Australia's regulatory environment is holding back payment innovation, and until the advent of real-time settlement, in 2016, innovation in this area will be limited, delegates at the CeBIT conference in Sydney were warned.Kees Kwakernaak, managing director of global treasury services for Bank of America Merrill Lynch, said that, in general, banks and regulators were "not necessarily any good at innovating. The regulatory environment is typically not helping, and the fact that regulatory systems are typically very domestic is also, typically, not helping." Kwakernaak said that the persistence of Australia's overnight batch-settlement system was holding back innovation efforts, and only the advent of a real-time payments hub, in 2016, would break the drought.Financial innovation was a major theme at CeBIT, with a number of presenters echoing Commonwealth Bank chief executive Ian Narev's warning earlier this week that the main competitive threat in the future may come from non-banks, which are not hampered by legacy issues and are able to leverage technology to create alternative payment techniques outside of the traditional banking regime.This threat is international, and, according to Christophe Langlois, an innovation consultant specialising in the financial sector, many banks are developing innovative responses, often crowd-sourcing innovation by tapping their customers or partners for ideas.He said that France's Credit Agricole was growing an "ecosystem" of financial solutions by opening up the applications programming interface to its banking systems to allow third parties to develop applications for its customers. This is a similar approach to that being taken by the CBA with its Pi development platform. Langlois said, however, that the 27 apps which had so far been developed by third parties had only achieved limited traction with Credit Agricole customers. He nominated Nigeria's Trust Bank as "probably the most social bank in the world", as it allowed new customers to open a bank account on Facebook, while its managing director regularly responded to customer concerns on YouTube.All of Australia's banks have taken to the social networks to some degree, but there was a sense at CeBIT that real, deep and sustained innovation remained difficult to achieve in the current regulatory environment.Where local banks do seem to be making significant innovation progress is in the application of so-called big data to extract insight about customer behaviour and preferences which can then be used to develop, price or target products and services. ANZ has already revealed plans to use IBM's Watson service, which serves up insight based on big data analysis. Meanwhile NAB's UBank demonstrated its Ultra Goal mobile phone app at CeBIT. This application allows customers to analyse their spending patterns and compare them with those of other Australians in order to help them monitor and manage their budgets.