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TRINA: The changes on real time payments is under way. Arun, one of the main reasons why banks are considering a core banking replacement or upgrade is to achieve 24 by 7 processing. While we know Osco payments may be achieved in near real time payments and funds may appear in the recipients account within seconds. They’re still electronic transfers that you can do on a Friday afternoon, before a long weekend that won’t get there until Tuesday morning. How does Australia compare to the rest of the world in this regard?
ARUN: So,,, what I’ll do is I’ll probably drive it to the few examples and then you know that will articulate it better. What you kind of described is what I would call as a typical Financial Services Supply Chain problem, right? Because there are multiple stakeholders involved, right? And when you take the example of the likes of India and China, probably that will give you a view of, you know, how to benchmark on the reference you actually had, Suppose you take the case of how a payment flows or a fund originates, right? or a transfer originates in say … India or China. What really happens, is a person like me who’s actually the end customer who is initiating the transaction… and India has gone very big in mobile, right? Everything is actually mobile for us in a sense, so that’s the source of origination, right? And because it is on the mobile, the concept of real-time payment is absolutely necessary, right? You just can’t work with, you know, India has moved past the wallet concept. Everything is real-time payment so the moment the user actually puts the pressure on the infrastructure for real time payments, the clearing and settlement system has to oblige to it, right?
So, we went through a massive transformation of similar to what you’ve actually done in the NPP world, we went through a transformation as well, right? So, the real-time … the infrastructure is available from a real-time perspective, but the final stakeholder is actually the core banking system in a sense, right? What… is it batch based? is it completely real-time etc. right? And that’s the final stakeholder in… in our ecosystem. And when you look at core banking engines, we were not among the earlier adopters, right? The earlier adopters have been the first wave actually was the Legacy batch-based system. Then you had the second wave which was pretty much 24 by 7 systems, right? And when India adopted it, we were mandated to take 24 by 7 systems. We couldn’t take batch … batch-based system. So, the entire core banking ecosystem in India is actually 24 by 7.
So, what really happens right from the user to the market infrastructure, to the core banking systems is actually a seamless flow in terms of 24 by 7. And because you’ve achieved it in low value payments, now it’s become mandatory even in high-value payments. So even the high-value payment is actually both 24 by 7, almost near real-time, right? So… so, that’s possibly the, you know, closest benchmark that everybody, you know, refers to today. And if you look at it, purely from a core banking perspective, the most interesting thing that’s happening is in China or greater China for us, right? Where you have Chinese Banks of Greater Chinese Banks being actually early adopters. So you have the legacy. But they also have 24/7. But the volumes that they hit on real-time payments are so high, right? Primarily, because you have Black Friday or mobile payments is … they have come up with the concept of dual-core, right? So they have… you can have the legacy core banking engine for your normal banking transactions but your entire online and mobile payments actually is run on a micro service based, you know, core banking system, which is quite scalable on the cloud.
So effectively what happens is your… the transactions which require real real-time payments are completely running on the smaller core, not the larger core, right? So that’s among the most
interesting things that’s happening on our side especially in India and China. UK, of course, has had very great success in… I would say faster payments. Europe is getting there in terms of say… instant payments; they’re still testing it out. But everybody still not 24 by 7, right? US, is not there, right? So, I think emerging markets, which have taken the 24 by 7 core banking system are mainly able to exploit real-time payments. The rest of them are going through the Journey. That’s the way I would actually summarize.
