Genevieve Marjoribanks Payment Systems Innovation and Regulation Summit speech - 3 June 2020


This is the text of the speech as drafted and may differ from the delivered version. This speech was delivered at the Payment Systems Innovation and Regulation Summit speech on 3 June 2020.

Good morning, and thank you for inviting me to speak here today. 

The fight against COVID-19 is proving to be a formidable challenge. It’s having a devastating effect all over the world, and the financial sector is working to provide vital lifelines that people need to deal with the impact.

I don’t know about you, but I usually use a variety of different ways to pay for things – whether it’s using cash at my children’s school fairs, using Faster Payments to transfer money to family and friends, or making contactless payments in shops. That all comes down to having a choice of different payment methods. But choice only happens because of innovation.

Right now, everything is different. The payments sector is constantly innovating, but even in the last ten or so weeks we’ve seen rapid change, from differences in the way people access and use cash to companion cards, allowing account holders to give someone they trust a debit card to make essential purchases on their behalf.

At the PSR, one of our key priorities is exactly this: innovation. Not innovation for the sake of innovation, but for the long-term benefits it can bring.

It’s at the heart of everything we do, alongside effective competition and ensuring that payment systems are operated and developed in the interest of the people and businesses that use them.

New Payments Architecture (NPA)

First, I want to look at supporting innovation and greater competition by delivering a resilient, robust architecture. For the PSR, the New Payments Architecture, or NPA, is one of our key priorities.

The NPA’s Blueprint comes from the Payments Strategy Forum, produced by countless hours of collaboration between industry stakeholders and users. It provides an ambitious plan for developing an innovative, competitive interbank payments environment underpinned by a resilient, sustainable infrastructure. 

In 2008, Faster Payments was one of the world’s first 24/7 immediate interbank payment systems. Now, it has been emulated in some form in over 50 countries, demonstrating that the UK can be at the forefront of payments innovation.

We all want to be part of delivering success for the future and there is a common consensus amongst industry that the NPA is the way forward.

By upgrading our interbank payment services to use the ISO20022 messaging standard and enabling other enhancements from the Blueprint, we can help to maintain the UK’s position as a payments leader.

Pay.UK has the challenge of developing the NPA ecosystem, including consulting on the NPA scope and potential trade-offs in competition, user benefits versus costs and implementation timelines. It must also ensure that the design and governance arrangements of the NPA are fit for purpose. 

We know that creating the NPA is a significant change that needs to be planned and managed carefully, a challenge not helped by these difficult times. There need to be proportionate decisions made to establish the right balance between the speed of realising benefits and managing the costs and risks of the transition.

We must be an outward facing regulator. For us, an important part of this is stakeholder engagement to inform our future regulatory approach. Our recent Call for Input, outlining potential innovation and competition issues, is one of the steps we’re taking to ensure our regulatory approach will be fit for purpose. The responses we received will feed into our policymaking, and we hope industry will remain engaged throughout. 

Despite the impact of COVID-19, there remains a strong commitment from industry to realise the Forum’s vision of the NPA. When it becomes operational, we will continue our work as the economic regulator focused on the interests of users, promoting access and competition.

Access to cash

Another of our priorities at the PSR is access to cash. This may not immediately spring to mind when thinking of innovation but we want to ensure that innovation in payment systems doesn’t have a detrimental impact on those who want or need to use cash. And of course, there continues to be innovation in how consumers can access cash, particularly in light of COVID-19.

Innovation plays a key role in access to cash and supporting consumers to broaden their choice of payment methods.

Our research, published last year, established that although cash was the preferred payment method for 28% of consumers, over 80% of consumers had still used cash in the previous week. This suggested that cash will continue to play an important role for many years to come. 

The gradual shift away from cash to digital payments has been accelerated by COVID-19; we’ve seen a 50% fall in ATM withdrawals and an increase in online shopping. This has created challenges for cash access, so we’ve continued our work with the Treasury, the Bank of England and the FCA via the Joint Authorities Cash Strategy Group, to ensure that cash remains widely accessible for those who need or want to use it.

We’ve also been working with the FCA, in collaboration with industry, other regulators and the University of Bristol, which in 2019 produced a report on the decline in cash, to develop a tool to map out access to cash across the country, allowing us to see any gaps in provision. This involved regularly collating data on the ATM network, consisting of 45,000 ATMs, 19,000 bank and building society branches, mobile banking services, Post Offices and ATM market. 

This was used to convene an FCA-led group for industry and regulators, including the PSR, to coordinate industry response including working with industry to ensure vulnerable and self-isolating groups could continue to access cash, for example through delivery services, sharing best practice amongst industry to help maintain branch access availability for essential services, and working collaboratively with industry as restrictio