:03:04 uh,
1:03:04 Dave's of course talked about digital identity as well,
1:03:06 so these are things you've got to grapple with,
1:03:07 but
1:03:07 there are a whole lot of different bespoke and nuanced solutions for that,
1:03:11 and actually I think we'll see a real flowering
1:03:13 of a lot of different alternatives within those general trends
1:03:16 in different countries.
1:03:18 I think developed economies and developing economies have quite different
1:03:20 needs and will do things in quite different orders.
1:03:24 Um,
1:03:24 it's not the case that you can go into a developing economy in,
1:03:27 say,
1:03:28 Africa
1:03:28 and say,
1:03:29 what you need is what Australia has.
1:03:31 I have learned this the hard way,
1:03:32 trust me,
1:03:32 you know,
1:03:33 you,
1:03:33 you,
1:03:33 you,
1:03:34 you,
1:03:34 you,
1:03:34 you can't,
1:03:35 you can't just apply a template.
1:03:37 The needs of the economy come first,
1:03:38 you've gotta work out what the economy's,
1:03:40 um,
1:03:42 situation is,
1:03:42 what it's evolution into the future is,
1:03:44 and then make your payment system fit,
1:03:46 so I mean that's my sentiment on it.
1:03:48 John,
1:03:49 John,
1:03:50 your,
1:03:50 your view?
1:03:51 It,
1:03:53 I suppose my view is that maybe if we all started from the same blank sheet of paper,
1:03:58 we may,
1:03:59 may maybe possibly we might come up with the same answer,
1:04:02 but,
1:04:02 but the fact is we don't,
1:04:04 and you can't ignore
1:04:05 the history of a country,
1:04:07 you can't ignore,
1:04:09 um,
1:04:10 the sort of the national psyche,
1:04:13 you can't ignore
1:04:14 the,
1:04:14 how the payment systems are already set up.
1:04:17 So,
1:04:18 you know,
1:04:18 so for example,
1:04:19 you.
1:04:20 You,
1:04:20 you were to say what should Kenya do,
1:04:22 I mean,
1:04:22 Kenya is the home of M-Pesa,
1:04:24 they've
1:04:25 virtually been very involved with that.
1:04:27 In some respects,
1:04:28 not a dissimilar place to Morocco,
1:04:31 but the problems faced are completely different,
1:04:33 because
1:04:34 people have been in there and they've done things,
1:04:37 uh,
1:04:37 and,
1:04:37 and they,
1:04:38 they,
1:04:38 they,
1:04:38 they,
1:04:39 so you don't have that blank sheet of paper.
1:04:41 So,
1:04:42 so I think in the end,
1:04:43 you maybe have the same
1:04:45 tools in the toolbox,
1:04:47 but I think how you actually put them together
1:04:50 will be
1:04:51 so fundamentally different,
1:04:53 um.
1:04:55 So,
1:04:55 so I,
1:04:56 so I,
1:04:56 so I think the trend,
1:04:57 I think the trends and the big themes are the same,
1:05:00 uh,
1:05:00 in answer to your question,
1:05:01 David,
1:05:01 but I,
1:05:02 I don't believe that
1:05:03 there will,
1:05:04 there are
1:05:04 sort of ubiquitous solutions
1:05:06 as such.
1:05:08 So it's horses for courses.
1:05:10 Yeah.
1:05:12 OK.
1:05:13 Thank,
1:05:13 thanks,
1:05:14 thanks,
1:05:14 John and,
1:05:15 and Chris,
1:05:16 um
1:05:17 I,
1:05:18 I was gonna ask you a question to Dave about digital identity,
1:05:21 and in fact,
1:05:22 a similar question has just come up from the floor.
1:05:25 So,
1:05:25 uh,
1:05:26 you,
1:05:26 you,
1:05:26 you're gonna get a
1:05:27 couple of questions in one,
1:05:29 Dave,
1:05:29 and I suppose that you're gonna
1:05:31 either answer the questions or talk about the
1:05:34 what whatever uh
1:05:35 uh answer you want to give.
1:05:37 So,
1:05:37 it seems to me clear that um
1:05:40 the,
1:05:40 the payment schemes and the operators need to,
1:05:43 to use.
1:05:44 An effective digital identity for,
1:05:47 for future innovation.
1:05:49 So that uh if that innovation is going to be
1:05:52 successful.
1:05:54 But the concept of data identity goes
1:05:57 far beyond payments and financial services,
1:05:59 and it goes into e-government and so on,
1:06:02 what you explained in the uh in,
1:06:04 in the presentation.
1:06:06 So my,
1:06:06 my que my question is,
1:06:08 how big is the,
1:06:09 the challenge for,
1:06:10 for payment schemes to embrace,
1:06:12 uh,
1:06:13 integrate and,
1:06:15 uh,
1:06:15 and use an existing.
1:06:18 Uh,
1:06:18 digital identity,
1:06:20 or is there a simpler way for them to solve the problem?
1:06:23 So that was,
1:06:23 that was gonna be my question,
1:06:25 and the question that's come from,
1:06:27 from the floor,
1:06:28 uh,
1:06:29 you should be able to.
1:06:31 You got to read it.
1:06:33 Like you finding out.
1:06:34 You,
1:06:34 you've dropped out,
1:06:35 David,
1:06:36 um.
1:06:37 David,
1:06:38 sorry.
1:06:39 David,
1:06:40 you missed the question from the floor,
1:06:41 we couldn't hear it.
1:06:43 OK,
1:06:43 I was in the,
1:06:44 in the process of reading it.
1:06:48 Oh right,
1:06:49 I'll go to the chat channel,
1:06:50 hold on.
1:06:51 OK,
1:06:51 so there's my question to Dave and the question from the floor,
1:06:55 which says,
1:06:56 you mentioned that digital ID ID showed up
1:07:00 as a key enabler.
1:07:02 Can you specify the trends that you've observed in this area?
1:07:07 Have you observed any practices
1:07:10 regarding the usage of digital ID
1:07:12 for the provision of cross-border payments?
