The European payment system took a giant step forwards with the introduction of SEPA in 2008. As a result, the previous extremely heterogeneous payment transaction market in Europe was harmonised, both in terms of formats and within the context of the processes. In addition to the single European currency, there was now also a joint network to exchange mass payments.

In existing methods that trigger payments, the individual transactions are processed via proxy accounts that then appear at the banks as cumulated balances in a classic current account. The main beneficiaries of this are technology companies that make this method available both to online traders as well as, increasingly, bricks and mortar traders. In order not to lose this part of the wealth creation chain, it is very important for banks to regain market share in the field of mass payment transactions by means of competitive services so that the contact to their end customers can be strengthened and made more sustainable.

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For the banks, this means that they offer the services involved at the front end of customer interaction and they can be processed without special item costs using the existing clearing platforms. Than banks profit from this in that they are right at the front of today’s market, are back in close contact with customers and can therefore secure access to important customer information in the long term.

Credit institutes should be aware that the introduction of instant payments offers advantages to the modern payment transaction market and, in particular, to the banks. Of course, an institution should
identify for itself which of the use cases suit its current or future business model.

There are already banks and credit institutes that have successfully implemented this and, for example, approve consumer loans within just a few minutes. The loan amount is then credited to the loanee’s account immediately. By using this uncomplicated loan application and the immediate receipt of the money thanks to instant payments, banks can increase the demand
for loans and attract and keep new customers.

Cooperation of the entire banking market and a governance structure more like that of a FinTech than a major bank is needed for successful market penetration for services based on instant payments. Because
this is the only way that the requisite agility can be ensured, both for development and for project management. Furthermore, close cooperation with the users, business and retail customers, is also required.

We will be happy to support you with a successfully implementation and on your path into the future of real-time-payments.