The Detail

This report provides an overview of the major market infrastructure initiatives now underway for account-to-account (A2A) payments in the European Economic Area (EEA) and individual European markets (including the U.K.) and the implications of these changes for FIs and other stakeholders in the near to medium term. The analysis summarizes the current state of complex regulatory and technical infrastructure initiatives, including but not limited to areas such as the single euro payments area (SEPA), the Nordic P27 project, and open banking initiatives. The study includes a discussion of pan-European initiatives such as SEPA instant payments, as well as regional/local initiatives in Austria, Belgium, France, Germany, Luxembourg, the Nordic countries, Switzerland (including Liechtenstein), and the U.K.

Why is this worth reading?

The European payments market is in a state of unprecedented change. The digitalization of commerce continues to drive customer demand for payment solutions that are faster, more transparent, less risky, and cost-efficient. Instant payments are becoming the norm, facilitated by new settlement infrastructures such as the Target Instant Payments Settlement (TIPS) system. With the arrival of open banking, new payment models are emerging to compete with card payments as the dominant online payment method. These commercial drivers are underpinned by a constantly evolving regulatory regime mandating change and ongoing improvements with no end in sight. In the face of these developments, FIs need to modernize their payments infrastructures to stay compliant and create new customer value.

To make it more convenient, we have also split this report into individual breakdowns for each region of focus:

Austria

Belgium

France

Germany

Luxembourg

the Nordic countries

Switzerland (including Liechtenstein)

U.K.

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Summary and key findings

Major trends such as the move to instant (real-time) payments and regulatory initiatives to increase competition and reduce fragmentation are reshaping the European payments landscape. This Aite-Novarica Group report provides an overview of the major market infrastructure initiatives now underway for account-to-account (A2A) payments in the EU and individual European markets, and the implications of these changes for financial institutions (FIs) and other stakeholders in the near to medium term. Key findings from this report are as follows:

  • European FIs are working hard to implement a significant number of large infrastructural projects, including the migration to new clearing and settlement platforms (T2, TIPS, P27) and the migration to ISO 20022 messaging standards.
  • FIs’ resources are already constrained. Still, they need to prepare for upcoming regulatory changes, such as the expected requirement to adhere to the SEPA instant payments (SCT Inst) scheme, new requirements resulting from the review of the second Payment Services Directive (leading to a “PSD3”), and regulatory initiatives to stimulate open banking and open finance.
  • Given this increasingly dynamic and complex environment, banks and other FIs are strongly motivated to invest in payments modernization to compete for new business while reducing costs and maintaining compliance obligations.
  • Payments modernization is a top priority, but qualified resources with payment expertise in-house are scarce, requiring FIs to look for outsourced solutions. FIs generally prefer to buy software solutions—cloud-based, Software-as-a-Service (SaaS) solutions, in particular—rather than develop them internally.

Introduction

The European payments market is in a state of unprecedented change. The digitalization of commerce continues to drive customer demand for payment solutions that are faster, more transparent, less risky, and cost-efficient. Instant payments are becoming the norm, facilitated by new settlement infrastructures such as the Target Instant Payments Settlement (TIPS) system. With the arrival of open banking, new payment models are emerging to compete with card payments as the dominant online payment method. These commercial drivers are underpinned by a constantly evolving regulatory regime mandating change and ongoing improvements with no end in sight. In the face of these developments, FIs need to modernize their payments infrastructures to stay compliant and create new customer value.

Bottomline commissioned this Aite-Novarica Group report to provide an overview of the major market infrastructure initiatives now underway for account-to-account (A2A) payments in the European Economic Area (EEA) and individual European markets (including the U.K.) and the implications of these changes for FIs and other stakeholders in the near to medium term. The analysis summarizes the current state of complex regulatory and technical infrastructure initiatives, including but not limited to areas such as the single euro payments area (SEPA), the Nordic P27 project, and open banking initiatives.

The study includes a discussion of pan-European initiatives such as SEPA instant payments, as well as regional/local initiatives in Austria, Belgium, France, Germany, Luxembourg, the Nordic countries, Switzerland (including Liechtenstein), and the U.K.

Methodology

To develop this research paper, Aite-Novarica Group used a combination of existing research and expertise, and analysis of data from Aite-Novarica Group data sets and reliable public sources, including the ECB, central banks, SWIFT, the Euro Banking Association (EBA), the European Payments Council (EPC), and other market infrastructures.

Aite-Novarica Group also conducted qualitative interviews with European FIs, regulators, industry organizations, and the financial services technology community to gather or validate additional perspectives and source additional information.

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