1:07:15 So the,
1:07:15 the two,
1:07:16 the,
1:07:16 the two questions are on uh
1:07:20 Digital ID.
1:07:21 What do you,
1:07:22 what,
1:07:22 what do you want to tell us as an answers?
1:07:24 Well,
1:07:26 to take the first question about trends,
1:07:29 I,
1:07:29 I think it is discernible now,
1:07:31 so I,
1:07:31 I think
1:07:32 we saw several experiments to try to take government identities
1:07:36 and sort of put those on top of payment schemes.
1:07:39 We saw a number of efforts to take payment schemes and try and use those.
1:07:44 And you,
1:07:44 you can point to one or two places with very special circumstances.
1:07:48 You know,
1:07:48 bank ID in Scandinavia is one of the examples that people always use.
1:07:53 But we didn't see a global solution to it.
1:07:55 I think what's changed
1:07:57 in
1:07:58 terms of the architecture is we see this more
1:08:01 framework led approach exemplified by,
1:08:04 um,
1:08:05 you know,
1:08:06 Australia and,
1:08:06 and,
1:08:06 and Canada in particular,
1:08:08 where the idea is no longer that there'll be a digital identity,
1:08:12 but there'll be a digital identity framework.
1:08:15 And so we'll see government identities
1:08:18 and,
1:08:18 uh,
1:08:19 you know,
1:08:19 bank identities and travel identities and,
1:08:22 and so on,
1:08:23 um,
1:08:23 that will interoperate,
1:08:25 and
1:08:26 that seems to give us a better chance of moving forward,
1:08:29 you know,
1:08:30 trying,
1:08:30 trying to boil the ocean with a universal solution
1:08:33 doesn't work,
1:08:34 except in some very specific
1:08:36 circumstances which aren't general.
1:08:38 So I,
1:08:38 I,
1:08:38 I think that framework approach.
1:08:41 Um,
1:08:41 looks good,
1:08:42 and,
1:08:42 and that's why I'm particularly interested in Australia,
1:08:45 um,
1:08:46 because of the links between that and the sort of more generalized
1:08:49 consumer data,
1:08:50 right?
1:08:51 And the question from the floor about cross-border payments,
1:08:54 about cross border,
1:08:55 the answer to that is no,
1:08:57 I haven't,
1:08:58 and I think it's sort of interesting to reflect on how
1:09:02 the
1:09:03 government use of identities
1:09:05 hasn't fixed that problem.
1:09:07 This is why I think.
1:09:09 Interoperable financial services identities within those wider frameworks,
1:09:14 might be a better chance.
1:09:15 Even in Europe,
1:09:17 uh,
1:09:18 you know,
1:09:18 we,
1:09:19 we,
1:09:19 we,
1:09:19 we've been messing around with
1:09:21 EIDA,
1:09:22 uh,
1:09:22 the interoperable electronic government identities
1:09:26 for years.
1:09:27 Um,
1:09:28 with the net result,
1:09:29 I think if I'm,
1:09:30 I might be wrong about this,
1:09:31 but until quite recently,
1:09:33 if I was German.
1:09:34 Um,
1:09:35 I'd acquired the ability to file my
1:09:38 British tax returns using my German identity.
1:09:41 But I defy you to go and try and open a bank account or get a credit card
1:09:45 using that German identity.
1:09:47 So even with all of the effort we've put into it,
1:09:50 interoperability at the government level has proved intractably complicated.
1:09:55 Uh,
1:09:56 and it,
1:09:56 which is crazy when you think about it,
1:09:57 cos I can,
1:09:58 I can walk into a bank,
1:10:00 uh,
1:10:00 you know,
1:10:00 with a forged Portuguese passport and an open account,
1:10:03 no problem.
1:10:04 And yet I can't use a real Portuguese
1:10:06 electronic identity online to open a bank account.
1:10:09 So the answer is sadly no.
1:10:13 I think that uh
1:10:15 we can see a way forward
1:10:17 in the financial sector.
1:10:19 I think that
1:10:22 The threat,
1:10:23 I mean I don't want to say it to be mean to people here,
1:10:25 but the,
1:10:25 but the threat
1:10:27 to domestic systems is that people just bypass them for cross border
1:10:31 and just start using Facebook or something instead.
1:10:35 Yep,
1:10:35 that's the risk.
1:10:36 I think,
1:10:36 I think Dave,
1:10:38 it might,
1:10:38 you might even go a half step further and say,
1:10:40 you know,
1:10:41 thinking of the card number as
1:10:43 a limited financial identity,
1:10:44 and often not a very very satisfactory one,
1:10:46 but nevertheless that's what it is,
1:10:47 the crowning achievement of Visa and Mastercard,
1:10:50 is
1:10:51 they have universalized a limited digital identity across the world,
1:10:54 you know,
1:10:55 you've spoken many times about your ability to get off a plane
1:10:58 and hand,
1:10:58 you know,
1:10:59 hand over your card and have it work,
1:11:00 that's a,
1:11:01 that's a fantastic achievement.
1:11:03 Can we do any better,
1:11:04 maybe not.
1:11:06 Well,
1:11:06 of course,
1:11:07 the,
1:11:07 the,
1:11:07 you know,
1:11:07 111 possible scenario,
1:11:10 of course,
1:11:10 which shouldn't be ruled out,
1:11:11 is that,
1:11:12 that
1:11:12 the Visa and Mastercard of the digital identity world
1:11:16 are Visa and Mastercard.
1:11:18 It,
1:11:18 it,
1:11:19 it might well be that,
1:11:20 um,
1:11:21 you know,
1:11:21 and you see the amount of money that Mastercard in
1:11:23 particular is investing into digital identity at the moment.
1:11:26 I mean,
1:11:27 I was looking at some of their recent work on health passports,
1:11:29 which,
1:11:30 which by the way,
1:11:30 is another sort of funny thing that,
1:11:32 that,
1:11:32 that might change the.
