Glendinning was keen to hear more on the topic of companies moving from B2B to B2C, which he said potentially spelt the end of wholesalers and retailers and also impacted on exchange controls. He called the growing use of e-wallets “fascinating”, as it introduces more non-bank players into the financial system. Banks can either regard these newcomers as potential partners or as competitors.
Shah agreed that the trend was a business challenge for the banks, with new payment platforms becoming available as central banks create new avenues for corporates to explore. Asia in particular has a growing number of young people dependant on their mobiles and mobile-based payments systems have been developed in response, which had not yet reached the critical mass to become a disruptive force but was nonetheless steadily growing.
He added that despite the digitalisation of cross-border payments and the wish of government authorities to encourage further digitalisation, exchange control regulation still demands sight of all underlying documents and data. So there are further efficiencies still to be released for everyone in the value chain through improved control and risk management.
While more fintechs and service providers are issuing e-wallets, corporates want to see greater regulation of this space. Shah added that the transfer of money from an e-wallet creates a degree of underlying risk, but with appropriate flows under specific-use cases this risk is well mitigated.
Rai noted that the technology surrounding application programming interfaces (APIs) has played a major role in transforming business models, with information becoming of major importance due to the instantaneous nature of the payment.
This is particularly evident when purchasing travel tickets online, agreed Shah. Successful payment acknowledgement needs to be instantaneous in order for the ticket to be issued, even if the airline selling it actually receives the incoming payment a day or two later. The information that enables ticket buyers to book an order instantaneously is distinct from the payment information.
A central issue regarding the benefits of digitalisation is the availability of data and information, said Glendinning. As the banking system is unable to carry the sheer volume of information, it creates the need for channels outside of the bank.
This is where the fintechs potentially play an enabling role, suggested Rai, depending on which countries they operate in. They can perform a number of important roles, including assuming the compliance and control functions. There are good models for this in the retail space, with a collaborative framework such as the Unified Payment Interface (UPI) in India.
The ‘last mile’ interface is an open one, for which a bank or a fintech can be the provider and new models will develop beyond the retail space, forecast Rai.
In addition, fintechs may also have a ‘last mile’ customer-facing role, with great potential for them in the future as major players in a conducive environment.
Asked how AMS might be impacted, Gruner said the company was mainly a producer and more a provider of hi-tech than fintech. Regular communication with its suppliers and vendors was essential and required a mix of online and digital solutions for this, both internally and externally. The company also needed to have
sufficient funds for paying its suppliers and employees. Many previously menial processes for these tasks were abolished as coronavirus spread in order to make working from home easier, but the pandemic has also raised questions about taxation for cross-border payments.