EBADay or Groundhog Day? Transforming to end the regulatory hamster wheel

As banks look towards their priorities for the coming year, instant payments – particularly the new European Instant Payments Regulation (IPR) – loom large in the minds of many. A poll of EBADay attendees found that 75% see instant payments regulations as their main priority for the year ahead.

Now, it is obviously important to come together as an industry to explore the challenges and implications of new regulations. But you don’t need to have been around for as long as I have to get the sense that much of this has all been heard before. For after a decade in which payments have been fundamentally reshaped to Instant being the new normal and banks have contended with myriad new regulatory requirements, 66% still report legacy technology as the main barrier to compliance.

The uncomfortable truth is that it really should not be this difficult. Meeting the requirements outlined within the IPR for example, including Verification of Payee (VoP) and additional sanction screening, coupled with -much- higher volumes is relatively straightforward for banks that have reimagined their payments processing capabilities.

Banks must also recognise that IPR is just the ‘new, new thing’. Death, taxes and yet another payments regulation are the only certainties in life and should come as no surprise (but often seemingly do). Also, across the rest of the world, momentum is building for instant payments and the reality is that this will inevitably lead to much more work for permanently over-stretched teams.

Yet continually kicking the can down the road is not a sustainable option (‘let’s see if we can extend the deadline’). It leads only to an interminable and costly cycle of short-term fixes that barely clear the latest hurdle, while doing nothing to address – and in many cases compounding – the root cause of compliance headaches.

To avoid having the same conversations at EBADay 2025 (or even 2035 for that matter), a different approach is needed, one that moves away from treating each new regulation as an individual challenge to be wrestled with.

Now is as good a time as any, with banks continuing to benefit from favourable interest rates and retail as well as wholesale clients slow to move money for higher yield. I’ve always struggled to count these revenues towards payments processing, but I will do so now to make my case: Investing this into a strategic payments transformation programme underpinned by a flexible framework approach can help banks to take control and jump off the regulatory hamster wheel. By freeing up time and resources to focus on delivering Value-Added Services on top of instant payments, banks can unlock new long-term revenue streams and fully capitalise on the true potential of instant payments.