1:11:35 Uh,
1:11:35 you know,
1:11:35 because right now there's a lot of pressure for COVID passports and,
1:11:39 and interoperable travel documents,
1:11:42 and if you look at what's going on in that world,
1:11:44 where you've got things like the vaccination credentials Initiative,
1:11:46 which is Microsoft,
1:11:47 Oracle,
1:11:48 Salesforce,
1:11:49 those guys are skipping directly to much more advanced technology,
1:11:53 they're going straight to the W3C,
1:11:55 uh,
1:11:55 to the World Wide Web Consortium,
1:11:57 verifiable credentials Initiative.
1:12:00 And uh,
1:12:01 you know,
1:12:01 distributed identities.
1:12:03 And it could well be that,
1:12:04 you know,
1:12:04 if they get those
1:12:06 wallets up and running like the IAA travel wallet,
1:12:09 it might,
1:12:10 who knows,
1:12:10 that the stranger things have happened that
1:12:12 that the banks will start using the same,
1:12:15 the same framework and the same
1:12:17 standards to get their credentials out there,
1:12:19 so,
1:12:20 you know,
1:12:20 it.
1:12:22 Yes,
1:12:22 it's disappointing that banks didn't get a handle on this
1:12:26 when they should have done a little while back,
1:12:28 but,
1:12:29 um,
1:12:29 things genuinely are changing.
1:12:32 OK,
1:12:33 if.
1:12:34 Uh,
1:12:35 thanks,
1:12:36 Jay,
1:12:36 and food for thought.
1:12:37 Um,
1:12:38 if I,
1:12:38 if I could move on,
1:12:40 um,
1:12:41 and perhaps turn to,
1:12:42 uh,
1:12:43 Harish Natarajan from the,
1:12:45 the World Bank.
1:12:46 Uh,
1:12:47 Harish,
1:12:47 but,
1:12:48 um,
1:12:48 the World Bank is,
1:12:50 uh,
1:12:50 is and has been for quite some time,
1:12:53 uh,
1:12:54 been
1:12:55 heavily engaged in,
1:12:56 uh,
1:12:56 in supporting local efforts,
1:12:58 uh,
1:12:59 to improve domestic,
1:13:00 uh,
1:13:01 payments and
1:13:02 in developing,
1:13:03 uh.
1:13:04 Mhm
1:13:06 Why,
1:13:06 why,
1:13:06 why is that is in your view,
1:13:08 so important,
1:13:10 and
1:13:11 what,
1:13:11 what in fact has the report that John and Chris has just,
1:13:15 just presented
1:13:16 tell you about how,
1:13:18 um,
1:13:20 Developments have progressed
1:13:22 uh towards a better payment industry in the different uh developing uh
1:13:27 uh economies that your team covers.
1:13:33 And I think you need to unmute
1:13:35 if I can see the.
1:13:41 Harish
1:13:44 Did everybody hear my question?
1:13:48 Yes,
1:13:48 thank you,
1:13:49 thank you,
1:13:49 David.
1:13:49 Um,
1:13:50 there was,
1:13:50 um,
1:13:51 you know,
1:13:51 I,
1:13:51 I think I had to,
1:13:52 the,
1:13:52 the setting has to change for me to be able to unmute myself,
1:13:54 so that's,
1:13:55 that's why there was a delay.
1:13:56 So thank you,
1:13:56 David.
1:13:57 Um,
1:13:57 um,
1:13:58 you're very right.
1:13:58 Uh,
1:13:59 the World Bank has been focused on this topic for,
1:14:01 uh,
1:14:01 quite some time.
1:14:02 Uh,
1:14:03 our work,
1:14:03 um,
1:14:04 of course,
1:14:04 in,
1:14:04 in countries kind of goes the full spectrum from legal and regulatory aspects to,
1:14:09 uh,
1:14:10 uh,
1:14:10 to,
1:14:10 to institutional capacity building,
1:14:12 uh,
1:14:13 to also institution building.
1:14:14 Uh,
1:14:15 in,
1:14:15 in many cases,
1:14:16 um,
1:14:17 and,
1:14:17 and,
1:14:17 and the,
1:14:17 the common thread across all of this for us is,
1:14:20 uh,
1:14:20 we are,
1:14:20 we entered the,
1:14:21 in the world of payments,
1:14:22 not for the purpose of,
1:14:23 um,
1:14:24 payments,
1:14:24 but more for
1:14:25 the,
1:14:26 as a means to achieve the World Bank's twin goals of,
1:14:28 um,
1:14:28 ending poverty and boosting shared prosperity.
1:14:30 So it's,
1:14:31 it's grounded in
1:14:32 economic development,
1:14:33 right?
1:14:33 So I know that's where the,
1:14:35 the role of the World Bank comes in.
1:14:36 Uh,
1:14:36 and we feel,
1:14:38 um,
1:14:38 that,
1:14:39 uh,
1:14:39 in many cases,
1:14:40 um,
1:14:41 there,
1:14:41 there,
1:14:41 there's some heavy lifting required to build a basic,
1:14:45 uh,
1:14:45 infrastructure,
1:14:46 sometimes the basic,
1:14:47 uh,
1:14:47 eco kind of enabling ecosystem,
1:14:49 uh,
1:14:49 and that's where the,
1:14:50 the World Bank,
1:14:51 uh,
1:14:51 uh,
1:14:51 comes in.
1:14:52 Uh,
1:14:53 so there are contexts where,
1:14:54 uh,
1:14:54 for example,
1:14:55 um,
1:14:56 uh,
1:14:56 the,
1:14:56 the international,
1:14:57 uh,
1:14:57 networks
1:14:58 are,
1:14:58 are,
1:14:59 are actively in the market,
1:15:00 um,
1:15:00 and,
1:15:01 uh,
1:15:01 they have,
1:15:01 uh,
1:15:02 covered the market reasonably well,
1:15:04 then our focus is really more,
1:15:05 more towards
1:15:06 building other services.
