Here are three big things we picked up on at Sibos and which leave us optimistic about where the industry is heading.

Towards true payments interoperability (really)

The importance of payments interoperability – for fostering economic growth and reducing risk – is well known. But so too are the many challenges standing in the way of achieving it. 

Competition incentivises proprietary platform development, which can hinder collaboration. Legacy systems and outdated infrastructure, built without interoperability in mind, often require substantial investment to replace. The inconsistency of the global regulatory landscape around payments – and the way in which global standards are implemented locally – adds technical and governance complexity to the global payments landscape.

But the industry is making good progress on a number of fronts that build towards greater interoperability. 

ISO20022, a common payments messaging language for financial institutions that enables the transmission of richer data, is becoming the dominant global standard for payments and is helping banks develop innovative solutions for customers. 

Swift's evolution to incorporate real-time payments and wallet access, through partnerships like the one with Nium for instance, demonstrates a move towards bridging existing and emerging networks.

Speed without sacrificing security

With ever faster transaction speed comes greater risk of fraud. In Europe, fraud rates have increased by 20-30% annually for the past three years, while instant payments have shown six times greater prevalence of fraud compared with regular credit transfers, according to the European Banking Authority.

Privacy-enhancing technologies are making good progress and helping to increase the speed of payments while also making them safer. 

At NatWest, we’ve built a suite of fraud controls across all payment types and channels throughout the customer journey – from customer contact and biometric authentication platforms to device and digital identity technology, using AI-driven fraud models. A key part of our strategy is to work on linking our payments fraud ecosystems, which are often segmented by channel  and payments type, bringing us closer to a singular, holistic customer-level view across products and channels. From here threats can be identified and interventions made approaching real-time.

We’re starting to see more examples of how blockchain could offer enhanced security, efficiency, and transparency in value transfer. Technical cryptographic solutions like zero-knowledge proofs can address data privacy and security concerns while enabling better data sharing for compliance purposes.

CommBank, an Australian bank, noted how its ‘NameCheck’ technology (which uses a private, permissioned blockchain network) helped halve the amount its customers lost to scams, and helped stop hundreds of millions of dollars in mistaken payments.

In 2023, Swift launched two AI pilot projects to target cross-border payments fraud, working with major financial institutions to see if AI can identify potential fraud patterns from anonymously shared datasets. In the UK, Confirmation of Payee has a similar aim.

Collaborate to innovate on fraud mitigation

Greater cross-industry collaboration and information sharing – within and beyond the financial services ecosystem – will also help. 

Meta and NatWest are piloting an initiative called Fraud Intelligence Reciprocal Exchange (FIRE). FIRE is a threat intelligence sharing program for financial institutions, allowing banks to share intelligence (but not personal information) with Meta.

FIRE gathers known ‘bad’ profiles associated with scams to share with Meta, to ensure that our customers and other UK consumers do not become a victim to crimes originating from these profiles or individuals linked to criminal networks.

Regulation will also play a key role in balancing customer safety and speed of payments. At the beginning of October, the UK Payment Systems Regulator (PSR) introduced a requirement on all payment services providers (PSP) in the UK to reimburse victims of Authorised Push Payment (APP) scams whereby remitter and receiving banks share the liability equally. The initiative is to protect consumers from harm, and most importantly to incentivise all players in the ecosystem to invest to prevent scams before they happen. 

The Australian government’s recent introduction of the Scam Prevention Framework (SPF), to foster greater collaboration between technology companies, telecoms providers, and financial institutions in stopping and preventing fraud, could be an exemplar for other countries seeking to improve consumer protection, early detection and reporting. Crucially, it could incentivise more investment in technology solutions like AI, machine learning, and data analytics.

AI and machine learning are also playing a growing role in risk management, and here too we are seeing greater industry collaboration among financial services providers and tech companies. Some of the most compelling use cases include scam risk scoring, mule account detection, behavioural biometrics and transaction monitoring.

To learn more about the future of payments, visit our Payments Hub or get in touch with your NatWest representative.