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Business Forum Philippines
Modernising payments for future generations
in The Philippines
April 2016
Michael Moon
Head of Payment Markets | APAC
PH BF Payments 2
The Philippines
7000+ islands
27 years old (avg)20% financial inclusion
100 mio people
110% mobile phones 25 bio o/seas
remittances
National Retail Payment System (NRPS) development is important for all Filipinos
What is NRPS? Well, NRPS envisions Filipinos to have easy
access to financial services and have accounts to make payments,
and receive or transfer funds to other accounts anytime, anywhere,
at a reasonable price from any digital device.
Efficient retail payments contribute to the stability and efficiency of
the financial system and the economy as a whole.
Amando M Tetangco, Jr. on the occasion of BANCNET 25th
Anniversary
PH BF Payments 3
The BSP has established a vision for a National Retail Payment System (NRPS)
To establish a safe, efficient and reliable payment system
Source: BSP
• Efficient interface and
interoperability
• Fosters innovation
• Facilitates wide range of
services with certainty,
affordability and trust
• Transparency
PH BF Payments 4
ASEAN 2025 vision confirmed commitments to the following
Payment &
Settlement
System
enhancements
Capital Account
Liberalisation
& Market
Integration
Global
Standards &
ISO 20022
Cross-border
trade;
Remittances;
Retail payment
systems
Promotion and
harmonisation
of standards
and market
practices
Facilitate investment
in region through
deepening clearing
settlement and
custody linkages
PH BF Payments 5
Innovation dilemma: future technologies are difficult to predict
We simply only know that it will be different
6
“The pace of change in terms of what
customers are doing, how they pay us, how
they come to us – it’s breathtaking … Any
company that interacts with consumers and
thinks that last week’s technology and
approach is going to work five years from now
is probably making a mistake”
Warren Buffett, March 2013
Interview at The Innovation Project 2013
(Harvard)
PH BF Payments
Infrastructure matters, and financial infrastructure is the backbone of all economies
7
airports
railway
roads
Financial infrastructure is important too
PH BF Payments
The Philippines payment system challenges
PH BF Payments
Inefficiencies
Fragmentation
Accessibility
Cost
8
9
Market Infrastructures in The Philippines require
renewal, rationalisation and modernisation
RTP
Cash
Cards
(ATM/POS)
Cheque
(PCHC)
Interbank Transfer X-Border
Gcash
Smart
Mega
Link
Banc Net
National Card
Switch
(BancNet)
Paper E-cheque
LVP
NRPS
Express & Bulk
PhilPaSS RTGS
Clearing
Settlement
ACH
(PCHC)
HVP
Mobile
Money
Customer/
Product
Institutions
Remit Correspondent
Banking
Commercial banks, Thrifts, Rurals, NBFCs
Consumer, Business, Government
Systems
NRPS
Corporate Bonds &
Equities
(On-Exchange)
PSE
PDTCBTr - RoSS
OTC/ Government
Bonds
Settlement Banks
SCCP
PDEx
PH BF Payments
There is a major shift in payment systems occurring: 18 markets are live with new national
Retail Payment Systems (RT-RPS) and many more being planned
10
18 countries ‘live’
12 countries ‘exploring’ / ‘planning’ /
‘building’
17 additional Eurozone countries
‘exploring’
Planning
Eurozone
Live
PH BF Payments
PH BF Payments 11
However, Real Time Payments Innovation is not just about going faster
Open Access
Simpler
Addressing
API to Anything
Intelligent
Messaging
̶ Inclusive -
extended
participant
ecosystem
̶ Regional/global
interoperability
̶ Extensive use of
Digital Channels,
esp. Mobile
̶ Reduced friction for
customer
̶ Centralized
Addressing across
banks
̶ Alias/Proxies
instead of account
numbers
̶ Addressing and
Overlay Services
integration
̶ Consumed by
Corporates,
SMEs, Govt.
organizations
̶ Transfer of
information, not
simply value
̶ Information rich
̶ ISO 20022
So how does The Philippines industry address this challenge?
