Mike Smith and John Box, Raphaels Bank: "Banks and fintechs are working together to deliver innovative services for customers"

What does it mean for Raphaels Bank the recent acknowledgement as a fully operational provider of Faster Payments solutions?

Mike Smith: To become the first new member of Faster Payments Scheme Limited (FPSL) is an achievement we are incredibly proud of. As a Bank that specialises in providing niche payment services, it is vital that we are able to offer market-leading services to our clients – direct technical access to FPSL is something that huge numbers of Payment Service Providers and the growing number of fintechs have been asking for, as identified in the Payment System Regulator’s Report into Access to Payment Systems. Raphaels Bank is delighted to be building the capability to support this.

In line with the first question, can you explain how the integration to the payment system of customers like TransferWise is enacted?

John Box: Our partners are now able to take advantage of FPSL’s New Access Model and connect directly to the FPS central infrastructure via a pre-certified aggregator gateway (five vendors have now had such gateways certified by the scheme, including ACI Worldwide, Bottomline Technologies and VocaLink). Through this approach, PSPs can submit and receive Faster Payments in real time, obtaining the same technical service and benefits as a full member of the scheme. The difference is that Raphaels Bank, as their sponsor, provides authorisation and settlement services via our own gateway and our Bank of England accounts. Unlike the Indirect Agency approach, sponsored PSPs do not integrate into their sponsor bank’s infrastructure, therefore removing issues such as bank system outages and batch file processing delays and charges from the solution.

Can you foresee any potential impact of Faster Payments on the overall intents and purposes of the PSD2 initiative related to the EU space?

J.B.: PSD2 provides a number of opportunities across the Financial Services community. The requirement to offer clear and transparent access to payment systems is something that FPSL’s New Access Model addresses – I believe the lessons learnt from the creation of this model should certainly be taken into account as the European Payments Council works on delivering a real-time SEPA Credit Transfer solution. Looking further into PSD2, the requirement to enable PSPs to access Banks via open APIs leads to a number of opportunities that may well revolutionise how payments are initiated. The development of new and exciting payment initiation solutions will be fascinating to observe and there will be a role for Payment Systems, such as Faster Payments, to play in ensuring these new solutions are real-time, secure and well-integrated into the established payment infrastructure.

What other technologies are you considering for leveraging your current solution offering to your payment processing customers, say for example, data analytics, cloud or blockchain?

M.S.: At the moment, Raphaels are committed to delivering a reliable, secure and real time solution for access to Faster Payments. Through this work, we continue to identify particular financial services that many PSPs struggle to obtain through traditional high street providers. We continue to assess which of these services provide opportunities for the bank to develop specialised solutions for this underserved sector.

Speaking of security measures required for e-payment transactions, how do the Faster Payments participants seal off their network against web fraud?

J.B.: Raphaels Bank is proud to have partnered with TransferWise as the technology partner that has enabled our initial launch as a FPSL participant. The onboarding process, is a necessarily rigorous procedure which has taken over 9 months and focuses heavily on system integrity.

The highest standards of firewall and levels of encryption must be used, whilst oversight and final sign off of the end to end technical solution for access to the central infrastructure is provided by the FPSL assurance team. This ensures Raphaels and all members conform to the strict security criteria of the scheme.

Can you picture out the evolution of the payments industry by 2020, given the increased interest of the new fintech companies in improving the actual banking services?

M.S.: As banks and fintechs are now learning to work together to deliver innovative services for customers, Raphaels’ partnership with TransferWise is just one example of this trend. The theme of collaboration and innovation now appears to have to replaced themes of competition from disruption, especially at events such as this year’s EBADay annual congress (Raphaels co-sponsored a fintech pavilion at this event). If you couple this new found willingness to work together with initiatives such as the Payment Strategy Forum (facilitated by the Payment System Regulator) in the UK and the requirements of PSD2, then the lead up to 2020 will be an incredibly busy time, however we as an industry are now faced with more opportunities to deliver cutting edge innovation in payments than ever before.

About John Box

John Box, Head of Strategic Partnerships Payment Services Division, has worked at Raphaels since 2012, during which time he has played a key role in growing the banks delivery capability along with overseeing the development of Raphaels indirect and direct agency access solutions for Faster Payments, Bacs and SEPA schemes and explaining the benefits of these to the emerging payment community.

 About Mike Smith

Mike Smith, Commercial Director, is a retail banker with over 30 years’ experience. He started his career with NatWest where he was Current Account and Personal Loan Manager, Head of Personal Customer Marketing in the Retail Bank and held several other senior roles. At the Post Office he was Head of Banking and then Head of Marketing at the inception of Post Office Financial Services. He has been working on Raphaels ATMs and Payment Services since 2005 and has been instrumental in their growth and strategy. He is a Board member of the Prepaid International Forum and Emerging Payments Association Advisory Board and is the Leading Global Prepaid Industry Contributor (Prepaid Awards) for 2013-14.

About Raphaels Bank

Raphaels Bank traces its roots back to 1787 and is one of the oldest independent banks in the UK. Today we operate as a dynamic, niche savings and lending bank with a portfolio of ATMs and a well-established, market-leading payment services division. Raphaels Bank is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority, and qualifying clients have the protection offered by the Financial Services Compensation Scheme and the Financial Ombudsman Service. The Bank is also a member of both MasterCard and VISA, and the LINK interchange network.