High-level discussion: ‘Future of Payments’
On 21 November 2024, Binder Grösswang hosted a panel discussion with renowned experts from the banking and financial services sectors.
The future of payment transactions was the focus of this event in the Binder Grösswang impulse series, which took place as part of Fintech Week 2024 in cooperation with the Austrian Bankers' Association. What added value does the digital euro have for Europe's consumers? What consequences, as well as opportunities, do EU regulations such as the Financial Data Access Regulation (FiDA) or the Markets in Crypto-Assets Regulation (MiCAR) have for banks? What significance does cash have in an increasingly digital world? These were some of the questions discussed by the panel consisting of Petia Niederländer, Director of the Payments, Risk Monitoring and Financial Education Department at the Austrian National Bank, Matthias Dekan, Head of Payments and Daily Banking at Raiffeisen Bank International, Andrea Meier, Head of Solutions Management & Transaction Management at DZ Bank and Board Member of the Euro Banking Association, and Georg Hauer, former General Manager at N26 Group and Advisor and Fintech Venture Expert. The discussion was moderated by Gundula Geiginger, Puls4.
"Technological innovations and continuously changing regulatory conditions are confronting the players in international payment transactions with new challenges. We wanted to take a closer look at this complex and, of course, highly topical issue. We are all the more pleased that the result was such an engaging and exciting discussion," said Stephan Heckenthaler, initiator of the event and partner in the Binder Grösswang Banking & Finance team.
A central point of the panel discussion was the role of a potentially groundbreaking player in payment transactions: the digital euro. Petia Niederländer, Director of the Payments, Risk Monitoring and Financial Education Department at theAustrian National Bank, because the advantages are obvious: in addition to the fact that the digital euro would be an important anchor of stability and would strengthen the strategic autonomy and resilience of the euro zone, it should ensure legal tender for the digital space. ‘Today, if you want to make payments across the EU, you still face restrictions. The digital euro would change that: it would enable all EU citizens to make cash-like and uncomplicated payments anywhere in the digital euro area.’ Furthermore, the digital euro would make the payment traffic in the euro zone independent of non-European payment providers and counteract their dominant market position. It was also important to Niederländer to emphasise that the digital euro, issued by the central bank, is not a replacement for cash, but a supplement to it. Currently, in Austria, information on this topic is aimed more at digital-savvy sections of the population, and shortly before its introduction, broad information will be targeted to the general public.
When asked about the future role of the European central banks, Niederländer sees a more active role for them than before; they must learn to work together more quickly and more actively. "Simultaneous interaction with consumers, retailers and banks – as is necessary, for example, with the digital euro – is new for us. But I am confident that we will be successful in this," concluded Petia Niederländer.
Making payment options smarter while keeping them simple
The fact that a means of payment such as the digital euro must always be seen in the context of the ecosystem behind it was emphasised by Matthias Dekan, Head of Payments and Daily Banking, Raiffeisen Bank International. ‘The success of a digital currency – whether it's a digital euro or Wero, for example – depends largely on whether most of the participants in this value chain also support it.’ There are already a great many alternatives to the digital euro, which reduces its added value. However, added value is crucial for a project like this. In general, however, ‘digital currencies will, should and must play an important role in the future,’ emphasised Dekan.
Matthias Dekan does not expect any significant changes in the area of cryptocurrencies over the next ten years. For most people, these are an investment class and have only established themselves as a means of payment in certain areas; for the general public, this is not the case.
When asked about his assessment of the future, Dekan sees several major challenges for banks: It is important to keep payment options simple and not to put customers in the situation of having to constantly choose between different payment options. Furthermore, payment options would have to be made more intelligent. "And at the same time, we have to try to simplify the complexity that we have with our customers. This also means that we actively think about how we can combine this," summarises Matthias Dekan.
Yes to the digital euro, but more attention to the way it is introduced
The necessity of the digital euro is undisputed, as it would support Europe's monetary sovereignty, emphasised Andrea Meier, Head of Solutions Management & Transaction Management at DZ Bank and Board Member of the Euro Banking Association. But: It is important to question how a digital euro will be designed and what role banks will continue to play in the future. It is also unclear what significance the infrastructures, systems and solutions that have already been developed would have in a market with the digital euro. If Europe really wants to become independent of international systems, we need to think collectively about where and how we can make meaningful use of existing private sector solutions. ‘We would like to see more cooperation on an equal terms so that we can grow together in this area,’ says Meier.
When it comes to regulation, Meier has mixed feelings: on the one hand, regulation – such as FiDA – theoretically allows banks to continue to be active in their customers' lives with their data and to develop business models for this. On the other hand, there is no longer any leeway to develop these business models. "Even just taking into account the minimum regulatory requirements takes up so much of our energy that we no longer get around to improving the customer interface," Meier explained. Looking to the future, the main task for banks is to use the basis created in recent years to expand and develop solutions for customers. Andrea Meier concluded by saying that banks now have to show how efficient they are.
Digitalisation in the banking world has only just begun
Georg Hauer, former general manager at N26 Group and now an advisor and fintech venture expert, was a proponent of the digital euro, although this may come as a surprise given his professional background. However, Hauer agreed with Andrea Meier's statements that criticism is still warranted: the ECB has so far failed to take private-sector players on board to jointly develop use cases. This must now happen quickly, then clear goals must be set and only then should the digital euro be developed. Furthermore, an official KPI for the number of users should not only be introduced, but it must become the central benchmark for the success of the project. The ECB, as a kind of infrastructure builder, would then have to be the platform that enables these use cases, according to Hauer. Only in this way could hundreds of use cases from European players go live from day one, as soon as the digital euro is introduced.
On the subject of EU regulation, Hauer put forward the following hypothesis: He assumes that in 15 to 20 years, a large proportion of assets will be held in tokenised form. MiCAR makes this possible and is actually a kind of prototype for digital asset regulation worldwide. ‘I would describe MiCAR as really good regulation. Pioneering work has been done, this regulation enables completely new business models,’ said Hauer. At the end of the discussion, the fintech venture expert also looked to the future: the real digitalisation of the banking world has only just begun, he said, and is currently only ten per cent complete. ‘We are now experiencing an extremely exciting time in banking. The next 20 years will change the banking industry to an extent that we cannot even begin to imagine today.’
The event in the Binder Grösswang impulse series, which attracted a large number of guests to the law firm's Conference Area, came to a close with a relaxed get-together during which the insights gained from the panel discussion were discussed in greater detail.