Belgium

ACI’s Take

Belgian banks have signed up to participate in the development and launch of the European Payments Initiative (EPI), which will see the convergence of card payments and real-time payments onto a new scheme with an accompanying digital wallet.

This will not only be a challenge, given the disruptive and wide-ranging nature of the proposed project, but also a major opportunity. EPI’s business-led drivers are likely to be a highly powerful starting point for widespread modernizations, more so than any technology-led need to refresh could ever be. Not only will it allow banks to get out from under high transaction fees paid to non-European payment networks, but it will also enable them to enjoy more ownership of innovation to, overall, offer better and more relevant services to customers at a lower cost. It will also likely allow them to leverage much of the infrastructure that they currently use to service both cross-border and domestic real-time payment use cases, and so maximizing those investments.

Some new functionality will be required, of course, and it will mean becoming familiar with new rules and new mandate maintenance requirements. They should take the opportunity to deliver this aspect of the project with a tech strategy that prioritizes having the flexibility to respond to changes while minimizing disruption. That means adopting solutions that will evolve with changing mandates and can take out any unpredictability around the costs of compliance once related services are in market and banks are outside of project mode.

Among the unintended and under explored consequences of the widespread real-time payments adoption that EPI hopes to create is the impact on core banking systems. Instantaneous balance updates are possible, and in many cases, not difficult. The challenge will be the sheer volume of channels that require this information. Customers will expect a real-time balance across mobile, internet, ATMs, in branch and digital wallets, and any embedded finance use cases they make use of.

Finally, EPI’s convergence of cards and real-time payments will likely involve a long, step-by-step modernization of card infrastructures. As that modernization develops, banks will become more motivated by the benefits of modernization to migrate other payment applications and services onto these new infrastructures.