Banking Review

The future for payments – we’ll discuss it at BarCampBank

If there’s one sector in banking that looks set to transform dramatically in the next few years it’s payments. The investors behind oneTXT and MoBank must agree, having gambled millions of dollars on start-ups seeking to capitalise on mobile and social network payments.

The mobile & social networking crowd (and it’s a rather large & growing crowd) demand speed. Why, they often ask, does it take so long for money to appear in a newly opened savings account, or for a new payment to an external party to process?

Real-time payments are now a reality in the UK, and that’s despite the regulatory compliance hurdles thrown up by AML legislation, and so often used as an excuse for slow payments.

A common theme emerging among new payments businesses is their role as middlemen between consumers and banks.

MoBank is working hard to build a brand that consumers can come to love, based on a simple interface and a solid service proposition – making what seems and sometimes is complex simple. The underlying banking infrastructure is still required for MoBank to operate, but customers will be forming a relationship with MoBank, not the bank that expedites the end payment.

This is where encumbent banks have been disintermediated in the past – by organisations like PayPal, ING Direct, and more recently Zopa.

Payments innovation by local banks is happening around the edges with pilots and other trials, but it’s those from outside the sector that we’re watching. Facebook continues to trial a virtual currency model, Centricom continues to sign up merchants for its online payments service, and Distra, (partly owned by NAB), is also developing

What do you think? Will local banks be disintermediated by new payments enablers? Will real-time payments come to be expected by more customers?

I’ve chosen faster payments and new business models as my discussion topics at this Friday’s BarCampBank in Sydney, an event where everyone that attends must contribute. More info here.