Payments Conference: Payments on the Cusp

Our Payments Conference: Payments on the Cusp 2023 covered a wide range of topics in the payments and financial regulation landscape.

For those of you who missed it, or would like a reminder of the topics covered, please find below key takeaways from each session: 

Session 1 - Global Payment Evolution: Unpacking from East to West - Trends, Transformations, and Strategies

Our panellists discussed the payments market and regulations in various parts of the world, highlighting the importance of helping clients navigate jurisdictional differences. As an example - the rise of SuperApps in Asia combines services like food delivery, rides, peer-to-peer payments, insurance, and investments with social networks in one App. These apps pose regulatory challenges, especially related to data protection. The session emphasized how regulators in different countries view the benefits and concerns presented by SuperApps.

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Session 2 - Digital Transformation: The Future of Payments

Our panellists talked about the significant progress digital payments have made, but challenges remain, especially regarding identity verification and fraud prevention.

Banks and FinTechs are exploring different approaches to know-your-customer (KYC) checks, and public-private partnerships could help streamline identity verification. However, balancing security and user experience in fraud prevention remains a challenge, with emerging technology such as AI playing a role.

The panelists disagreed on whether central bank digital currencies (CBDCs) had yet shown themselves to have a clear use case, noting the important difference between wholesale and retail applications.

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Session 3 - Payments Unleashed: The Collaborative Revolution

The session discussed the impact of the rise of aggregators in the payments ecosystem, with regulated entities partnering with unregulated entities to offer comprehensive solutions. The panelists highlighted slow consumer adoption of open banking as a particular challenge.

The panellists opined that access to traditional payment networks is essential, but innovation should also have room to flourish. This raised the question as to whether increasing alliances between payment providers might reduce competition and vibrancy in the payment space.

A recent change in the payments market has been innovation by non-regulated players who offer value-added services.  In conclusion, the panellists identified a need for both competitive and collaborative ideas to build a functioning payments infrastructure.

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Session 4 - The Future of UK/EU Payments and Financial Regulation: Convergence or Divergence?

In this panel, our UK and EU payments regulatory teams discussed their views on the Future of UK and EU payments regulation. Currently, there hasn’t been significant divergence in approach between the EU and UK regulators, with both focused on improving innovation and competition in their respective markets with an overarching consumer protection objective. The EU's PSD3 suite of legislation (which includes a Regulation of Payment Services in the EU) aims to harmonize payments regulation in Europe, potentially leading to more intra-EU convergence and less Member State gold-plating. PSD3 also contains some similar approaches to those taken by the UK legislature / regulators especially in areas like APP fraud and open access to data. It is therefore unlikely for there to be ‘capital D’ divergence between the UK and the EU.

The panelists concluded that there's an expectation of some inevitable divergence as new laws like PSD3 are passed, but both UK and EU regulators share similar priorities.

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Breakout session - From Open Banking to Open Finance: What model do we use? 

Open Banking, particularly in the UK, has been successful thus far because it has leveraged a specific business model, mandating established banks to allow third-party access to financial data through APIs. When it comes to broadening the same principles to the rest of financial services, panellists delves into what models for incentivisation will be most effective? How will evolving data policies shape this? 

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Breakout session - Governance and Trust: building consistency and reliability in challenger payments systems

What is the impact of strong governance on digital payment adoption, and the consequences of failures of governance? Panellists looked at payment regulation and the role this plays in building trust in new digital systems. Where may there be gaps between regulation and best practice behaviour? Between the ‘S’ and ‘G’ of ESG, how does strong governance enable better inclusion in digital transformation, especially in financial services?

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 Breakout session - The dirty, the bad and the ugly: Tackling launderers, scammers and hackers

Criminals are constantly developing new strategies to exploit payment products and services. Panellists discussed financial crime risks and controls and the current focus of the FCA and the EBA and Bank of Italy reports on retail payment security and fraud, plus the UK Economic Crime and Corporate Transparency Bill and AMLA. Data breaches happen and hit the headlines. We’ll share tips on breach preparation, vendor vulnerability, regulatory notifications and a ransomware survival story.

Click here for the audio recording. 

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