How do consumers perceive “real time”? How do banking establishments and new participants deal with the “real time” issues? What are the consequences on their organization?
- Instant services or information availability
Information instantaneousness corresponds to today’s behaviour of young consumers, future clients of tomorrow’s banks: “Receive the information or service, anytime, anywhere”.
The instant information availability can be provided:
- In ‘push’ mode with very classic methods (e.g.: being informed by SMS about any banking transaction). This is not very frequent; even if banks have this information, they do not systematically “push” it to their clients. Very few banks do that.
- In ‘pull’ mode, i.e. by searching for the information regardless of the possible channel (web, mobile); this method is much more widely used.
Concerning real time value-added services, the possibility to open an account in real time is today more widespread. What is less spread, is the capacity to immediately subscribe to a card and retrieve it (buy it, make a payment and immediately use it at distributors and traders); as such, we can mention the original Compte Nickel initiative that enables this immediate service, in tobacco shops.
The other value-added service, especially adopted by students, concerns instant payments from individuals to individuals via mobile by banking cards saved on mobiles. We are convinced of the banks’ interest to build partnerships with Fintech in order to offer their clients this kind of services. This case is similar to the Lydia service adopted by students that benefit by systematically entering a banking services kiosk.
- Fairly hold accounts position
The response to real time issues passes by a quality improvement of the instant delivered information, notably that of sensitive data, which is the current bank account “real-time” position that integrates all transactions at the moment of their execution or as close as possible to their execution.
The real-time position consolidates the last known accounting balance with the saved or validated transactions that are not posted since the account debit or credit.
This position is used to have a balance approach as close to reality as possible. It is also used to control the risk because when a transaction is presented to the account debit, the account provision availability can be controlled. As such, payment establishments are very concerned by this concept because they cannot have debit accounts, thus holding the real-time position in real time is fundamental for them.
The real-time position is a sensitive data that is not necessarily held in real-time for all payment methods used by the client, because it is updated by transactions in a different way according to what must be done to card transactions or transfers/withdrawals.
- On cards transactions, the real-time position is updated every time the card is used; the authorisation server enquires the bank to know if the real-time position allows the transactions and to update it. The authorisation must as well be issued by the payment terminal; which is not always the case, and not valid for all transactions. For example, in highway tolls or in automatic fuel dispensers, we know that the real-time authorisation is not always possible; thus, in these cases, the card is used without enquiry and without updating the real-time position. The authorisation servers must also enquire the bank, which is not very common. Until now, there are banks that sent the overnight positions to the authorisation server and do not allow all day enquiry of the account’s real-time position, integrating for example transfers or withdrawals issued during the day.
- With transfers/withdrawals, we inherit from the functioning of clearing houses in France where SEPA transactions transmissions continuously occur but are stopped in terms of accounting according to the transmissions limit times; this prevents the immediate reception of an external transfer from account to account, even if the transfer issuer is debited, because transactions pass structurally by predefined paths, in deferred time.
This is why “instant payment”, the new payment instrument scheduled for 2017-2018, that enables exchanges and real-time, is very expected in France.
As a conclusion, the consumers’ real-time perception values the information instantaneousness and quality, notably that regarding account balance, which are delivered by all channels.
The banking establishments meet this perception by multiplying channels of access to centralised information, so that the latter is identical on all channels, and by improving pertinence of delivered data, in particular, that of the account position. However, they are constrained by the structural functioning of payment methods in France, notably for transfers and withdrawals.
Their organisation must evolve to identically distribute the information in real-time via all available channels.