1:15:08 Uh,
1:15:08 which are,
1:15:08 which are not,
1:15:09 uh,
1:15:09 there in the market,
1:15:10 uh,
1:15:10 which will benefit,
1:15:11 um,
1:15:11 say,
1:15:12 uh,
1:15:12 rural institutions,
1:15:13 uh,
1:15:13 rural banks,
1:15:14 cooperative banks,
1:15:15 credit unions
1:15:16 who might not be,
1:15:17 uh,
1:15:17 active in the payments market,
1:15:19 um,
1:15:19 because they're not able to,
1:15:20 uh,
1:15:20 connect to the such infrastructures and our role is then to enabling them,
1:15:24 uh,
1:15:24 to be able to connect.
1:15:25 And increasingly our work is also shifting more towards
1:15:28 uh the areas which were identified by John in terms of fast payments,
1:15:31 uh,
1:15:32 in terms of looking at the role of ID,
1:15:34 and I will also add one point
1:15:36 about the role of,
1:15:37 uh,
1:15:37 payment switches and payment,
1:15:38 uh,
1:15:39 institutions
1:15:40 as becoming hubs for open,
1:15:41 open banking,
1:15:42 you know,
1:15:42 in many countries.
1:15:43 Uh,
1:15:44 open banking is introduced.
1:15:45 Uh,
1:15:45 there is,
1:15:45 of course,
1:15:46 a European model of
1:15:47 basically of,
1:15:48 uh,
1:15:48 API registry,
1:15:49 and then,
1:15:50 uh,
1:15:50 uh,
1:15:50 and institutions can go discover it and then
1:15:53 use common protocols to reach the banks.
1:15:55 But,
1:15:55 but in emerging markets,
1:15:56 what might be more viable is to have some kind of hub.
1:15:59 Environment
1:16:00 where you connect to 11 infrastructure and then from there you're able to reach the
1:16:04 uh different banks and other financial institutions
1:16:06 and then I think I see payment institutions as as a very,
1:16:09 um,
1:16:09 uh,
1:16:09 natural,
1:16:10 um,
1:16:11 uh,
1:16:11 role to play there.
1:16:12 So our efforts are now focused towards,
1:16:14 uh,
1:16:14 ensuring that,
1:16:15 uh,
1:16:16 the new means of,
1:16:17 uh,
1:16:17 new,
1:16:17 uh,
1:16:17 modalities of payments like fast payments.
1:16:19 Uh,
1:16:20 to our codes,
1:16:21 um,
1:16:21 and then also the digital ideas you rightly mentioned,
1:16:24 building on top of the national identification,
1:16:26 uh,
1:16:26 infrastructure and build the digital capabilities for that.
1:16:29 So that's the direction in which we're focused,
1:16:31 uh,
1:16:31 we see,
1:16:32 um,
1:16:32 uh,
1:16:33 such infrastructure having a very strong role in,
1:16:35 uh,
1:16:35 social protection,
1:16:36 uh,
1:16:36 uh,
1:16:36 payments,
1:16:37 the,
1:16:37 the government to process payments,
1:16:39 e-government,
1:16:40 uh,
1:16:40 and all of those are areas of focus for us.
1:16:43 Thank you.
1:16:43 Thank you,
1:16:43 thank.
1:16:44 OK,
1:16:45 thank you,
1:16:46 uh,
1:16:46 uh,
1:16:47 Harrish,
1:16:47 and,
1:16:48 uh,
1:16:48 I'm sure that,
1:16:49 uh,
1:16:50 uh,
1:16:50 your team together is,
1:16:52 um,
1:16:53 contributing to the,
1:16:54 the,
1:16:55 the strong development in,
1:16:56 in these,
1:16:57 uh,
1:16:58 these economies.
1:16:59 Um,
1:17:00 I,
1:17:01 I have a,
1:17:01 a question
1:17:03 for,
1:17:03 let me think,
1:17:04 let,
1:17:05 let me say for,
1:17:06 uh,
1:17:08 John and Dave as Europeans.
1:17:11 Uh,
1:17:11 as you know,
1:17:12 there,
1:17:12 uh,
1:17:13 over the last few months or year or so,
1:17:16 there are 2 major European banks and,
1:17:18 uh,
1:17:19 some leading independent,
1:17:21 uh,
1:17:22 processors,
1:17:22 PSPs,
1:17:23 such as World Line and,
1:17:25 and NETS,
1:17:26 who have launched,
1:17:27 uh,
1:17:27 uh,
1:17:28 an initiative called the European Payment Initiative
1:17:32 to create a new European scheme.
1:17:36 Uh,
1:17:37 I was very surprised,
1:17:39 and that's an understatement,
1:17:41 but very surprised
1:17:42 that the report doesn't,
1:17:44 uh,
1:17:44 mention this new scheme for,
1:17:46 for Europe.
1:17:47 So I,
1:17:48 I've got two questions.
1:17:49 Uh,
1:17:49 what,
1:17:50 why is it that the report didn't,
1:17:52 uh,
1:17:52 cover the EPI project,
1:17:54 or at least have a,
1:17:55 a,
1:17:55 a mention of it?
1:17:57 And
1:17:58 What do you think is the,
1:18:00 not only the potential
1:18:02 of a European scheme.
1:18:04 I'm talking about the
1:18:06 European payment scheme,
1:18:07 including cards and other uh payment instruments.
1:18:11 Um,
1:18:12 what do you think would be the,
1:18:13 or should be the key enablers for the EPI project
1:18:18 uh to be successful?
1:18:21 And I'll leave it up to you as to who wants to uh answer first,
1:18:26 John or Dave.
1:18:27 I can answer the first bit of the question,
1:18:29 how about I do that,
1:18:30 so,
1:18:30 so the,
1:18:31 the,
1:18:32 um,
1:18:35 We put out,
1:18:35 when we put out this document,
1:18:37 we,
1:18:37 the,
1:18:37 the research project,
1:18:38 we always give people a chance to
1:18:41 write in whatever they want to.
1:18:43 So I suppose my question would be,
1:18:44 so why didn't the Europeans write anything about it?
1:18:48 I think we had like two people who,
1:18:50 who actually mentioned it as a significant um
1:18:53 innovation.
