trends in payment systems and financial inclusion in asean - michael moon
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Business Forum Philippines
Modernising payments for future generations
in The Philippines
April 2016
Michael Moon
Head of Payment Markets | APAC
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The Philippines
7000+ islands
27 years old (avg)20% financial inclusion
100 mio people
110% mobile phones 25 bio o/seas
remittances
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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
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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
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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
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Innovation dilemma: future technologies are difficult to predict
We simply only know that it will be different
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“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)
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Infrastructure matters, and financial infrastructure is the backbone of all economies
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airports
railway
roads
Financial infrastructure is important too
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The Philippines payment system challenges
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Inefficiencies
Fragmentation
AccessibilityCost
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Market Infrastructures in The Philippines require
renewal, rationalisation and modernisation
RTP
CashCards
(ATM/POS)
Cheque
(PCHC)Interbank Transfer X-Border
Gcash
SmartMega
Link
Banc Net
National Card
Switch
(BancNet)
Paper E-chequeLVP
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
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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
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18 countries ‘live’
12 countries ‘exploring’ / ‘planning’ / ‘building’
17 additional Eurozone countries ‘exploring’
Planning
Eurozone
Live
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However, Real Time Payments Innovation is not just about going faster
Open AccessSimpler
AddressingAPI 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
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So how does The Philippines industry address this challenge?
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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
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An open, scalable, flexible NPRS can support financial inclusion in the Philippines
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Basic Infrastructure
Dir
ect
Part
icip
an
ts
Ind
irec
t
Part
icip
an
ts Addressing Database
Switch
Network
Se
ttle
me
nt
Se
rvic
e
Overlay Services
Real-time
24/7
ISO 20022
Addressing database
Connected services
such as Mobile
Payments
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In Australia SWIFT is currently building the infrastructure supporting the next
generation payment platform known as the “New Payments Platform”, or NPP
Basic Infrastructure
Dir
ect
Part
icip
an
ts
Ind
irec
t
Part
icip
an
ts
Addressing Database
Switch
Network
Se
ttle
me
nt
Se
rvic
e
Overlay Services
15PH BF Payments
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Practically speaking, the The Philippines can pursue the following
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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
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The Philippines and ISO 20022
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recommended
reading
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