NPP benefits to come from added services, not 'plumbing'

The real benefit of the New Payments Platform unveiled earlier this week will come from the value added services that banks and financial institutions are able to build around it, according to financial technology specialist HCL Australia Services.

Estimates that the entire NPP ecosystem might cost as much as A$1 billion to construct reflect the overall investment that will be made by institutions harnessing the system, rather than the cost of building the underlying network infrastructure alone.

Balaji Ram, vice president and head of financial services for HCL, said that the NPP would be a focus for the company and its financial sector clients over the next three to five years.

He said the major benefits of the NPP would derive from the innovative services developed by banks that took advantage of the real time and mobile payments platform, along with the rich data that surrounded payments.

"Payments is under threat from the PayPals and the Apples. Our approach is to say if you don't play a role in ecommerce then you will miss out on some upstream opportunities.

"This is an opportunity for ADIs to get in the value chain," and make use of the rich payments data that would be made available, he said.

Those institutions which take a pure compliance and regulation-focused approach to linking to the NPP, and just use it to facilitate payments would miss out on the full benefits, Ram said. By using the NPP as a springboard for new services and business transformation banks would have the opportunity to grow revenues and improve their overall liquidity, he said.

Phil Chronican, CEO of ANZ Australia, which is one of the dozen companies committed to invest in the next phase of the NPP rollout, spoke at the NPP-SWIFT contract announcement about the importance of the new platform in allowing banks to keep up with customer expectation and compete with payments disruptors.

"The best way of protecting yourself from competition is meeting the needs of your customers first," he said, noting that peer-to-peer payment facilitation would likely be one of the first services to be launched over the NPP.

According to the timetable provided this week the first overlay services for the NPP are slated to be launched in early 2015.