1:18:55 So,
1:18:55 um,
1:18:56 now I can.
1:18:58 Postulate a,
1:18:59 a,
1:19:00 a maybe an answer to that,
1:19:02 which is that there have been
1:19:04 so many initiatives in Europe,
1:19:07 um,
1:19:07 to create another scheme.
1:19:10 But I wonder whether there's a degree of uh
1:19:14 uh reticence to actually um,
1:19:17 say anything until people are sure that this is going to be any more successful than.
1:19:22 Going in reverse order,
1:19:24 um.
1:19:26 Monet,
1:19:27 uh,
1:19:27 the EAPS ones,
1:19:29 the ones before that,
1:19:30 and
1:19:31 we could even end up back at Eurotech if we're not careful,
1:19:33 so,
1:19:34 so,
1:19:34 um,
1:19:35 so I,
1:19:35 so I,
1:19:36 I think,
1:19:38 um,
1:19:39 Interesting,
1:19:39 we,
1:19:40 we actually,
1:19:40 cos we,
1:19:41 we take a global approach to this research,
1:19:43 so,
1:19:43 so therefore we,
1:19:44 we were not asking questions,
1:19:46 we didn't ask questions about it and nobody,
1:19:49 wrote in anything particularly,
1:19:52 so,
1:19:52 and,
1:19:52 and I say my,
1:19:53 my supposition is that people are being very
1:19:57 conservative about whether they think it will,
1:20:01 Work
1:20:02 I
1:20:02 I say earlier today,
1:20:03 I have one other comment,
1:20:05 Dave,
1:20:05 I have one other comment,
1:20:06 which is that I do see that in,
1:20:09 cos I don't really work in Europe,
1:20:10 I really work outside of Europe.
1:20:12 I do see that there is a big trend
1:20:14 towards regionalization.
1:20:16 And so,
1:20:17 uh.
1:20:18 In South Africa or Southern Africa,
1:20:21 there's the,
1:20:22 the economic communities,
1:20:23 the SADC markets are
1:20:25 starting to work out how to link their payment systems.
1:20:27 In Eastern Africa,
1:20:28 people are working out how to link their payment systems.
1:20:31 West Africa,
1:20:32 in Asia with the Asian Pat network.
1:20:34 So I do think there is a,
1:20:36 there is a trend towards
1:20:38 regionalization.
1:20:41 So why,
1:20:42 where does Europe fit in that?
1:20:43 I think I'll stop at that point and let Dave,
1:20:46 um,
1:20:46 Dave,
1:20:47 do you,
1:20:47 do you have two or three key success factors or enablers that,
1:20:51 uh,
1:20:52 um,
1:20:53 EPI should be,
1:20:54 uh,
1:20:55 concentrating on?
1:20:56 I mean,
1:20:57 I think,
1:20:58 uh,
1:20:58 I mean,
1:20:58 John's right,
1:20:59 I mean,
1:20:59 people are,
1:21:01 I mean,
1:21:02 people here keep calling it the third scheme,
1:21:05 which is,
1:21:05 uh,
1:21:06 which is,
1:21:06 um,
1:21:07 you know,
1:21:07 a reflection of the fact that we've seen this before.
1:21:09 Look,
1:21:10 I,
1:21:11 I have been,
1:21:11 I've been critical of it,
1:21:13 and I was critical of it because I think that,
1:21:17 um,
1:21:17 part of it is.
1:21:20 It's,
1:21:20 it's almost a sort of hubris,
1:21:21 it's like we have Visa and Mastercard,
1:21:23 they're American,
1:21:24 so therefore we must have something
1:21:27 European.
1:21:27 But it doesn't make any sense to compete with
1:21:30 Visa and Mastercard at retail point of sale,
1:21:32 that's where they're strongest.
1:21:34 And it certainly doesn't make any sense to put debit products up against them there.
1:21:38 You know,
1:21:38 I,
1:21:39 I think it makes more sense
1:21:41 to focus on providing.
1:21:43 A better service,
1:21:45 where Visa and Mastercard are weakest,
1:21:47 and that's online,
1:21:49 that's,
1:21:49 that's online,
1:21:49 remote,
1:21:50 mobile,
1:21:51 and so putting an,
1:21:52 putting an excellent
1:21:54 front end onto A A2A,
1:21:56 a sort of Euro ideal
1:21:58 kind of thing,
1:21:59 um,
1:21:59 to me would sort of make more sense.
1:22:02 Um,
1:22:02 now,
1:22:03 having said that,
1:22:04 um,
1:22:05 would you do it this way?
1:22:07 I,
1:22:07 I,
1:22:07 I'm,
1:22:08 I'm not sure,
1:22:10 because I see
1:22:11 you've got the next generation standards coming through,
1:22:14 request to pay,
1:22:15 variable recurring payments.
1:22:17 So my personal opinion is I would have been more tempted
1:22:21 to have built a first class
1:22:24 European request to pay scheme
1:22:26 that sat on top ofE credit transfer and,
1:22:29 and network interoperability.
1:22:31 Um,
1:22:31 to,
1:22:32 to do the A2A payments through,
1:22:34 because there you're building something different and useful,
1:22:37 you're using the data fields of 222,
1:22:40 you're giving a platform for value added services,
1:22:42 you know,
1:22:43 building AN other.
1:22:46 Pretty standard 8583
1:22:48 scheme for point of sale,
1:22:50 to me,
1:22:51 you know,
1:22:51 it,
1:22:52 it's,
1:22:52 it doesn't seem the obvious way forward,
1:22:54 so yes,
1:22:54 I,
1:22:55 I'm on record of
1:22:57 as saying I'm not,
1:22:57 it's not obviously the best solution to me.
1:23:00 And of course you'll say I'm bias because
1:23:01 the,
1:23:02 the crucial element.
1:23:03 of having a very good RTP system
1:23:05 that sits on top,
1:23:06 you know,
1:23:06 222,
1:23:07 that sits on top
1:23:09 of A2A is digital identity.
