Key themes from our 2018 Australian Payment Summit

On 26-27 November 2018, more than 250 delegates, including 50 local and international speakers, came together at the payments industry’s flagship annual event – the Australian Payment Summit.

Convened by Australian Payments Network (AusPayNet), in collaboration with global organisation Currency Research, the two-day summit was a rare opportunity to discuss the latest payments industry developments and trends with experts, regulators and innovators.

The Summit began with a warm welcome from AusPayNet CEO Leila Fourie, who addressed the event’s theme of “Payments in the Platform Economy”, setting the scene for a number of key summit themes.

Shift to the digital economy

The Summit was delighted to welcome Reserve Bank Governor Philip Lowe to deliver the opening day’s keynote address. Mr Lowe’s broad-ranging address covered issues such as the clear shift to electronic payments, the declining role of cash and cheques, and addressing card-not-present fraud and digital identity.

Mr Lowe said that per capita Australians make, on average, nearly 500 electronic payments a year, whereas ATM visits have dropped to 25 times a year, and that it was now easier to envisage a world where “cash becomes a niche payments instrument”.

Mr Lowe highlighted that it may be appropriate to soon consider winding up the cheque system, given plummeting usage as consumers and businesses continue to choose digital payments (including for high value transactions previously covered by cheques).

Moving to a customer lifestyle experience

The Summit heard compelling evidence, both in Australia and abroad, of a shift from providing individual financial services products towards delivering financial services as part of a broader customer lifestyle experience.

A panel session entitled Payments in the Platform Economy uncovered how tech giants in Asia are now morphing into lifestyle companies, offering services including travel, telecommunications and online shopping alongside payments.

The importance of delivering lifestyle solutions was also highlighted in the Next Generation of Digital Banks session. Panellists from Australia’s digital banks agreed that “banking services should fall into the background and happen automatically”, with one panellist summarising their bank’s approach neatly with the statement that they’ve “crossed out banking and replaced it with living.”

Open banking

The Summit hosted an insightful session entitled Open Banking – Exploring New Opportunities, moderated by AusPayNet CEO, Leila Fourie.

Panellists discussed the impetus and drivers for implementing open banking reforms. In May 2018, the Australian Government announced it would legislate to create a consumer data right in financial services. Gijs Boudewijn, the Chair of the European Banking Federation’s Payments System Committee, said there was a need for a stronger and more prescriptive government mandate – along with implementation support – to help Europe’s open banking journey. Against this, Payment NZ’s Steve Wiggins said his country was moving towards open banking purely through industry collaboration.

The session included an interesting discussion about the potential for open banking to drive greater financial social inclusion, alongside also supporting financial services competition and economic growth.

Building trust

A common theme over the two days was “trust”. In his opening address, Mr Lowe acknowledged the important work underway to build customer trust in the digital environment. He referred to industry work led by AusPayNet to develop a framework to mitigate card-not-present (online) fraud, as well as a standards-based trust framework for digital identity, being led by the Australian Payments Council.

The panel session entitled How Do We Build Better Trust Online? further considered a framework for digital identity, uncovering the requirements of organisations that want to play in this space and highlighting the need for close collaboration among all parties.

Discussions in the In Search of New Business Models in Payments session also circled around trust (including a lack of it) and the role it could play in determining the success of major tech giants in the payments space. Potential ‘seeds of failure’ included consumer and client concerns about data privacy and the costs of vetting inappropriate content.

The role of regulators in innovation

On day two, Melisande Waterford from the Australian Prudential Regulation Authority (APRA), Tony Richards from the Reserve Bank of Australia and Stephen King from the Productivity Commission took part in the session entitled Reforms Disrupting the Regulatory Landscape to Drive Competition and Innovation.

The panel considered APRA’s work to encourage new challenger or ‘neo-banks’, and the role that this will play in supporting the development of a more competitive landscape, where customers have greater choice.

The panel also discussed card interchange fees and the comparative merits of positive interchange in a mature card market, following some introductory remarks by Tony Richards.

In conclusion

In closing the successful event, AusPayNet chair Rob Craig pointed to the evolution of motor cars as a good analogy for what’s happening in payments. Fifty years ago, a motor car was difficult to drive, but the car itself was simple. The modern motor car is far easier to drive, although it is far more complex under the bonnet.

AusPayNet will publish a more comprehensive summit report in coming weeks – watch out for it!