Three key payments considerations for banks in 2024

As banks look to stave off disintermediation from fintechs, while managing technical implementations and navigating new regulatory changes, XMLdation explores the issues that should be top of mind in 2024.

In today's evolving payments landscape, the industry is experiencing a whirlwind of change. With advancements in technology, shifting consumer preferences, and the emergence of new payment methods, banks face unprecedented challenges and opportunities – so the need for agility and adaptation has never been more pressing.

For banks, automation has become paramount in streamlining processes, enhancing efficiency, and meeting the ever-growing demands of corporate customers. This article explores three upcoming key issues for banks in 2024, what each might mean for their corporate customers, and how payment testing solutions should remain top of mind.

1. Supporting SEPA payments, 2019 version

As of March 2024, all ISO 20022 standard-based XML payment messages – as specified under the four 2023 Single Euro Payments Area (SEPA) payment scheme rulebooks – will be based on the 2019 version of the ISO 20022 standard (Version 2019).

While the move to Version 2019 brings with it new optional fields to allow for structured information and additional XML tags, it also creates a new headache for banks and their customers. In the interbank space the move to Version 2019 is mandatory; however, for corporate-to-bank messages it will – at least for now – remain optional.

Banks, however, have a vested interest in ensuring their corporate clients do not ignore this transition. If they do, it will not only take longer to unlock the full benefits of the updated rulebook, but it will likely introduce new challenges further down the road – especially as fully unstructured address information will be discontinued from November 2026.

So how can banks make this implementation as seamless as possible for their clients? As banks roll out support for Version 2019 to their corporate customers, the XMLdation Payment File Testing solution can offer tremendous value. It enables banks to engage XMLdation to prepare and launch a self-serve test environment that reflects the particular business rules and processes associated with Version 2019. This test environment can be opened to corporate clients to significantly streamline the migration process for them.

2. Driving automation to launch new services faster

In a fast-moving industry filled with disrupters, the ability of a bank to launch new services faster than competitors is rightly positioned as a key differentiator. Greater levels of automation can act as a key enabler of competitive edge, streamlining processes and expediting the new product from conception to reality.

But success should not only be judged by how quickly a new service makes it to market; equally important is how soon customers can begin using it. Ultimately, the earlier a new client onboards, the sooner revenue can start flowing in.

When rolling out a service to a new client, the technical integration of client and bank systems may, however, prove a barrier. During this final stage of client onboarding, banks can experience delays in getting a corporate customer to conform to their payment file formats.

It is at this stage in the client journey where automation can also be a key enabler. By using self-serve testing tools – such as those offered by XMLdation through the Payment File Testing solution and its API Sandbox solution – banks can automate this tricky file testing process, which may, in turn, help to significantly expedite the onboarding process and enable corporates to go-live with new services faster.

3. Mandatory instant payments in the EU

In February 2024, the European Council adopted a new regulation that will mandate all payment service providers (PSPs) to expand their standard euro credit transfers to include sending and receiving instant payments. Under the instant payments regulation, individuals will be able to transfer funds within 10 seconds – unrestricted by business hours – both domestically and across EU member states.

The new regulation aims to enhance the strategic independence of the European economic and financial sector, while also fostering innovative new payment services (such as request to pay). At the same time, the regulation will, unsurprisingly, fundamentally change the instant payment landscape in Europe.

With volumes set to grow dramatically, PSPs will need to conduct a front-to-back review of their existing payment infrastructure to see if it will be fit for purpose, while corporates from multinationals to SMEs should assess how the changes will impact their own treasury workflows.

As PSPs enhance their infrastructure to support instant payments, they can use XMLdation Simo® Simulator solution to automate testing of their renewed payments processes.