1:23:11 That's,
1:23:11 that's the crucial enabling factor of that,
1:23:14 and I accept that,
1:23:15 you know,
1:23:15 I,
1:23:15 I do look at it from that point of view,
1:23:17 but
1:23:17 I,
1:23:17 I don't know,
1:23:18 John,
1:23:18 I just,
1:23:19 uh,
1:23:19 you know,
1:23:20 it,
1:23:20 it,
1:23:20 it,
1:23:21 you know,
1:23:21 trying to build another
1:23:23 pan-European.
1:23:25 Retail point of sale payments,
1:23:27 this,
1:23:28 this seems
1:23:29 25 years out of date,
1:23:31 it does,
1:23:31 I,
1:23:31 I'm just not sure about it.
1:23:33 Mhm.
1:23:34 OK,
1:23:34 well,
1:23:35 I,
1:23:35 I,
1:23:35 I,
1:23:35 I must say on behalf of uh ECPA that
1:23:39 um the members of our members
1:23:42 are actually uh investing in this,
1:23:44 uh,
1:23:45 this initiative,
1:23:46 so,
1:23:47 uh,
1:23:47 our association is giving any support that we can.
1:23:51 But let,
1:23:51 let's,
1:23:52 let's move on and it's,
1:23:54 it's nothing personal,
1:23:55 David,
1:23:55 it's just that I would have started from a different place.
1:23:59 OK,
1:24:00 so let's,
1:24:00 let,
1:24:00 let's move on and um.
1:24:04 What else can we ask for?
1:24:05 I,
1:24:05 I,
1:24:06 the,
1:24:06 the audience is very,
1:24:08 very quiet.
1:24:09 Uh,
1:24:10 please,
1:24:10 please use the,
1:24:11 the chat option to,
1:24:12 uh,
1:24:13 to ask some questions if you wish.
1:24:15 And in the meantime,
1:24:16 I've got,
1:24:17 I perhaps got a,
1:24:18 a,
1:24:19 a general question for,
1:24:21 uh,
1:24:21 for all panelists.
1:24:23 Um,
1:24:24 if you could,
1:24:25 uh,
1:24:26 look into your crys uh into
1:24:29 your uh
1:24:29 uh crystal ball.
1:24:32 Um,
1:24:33 what in fact would,
1:24:34 uh,
1:24:35 if you had to select one category of,
1:24:37 of payments innovation that you think,
1:24:39 uh,
1:24:41 It is important for domestic
1:24:44 operators over,
1:24:46 let's say the next 5 years.
1:24:48 What,
1:24:48 what would you pick and,
1:24:49 and why would you make that choice?
1:24:53 So let's uh
1:24:54 uh
1:24:56 start off uh with Dave,
1:24:58 so that we can become friends again.
1:25:01 Uh,
1:25:01 well,
1:25:02 for me it's,
1:25:02 it's without a shadow of a doubt,
1:25:04 it's central bank digital currency.
1:25:06 Because,
1:25:07 you know,
1:25:07 most of the,
1:25:08 most of the central bank,
1:25:09 John said,
1:25:10 you know,
1:25:10 these late that we start from different places,
1:25:13 and we do
1:25:14 when you're comparing account to account
1:25:16 infrastructure and mobile money infrastructure,
1:25:19 both of which,
1:25:19 by the way,
1:25:20 are imperfect,
1:25:21 I mean.
1:25:22 Uh,
1:25:22 you know,
1:25:22 when M-Pesa goes down from time to time,
1:25:24 it,
1:25:24 it halts the Kenyan economy.
1:25:26 Well,
1:25:27 Target 2 goes down,
1:25:28 it went down last year,
1:25:29 Visa Europe goes down occasionally.
1:25:31 I,
1:25:31 I was writing a thing earlier on,
1:25:33 and,
1:25:33 and I think it was that,
1:25:34 I can't remember one of the acquirers had gone down,
1:25:35 I think FIS had gone down,
1:25:37 and McDonald's in America couldn't accept,
1:25:39 you know,
1:25:40 these are,
1:25:41 these are old creaking string and sealing wax.
1:25:45 On the other hand,
1:25:46 you've got a parallel
1:25:48 infrastructure of central bank digital currency coming,
1:25:51 which will add resilience to the economy as a whole.
1:25:54 So if,
1:25:54 if M-Pesa goes down,
1:25:55 people can still use their central bank digital currency.
1:25:58 And in,
1:25:58 in,
1:25:59 in one of your uh comments during the,
1:26:02 uh,
1:26:02 uh,
1:26:03 in one of your chats during the,
1:26:05 uh,
1:26:05 the webinar a few minutes ago,
1:26:08 you implied that the um.
1:26:10 Uh,
1:26:11 domestic players are actually,
1:26:12 uh,
1:26:13 neglecting that aspect.
1:26:15 I,
1:26:15 I think they are,
1:26:16 and I've,
1:26:16 I've kind of accelerated in that thing,
1:26:18 I was asked to review a UN
1:26:21 paper,
1:26:21 sort of a couple of weeks ago,
1:26:22 I was asked to review a UN
1:26:24 paper on the impact of central bank digital currencies on the less developed
1:26:29 nations,
1:26:29 and,
1:26:30 and what the UN was concerned about is that,
1:26:33 you know,
1:26:33 if you,
1:26:34 if you're using pounds or euros.
1:26:36 You know,
1:26:37 you're not gonna throw them out overnight and start using a digital dollar instead.
1:26:41 But there are a great many countries in the
1:26:42 world where people would use a digital dollar instead,
1:26:46 uh,
1:26:46 and that means that monetary policy would become awfully complex,
1:26:50 at that,
1:26:50 you know,
1:26:51 what,
1:26:51 what's the point of setting interest rates
1:26:53 and monetary if nobody's using your currency?
1:26:55 You know,
1:26:56 um,
1:26:56 and so
1:26:58 the question for the domestic schemes is,
1:27:00 um,
1:27:01 which part of that business do you go for?
1:27:03 Are you,
1:27:04 are you just going to be a passive,
1:27:05 well,
1:27:06 are you going to be bypassed?
