From paper to reality


Speech by Hannah Nixon, managing director of the PSR, at the British Bankers' Association The Future of Payments Conference on 24  September 2015 in London.

This is the text of the speech as drafted and may differ from the delivered version.

Good morning.

I am delighted to be your keynote speaker today and my thanks to the British Bankers’ Association for the invitation.

Incidentally I also had the honour of giving the keynote speech at last year’s Future of Payments conference, which took place exactly the same day – 24 September.

Such a neat coincidence it is far too good an opportunity for me to pass up so I’m going use this anniversary as a convenient way of making some observations on the last 365 days.

But, this is a conference all about the future, so more than anything I want to focus on what happens next.

Three hundred and sixty five

Last year was a different time for the PSR. In September 2014 we were at a more gestational stage, and all eyes were on us.

We were busy working our way through stacks of stakeholder feedback and research to understand what we needed to do to deliver our objectives.

What approach should we take? What policies would make a real difference? What could we learn from the industry and other regulators?

It was a time of reflection and discussion. It resulted first in a Consultation Paper and, ultimately, our Policy Statement – which confirmed the approach we are using today.

Fundamentally, we’re focused on developing and protecting competitive markets where they can provide the conditions where innovation thrives and they deliver for consumers. And where competitive markets can’t achieve that, we will intervene proportionately and in an evidence-based way to drive better outcomes.

So a year has passed and we now have a regulatory framework that is already helping drive up performance in payments.

Our framework is hardwiring the core qualities we are looking for into the way you do business.

We’ve put in place a package of measures to improve access to payment systems, ensure payment systems are focused on their users and to speed up the pace of innovation.  These include requirements for clear and proportionate access terms and on boarding processes; requirements to ensure all users are appropriately represented in decision making; requirements to improve information provision in the sponsor bank market; and, most recently, the launch of the Payment Strategy Forum, which is working to drive innovation where industry collaboration is needed.

Encouragingly, we’re already beginning to see changes in the industry.  Changes that should improve the way that payments systems work and ultimately benefit all who use them.  For example:

  • It’s clear that payment systems are going up the agenda.  There’s still some way to go. But the banks, who ultimately own them, are beginning to see payment systems as the strategic assets they are; not simply as something that can be left alone as long as they don’t fail.
  • The process for joining a payment system directly is becoming clearer and easier.  We’re hearing that the time to connect is roughly halving from 12-18 months to around 6-9 months.
  • We’re expecting to see a number of new members of both interbank and card schemes next year.
  • There’s much greater transparency of information in the sponsor bank market now, and there are signs that new providers are looking to enter that market.
  • Innovation at the consumer facing end of the sector continues apace.  Barely a week goes by without a new announcement.

So for numerous reasons, many more in fact than I have listed above, I view the achievements of the past year with great positivity.

The next challenge

But now we are in a new phase now, and with that comes new challenges.

We’ve developed a policy framework, consulted on it, checked it and implemented it.  We will keep our regulatory approach under review to make sure it remains fit for purpose. But the broad architecture of our regulation is in place.

The focus now shifts from regulator to regulated. The spotlight is on you.

How will industry continue to respond to this new regulation? What further changes will we see? What are the newly-regulated firms saying?

Well, the good news is, for my part: I’m encouraged by what I see.  And what I see is progress.

The people I meet every week agree that change was needed and think we have the right approach. We are enjoying productive relationships with those we regulate and we have constructive and meaningful discussions with the wider payments family.  Indeed the payments family is bigger and wider than ever.

But in this new phase it needs to be more than that. It needs to be more than talk about the progress made, it needs to be more and sustained change that builds on the early progress we’ve seen.  We’ve seen a good start, but it just a start.

What I want to see, and what the people and businesses that use payment systems want to see, is a collective taking of responsibility to drive payments forward – not just now, as a one off, but on an ongoing basis.

A sporting analogy

Now at this point, I would like to digress for a moment.

I have two boys, both of them sports-mad. Like most boys their age, they play as many sports as possible and myself and my husband provide a free taxi service on a seemingly never-ending basis.

Swimming, tennis, cycling, football, rugby, hockey… you name it - they do it.

Yesterday, the 23rd September, was an auspicious day for those that love sport.

It was the 15 year anniversary of Sir Steve Redgrave winning his fifth gold medal at a five consecutive Olympics.

Today, the 24th September, marks a more unsavoury sporting anniversary.

Would anybody in the audience care to take a guess at the anniversary I’m talking about?

27 years ago, in Seoul, South Korea, Ben Johnson won the 100m sprint at the 1988 Olympics.

I’m sure we all know the story: Johnson blew the competition away in a record breaking time of 9.79 seconds. He would only hold the title for a couple of days, and was quickly stripped of his gold after testing positive for anabolic steroids.

Why do I bring this up? What does this have to do with payments?

Steve Redgrave’s ambition and determination kept him, through 16 years of early morning starts and gruelling training routines, at the top of his game. He wavered from time to time – we all remember his ‘shoot me if you see me go near a boat’ comment