PH BF Payments 12
A National Retail Payment System (NRPS) in the Philippines must …
• Include large non-banking populations
• Rationalise existing infrastructures for efficiency & scalability
• Support government needs of monitoring payments
• Be flexible and adaptable for future generations
• Support future payment innovation and technology change
• Be highly available, safe, secure
PH BF Payments 13
An open, scalable, flexible NPRS can support financial inclusion in the Philippines
PH BF Payments
Basic Infrastructure
Direct
Participants
Indirect
Participants
Addressing Database
Switch
Network
SettlementService
Overlay Services
Real-time
24/7
ISO 20022
Addressing database
Connected services
such as Mobile
Payments
14
In Australia SWIFT is currently building the infrastructure supporting the next
generation payment platform known as the “New Payments Platform”, or NPP
Basic Infrastructure
Direct
Participants
Indirect
Participants
Addressing Database
Switch
Network
SettlementService
Overlay Services
15PH BF Payments
Practically speaking, the The Philippines can pursue the following
PH BF Payments
Outline a layer-based NRPS:
- innovation layer
- settlement layer
- clearing layer
Industry roadmap for ISO 20022 adoption
Form an industry working group
Establish core principles for NRPS
Tap into global expertise
16
The Philippines and ISO 20022
PH BF Payments 17
recommended
reading
Trends in Payment Systems and Financial Inclusion in ASEAN - Michael Moon

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Trends in Payment Systems and Financial Inclusion in ASEAN - Michael Moon

  • 1. Business Forum Philippines Modernising payments for future generations in The Philippines April 2016 Michael Moon Head of Payment Markets | APAC
  • 2. PH BF Payments 2 The Philippines 7000+ islands 27 years old (avg)20% financial inclusion 100 mio people 110% mobile phones 25 bio o/seas remittances
  • 3. National Retail Payment System (NRPS) development is important for all Filipinos What is NRPS? Well, NRPS envisions Filipinos to have easy access to financial services and have accounts to make payments, and receive or transfer funds to other accounts anytime, anywhere, at a reasonable price from any digital device. Efficient retail payments contribute to the stability and efficiency of the financial system and the economy as a whole. Amando M Tetangco, Jr. on the occasion of BANCNET 25th Anniversary PH BF Payments 3
  • 4. The BSP has established a vision for a National Retail Payment System (NRPS) To establish a safe, efficient and reliable payment system Source: BSP • Efficient interface and interoperability • Fosters innovation • Facilitates wide range of services with certainty, affordability and trust • Transparency PH BF Payments 4
  • 5. ASEAN 2025 vision confirmed commitments to the following Payment & Settlement System enhancements Capital Account Liberalisation & Market Integration Global Standards & ISO 20022 Cross-border trade; Remittances; Retail payment systems Promotion and harmonisation of standards and market practices Facilitate investment in region through deepening clearing settlement and custody linkages PH BF Payments 5
  • 6. Innovation dilemma: future technologies are difficult to predict We simply only know that it will be different 6 “The pace of change in terms of what customers are doing, how they pay us, how they come to us – it’s breathtaking … Any company that interacts with consumers and thinks that last week’s technology and approach is going to work five years from now is probably making a mistake” Warren Buffett, March 2013 Interview at The Innovation Project 2013 (Harvard) PH BF Payments
  • 7. Infrastructure matters, and financial infrastructure is the backbone of all economies 7 airports railway roads Financial infrastructure is important too PH BF Payments
  • 8. The Philippines payment system challenges PH BF Payments Inefficiencies Fragmentation Accessibility Cost 8
  • 9. 9 Market Infrastructures in The Philippines require renewal, rationalisation and modernisation RTP Cash Cards (ATM/POS) Cheque (PCHC) Interbank Transfer X-Border Gcash Smart Mega Link Banc Net National Card Switch (BancNet) Paper E-cheque LVP NRPS Express & Bulk PhilPaSS RTGS Clearing Settlement ACH (PCHC) HVP Mobile Money Customer/ Product Institutions Remit Correspondent Banking Commercial banks, Thrifts, Rurals, NBFCs Consumer, Business, Government Systems NRPS Corporate Bonds & Equities (On-Exchange) PSE PDTCBTr - RoSS OTC/ Government Bonds Settlement Banks SCCP PDEx PH BF Payments
  • 10. There is a major shift in payment systems occurring: 18 markets are live with new national Retail Payment Systems (RT-RPS) and many more being planned 10 18 countries ‘live’ 12 countries ‘exploring’ / ‘planning’ / ‘building’ 17 additional Eurozone countries ‘exploring’ Planning Eurozone Live PH BF Payments
  • 11. PH BF Payments 11 However, Real Time Payments Innovation is not just about going faster Open Access Simpler Addressing API to Anything Intelligent Messaging ̶ Inclusive - extended participant ecosystem ̶ Regional/global interoperability ̶ Extensive use of Digital Channels, esp. Mobile ̶ Reduced friction for customer ̶ Centralized Addressing across banks ̶ Alias/Proxies instead of account numbers ̶ Addressing and Overlay Services integration ̶ Consumed by Corporates, SMEs, Govt. organizations ̶ Transfer of information, not simply value ̶ Information rich ̶ ISO 20022
  • 12. So how does The Philippines industry address this challenge? PH BF Payments 12
  • 13. A National Retail Payment System (NRPS) in the Philippines must … • Include large non-banking populations • Rationalise existing infrastructures for efficiency & scalability • Support government needs of monitoring payments • Be flexible and adaptable for future generations • Support future payment innovation and technology change • Be highly available, safe, secure PH BF Payments 13
  • 14. An open, scalable, flexible NPRS can support financial inclusion in the Philippines PH BF Payments Basic Infrastructure Direct Participants Indirect Participants Addressing Database Switch Network SettlementService Overlay Services Real-time 24/7 ISO 20022 Addressing database Connected services such as Mobile Payments 14
  • 15. In Australia SWIFT is currently building the infrastructure supporting the next generation payment platform known as the “New Payments Platform”, or NPP Basic Infrastructure Direct Participants Indirect Participants Addressing Database Switch Network SettlementService Overlay Services 15PH BF Payments
  • 16. Practically speaking, the The Philippines can pursue the following PH BF Payments Outline a layer-based NRPS: - innovation layer - settlement layer - clearing layer Industry roadmap for ISO 20022 adoption Form an industry working group Establish core principles for NRPS Tap into global expertise 16
  • 17. The Philippines and ISO 20022 PH BF Payments 17 recommended reading