1:27:07 Are you going to be a passive switch?
1:27:09 Are you going to be an active,
1:27:11 uh,
1:27:12 you know,
1:27:12 wallet provider or,
1:27:13 or identity provider into wallets or so.
1:27:16 So I'm just saying,
1:27:17 a year ago,
1:27:18 this was all highly speculative stuff.
1:27:21 But if you look at the what's come out of the Bank of England,
1:27:24 the Bank of Russia,
1:27:25 the People's Bank of China,
1:27:27 the Bank of Canada,
1:27:28 if you look at what these guys are saying,
1:27:30 it's no longer speculative,
1:27:32 and I feel that the domestic payment networks probably
1:27:36 should give it a slightly higher priority
1:27:39 in their studies for the coming year.
1:27:41 Mhm.
1:27:42 Haresh,
1:27:43 if I could turn to you,
1:27:44 what,
1:27:44 what would,
1:27:45 uh,
1:27:47 what would your favorite pick be for a.
1:27:50 Uh,
1:27:51 a category of,
1:27:52 of payments and innovation that
1:27:54 must have or should have or will have over the next five years.
1:28:00 I think our focus is,
1:28:02 um,
1:28:03 is on fast payment services and that this does
1:28:05 not mean a new system necessarily but it's about improving
1:28:09 the ability to initiate a transaction from any account to any account
1:28:13 and do it real time,
1:28:14 do it 24/7,
1:28:15 and hopefully also interconnected,
1:28:17 um,
1:28:18 uh,
1:28:18 with,
1:28:18 with other countries,
1:28:19 you know,
1:28:19 so that is the real focus from our side.
1:28:21 Uh,
1:28:22 I do see the point that Dave was making on CBDC,
1:28:24 etc.
1:28:25 but I think,
1:28:25 uh,
1:28:25 the first order of business
1:28:27 is really to,
1:28:28 um,
1:28:28 is to achieve that capability,
1:28:30 and I'm not talking about just banks.
1:28:31 I'm talking about also your money and other things.
1:28:33 And,
1:28:33 uh,
1:28:34 along with this comes other,
1:28:35 um,
1:28:35 aspects like QR code and then alias-based payments,
1:28:39 third party initiated payments.
1:28:40 So I think there's an entire complex of
1:28:42 innovations around fast payments.
1:28:44 I think,
1:28:44 um,
1:28:45 I kind of our focus is really on that,
1:28:47 and
1:28:47 we think that is extremely critical to get it right.
1:28:50 And then if,
1:28:50 if you get that right,
1:28:51 then either you don't have a need
1:28:53 for CBDC in some sense,
1:28:55 or,
1:28:55 or if there is a CBDC being introduced,
1:28:57 at least it will provide the,
1:28:58 the rails and infrastructure
1:29:00 and then also the ecosystem around which it can develop,
1:29:02 you know,
1:29:03 uh,
1:29:03 so that is the,
1:29:04 uh,
1:29:04 the,
1:29:04 the,
1:29:04 uh,
1:29:05 we think is the highest priority.
1:29:06 Thank you.
1:29:07 Thank,
1:29:08 thank you,
1:29:08 Harish.
1:29:10 I'm,
1:29:10 I'm conscious of the time,
1:29:12 so,
1:29:12 um,
1:29:14 I,
1:29:14 I'm gonna ask one last question,
1:29:16 and uh if uh John and Chris
1:29:19 want to uh add in their,
1:29:21 their uh pick for the uh
1:29:24 um
1:29:25 category of payments innovation,
1:29:27 they can.
1:29:28 But Chris and,
1:29:29 and John,
1:29:30 um,
1:29:33 Based on the experience of putting together this most recent report,
1:29:37 uh,
1:29:39 where are you thinking of doing research in the future?
1:29:42 And it can be coupled with the last,
1:29:43 uh,
1:29:44 question if you wish.
1:29:46 Or the previous question.
1:29:48 Presly go for it.
1:29:50 OK,
1:29:51 um,
1:29:52 So I,
1:29:53 I,
1:29:53 uh,
1:29:54 uh,
1:29:55 I think there are a lot of interesting,
1:29:57 uh,
1:29:57 avenues for further inquiry that came out of the report,
1:30:01 um,
1:30:03 digging,
1:30:03 I mean there's a whole,
1:30:04 there's a whole book you could write on the policy challenges and
1:30:06 the regulatory issues and how they tie back to the economy,
1:30:09 right?
1:30:10 Uh,
1:30:10 I'm not sure that's a survey-based thing,
1:30:12 but I think there's a lot to learn in that space,
1:30:15 um,
1:30:16 but,
1:30:17 um,
1:30:17 to try and sort of weave it into your point about what's the technology I would pick,
1:30:22 I actually think the single most interesting
1:30:24 um bit of technology that's emerging now,
1:30:27 and I say this as a guy who spent the last 15 years building real-time
1:30:31 account to account payment systems,
1:30:32 right,
1:30:33 so that,
1:30:33 that's been my thing for a long time,
1:30:36 um,
1:30:37 is actually
1:30:38 how those systems hit the consumer,
1:30:41 and that leaves in a,
1:30:43 what I would call a multi-functional wallet.
1:30:45 I'm,
1:30:45 I'm picking my words carefully here because,
1:30:49 Um,
1:30:49 I don't mean a wallet in the way in which WeChat means a wallet,
1:30:53 which is a,
1:30:54 a store of value
1:30:56 which is usable entirely in the universe of the WeChat
1:30:59 system.
1:30:59 I'm talking about
1:31:01 a wallet that lives with the consumer and can take and handle multiple different
1:31:05 forms of payment.
1:31:07 In particular,
1:31:08 it can take traditional,
1:31:10 um,
1:31:12 Uh,
1:31:12 centralized systems,
1:31:13 uh,
1:31:14 like cards,
1:31:15 and also decentralized offline systems like CBDC as it will eventually be.
