Hello everybody, welcome to another edition of C&F Talks. It's great to have with me today, Simon Eacott who's the Head of Payments at NatWest Bank. Simon's going to be joining us and speaking at the Payments Regulation and Innovation Summit, which we're holding in London on the 21st of January. Simon, good morning.

Good morning, Maurice, how are you?

Very well indeed, great to have you with us. Let's turn to our first question, if we may.

The government recently published its National Payments Vision. How do you think this will impact the payments ecosystem?

Yeah, I mean I guess the short answer to that is, I hope profoundly. But it's been something that's been welcomed not just by myself in NatWest, but by the broader industry as well. And the hope is that it will unblock a lot of things. It certainly gives the UK the opportunity to regain a leading place in the magical mystical world of payments, a place that we've perhaps been overtaken certainly technologically for a while.

In terms of real benefits from it, I see the opportunity for much greater regulatory coordination. We're not short of regulators in the payment space in the UK, so that clarity is certainly welcome but the engagement of the regulators with the industry through the various committees I think is a good thing. On terms of specifics, I think the unblocking of the new payments architecture procurement is a welcome step because it gives us the opportunity to move out of a period of stagnation and really look at what is required for retail payments infrastructure going forward.

I also very much like the introduction of digital identity into the into the picture and focus on that because I think that will have a number of really really powerful use cases and you know will certainly help in the development of e-commerce and indeed in the prevention of fraud. So lots and lots of things to you know to be really really positive about and the need now very much is to let's get on with it, let's inject some pace, let's inject some real energy and we can very much enable the payments industry to really move forward and support the government's need for growth.

When you say Simon, that we've fallen behind a bit technologically, where in the world, which of the centres or regions which have overtaken us?

I think I mean it's primarily in the retail space, retail payment space, it's where you know we certainly led the world with faster payments some 12-15 years ago, and that's been a, you know, that's been a great innovation. And it's wrong to say that we haven't innovated, we have had things you know we've done a lot of work on things like open banking for example, but when you look at the economies of India and Brazil with UPI in particular, they seem to you know leapfrogged a little bit in technology terms, and it's that kind of technology that we need to be looking at a lot more closely.

Sure.

Another major development has been the introduction of mandatory reimbursement for APP frauds. What do you think could be done to try to counteract the increase in fraud?

Yeah, again, that's a really really important question and fraud very much and APP scams in particular are the scourge of society. In the UK with faster payments, we've perhaps taken the brunt of that earlier than maybe some other ecosystems have.

We have done a lot in the UK already which has helped introduction of things like confirmation of payee for example on faster payments, making sure that the payment is going to who you want it to go to. There's been a lot of work around the management of data, but we can go a lot further. The APP fraud reimbursement scheme went live in October and introduced or mandated a set of reimbursement rules spreading the liability across both sending and receiving banks which helps as a safety net for once the fraud has been perpetrated, to make sure that the individual is appropriately reimbursed but actually we should be doing more to stop it up front and that means things like spreading the ecosystem a lot wider.

The majority of frauds actually start outside of the payments ecosystem directly on some of the platforms and some of the telco. We need to be working with those bodies to improve the detection and stopping the fraud in the first place.

Do you think this new reimbursement scheme is going to disproportionately hit the smaller challenges and perhaps stifle innovation and competition from them?

I certainly hope not, and I know that it was subject of a lot of debate in the run-up to the implementation in October.

The regulators did indeed respond to the size of the cap, the liability cap which was meant to even that out a little bit but this is such a heinous position that we're in to have the level of scrutiny on it is the right thing and we've got to work as an industry. That's the key thing here. Data sharing initiatives are going to be key to this and we need to find a way through that regulatory maze to make sure we get the right balance between the obvious need for privacy but also the need for sharing data for the common good.

Maurice

On that last point and bearing in mind what you said earlier that we're not short of regulation or regulators in this space, what do you think globally regulations can do to make life easier both for financial institutions and consumers? How do they strike the right balance between the two things?

Yeah, it's a great question. And if you think about what we're doing in the UK and then multiply it many many many scores of times to, you know, to coordinate across that is clearly very challenging. A lot of jurisdictions have their own rules, regulations but there is a lot that is already happening. Simplifying the standards is one of the payment standards and the ISO 20022 initiative and rollout will help with the interoperability across systems and again the potential sharing of potential sharing of data.

I think the initiative Maurice, is what's happening with the G20 and the real focus on coordinating across those you know those main economies to focus on speed on transparency on cost and access. But the concern that I have and it kind of goes back to the conversation on fraud is as we get more interoperability of systems, more instant payments being linked then the speed with which fraudulent money can cross border obviously increases. So, getting the right balance between appropriate friction and a great user experience in terms of instant payments is, you know, it's going to be key, it's going to be key in all of this.

Yeah, so, it's quite challenging from a regulatory point of view.

For our viewers if you'd like to hear more on these and related issues from both Simon and our other speakers at the conference, just to remind you, it's the Payments Regulation and Innovation Summit. It's being held in London on the 21st of January, and further information is available from our website www.cityandfinancial.com.

Simon, that was a very interesting conversation. I look forward to meeting you in person in January.

Thank you.