1:31:21 I think there's a really uh pressing need to dig into
1:31:25 the technologies that will enable consumers to grapple with this
1:31:29 incredibly complicated world that we're creating for them right now,
1:31:32 with lots of different alternatives,
1:31:33 and that to me lives in
1:31:35 uh a digital wallet that is easy for a consumer to use and handles multiple,
1:31:40 multiple payment systems and technologies.
1:31:42 So that's,
1:31:43 that's where my vote is,
1:31:44 and I would also like to do a lot more research into
1:31:47 who's doing work on that,
1:31:48 how they're doing it,
1:31:49 what it looks like,
1:31:50 you know,
1:31:50 and I think there's a really interesting piece of research there.
1:31:54 Thank you.
1:31:57 So David,
1:31:57 uh,
1:31:58 I'll slightly duck the question,
1:32:00 I'm not gonna answer about technology.
1:32:01 I,
1:32:02 I,
1:32:02 I think one of the biggest,
1:32:04 I,
1:32:04 I think by and large,
1:32:05 lots of.
1:32:09 Technologies can work for me,
1:32:11 the biggest issue is,
1:32:12 is getting
1:32:13 uh the,
1:32:14 the domestic payment.
1:32:17 Payments is
1:32:20 Will get,
1:32:21 will
1:32:22 er
1:32:23 survive or maybe not survive,
1:32:25 will be the ones who haven't
1:32:27 reacted to the change in the financial services industry,
1:32:32 they,
1:32:32 you know,
1:32:32 they,
1:32:33 they spend their life hoping that regulators and
1:32:35 reg regulation will go away and it won't,
1:32:38 um,
1:32:39 so,
1:32:39 so I think,
1:32:41 innovation should be as much about
1:32:43 the softer factors of,
1:32:45 of governance and,
1:32:48 Ownership models,
1:32:49 etc.
1:32:50 um.
1:32:52 So that's the answer to the first question,
1:32:54 don't,
1:32:54 don't just get
1:32:56 lost on technologies,
1:32:57 we've been down this thing before
1:32:59 in my days in Visa,
1:33:00 we're always imagining something we could change the world,
1:33:03 uh,
1:33:03 and I,
1:33:04 you know,
1:33:05 I think you've got to look at how these things get to market,
1:33:08 and in terms of future research,
1:33:10 that's probably a good finishing point is that
1:33:13 I set up this innovation jury.
1:33:16 As not for profit,
1:33:18 to try to help the industry advance,
1:33:20 and so,
1:33:21 you know,
1:33:21 the inspiration comes from,
1:33:23 the views of the industry,
1:33:25 um,
1:33:25 and
1:33:26 if we're talking domestic payments,
1:33:28 then
1:33:29 through whatever forum,
1:33:30 we look to find out what,
1:33:33 what people want to know about what we and then what we can actually bring to market,
1:33:37 so it's the people who are on the call today
1:33:40 who should tell us,
1:33:42 Where we should go and what we should look at,
1:33:44 cos I,
1:33:45 I,
1:33:45 I wouldn't,
1:33:46 I think it'd be arrogant to say this is what we should do,
1:33:49 um,
1:33:49 I'd love to know where people are
1:33:51 struggling to understand best practice,
1:33:54 to think what they should be thinking about,
1:33:56 and then we can bring the formula and bring,
1:33:58 bring,
1:33:58 bring the innovation theory model
1:34:00 uh to bear on it,
1:34:02 so that's where I'd,
1:34:03 I'd sign off,
1:34:03 I think,
1:34:04 David.
1:34:05 OK,
1:34:06 thanks a lot,
1:34:06 John.
1:34:07 And uh I think,
1:34:07 I think I'll close the panel session,
1:34:10 apart from thanking all of you uh for your contribution
1:34:13 by asking you,
1:34:14 John,
1:34:14 just to flip back to the previous slide,
1:34:17 uh,
1:34:18 simply to remind everyone how you can uh
1:34:21 obtain a,
1:34:21 a copy of the,
1:34:22 the report.
1:34:24 So I,
1:34:25 I'll leave that on the uh on the screen as I uh
1:34:28 wrap up the uh the webinar
1:34:31 by
1:34:32 Uh,
1:34:33 reminding you that there should be a,
1:34:35 a,
1:34:35 a recording
1:34:36 of the,
1:34:37 uh,
1:34:37 webinar,
1:34:38 uh,
1:34:39 available,
1:34:39 available soon on the,
1:34:41 um,
1:34:41 World Bank,
1:34:42 uh,
1:34:43 website.
1:34:44 Um,
1:34:45 I'd also like to express my gratitude to the team behind the scenes,
1:34:50 team behind the scenes,
1:34:52 which,
1:34:52 uh,
1:34:53 has made it all,
1:34:55 made it all work.
1:34:56 Um,
1:34:57 so thanks to,
1:34:58 uh,
1:34:58 Mia Ho and Rose from the
1:35:01 World Bank
1:35:02 and,
1:35:02 uh,
1:35:02 Lizzie Chey from,
1:35:04 uh,
1:35:04 John Chaplin's team.
1:35:07 Thanks once again to uh the speakers for
1:35:10 sharing with us your expertise and experience.
1:35:14 And,
1:35:15 uh,
1:35:15 of course,
1:35:16 thank you to you,
1:35:17 you,
1:35:17 the audience for your participation.
1:35:20 Um,
1:35:21 I look forward to,
1:35:22 uh,
1:35:22 meeting you all,
1:35:23 uh,
1:35:24 soon,
1:35:25 hopefully in person,
1:35:26 uh,
1:35:27 and if not through other events like this one.
1:35:30 And in the meantime,
1:35:32 uh,
1:35:33 I hope everyone stays safe.
1:35:36 So,
1:35:36 thank you all once again and thanks uh
1:35:39 for every thanks to everyone who's participated.
1:35:42 Thank you.
1:35:43 Thank
1:35:44 you.
1:35:44 Thanks,
1:35:45 David.
1:35:45 Thanks everyone.
1:35:48 Thank you.
1:35:52 Perhaps the,
1:35:53 perhaps the team would like to stay for a few.
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