Irish banks consider new business model for Synch payments app to avoid Central Bank approval process


Except it can't be. Introducing sepa instant into the Irish banks that have decades of built up payments infrastructure is not straight forward.
Traditional banks have operated in 'batch' mode for decades. Moving away from that to real time processing is anything but simple. Revolut and other fin tech companies don't have the issue of legacy systems.
SEPA as a concept took nearly 15 years to be fully implemented across Europe and that was a batch process that banks understood.
All that is also ignoring the fact that SEPA instant is simply a foundation. Most banks in Europe even those who have SEPA instant are looking at solutions like this app. And that's because as good as SEPA instant is, the really powerful stuff is through open banking and account to account payments.
As for SEPA instant being the European standard, it's not. There is a reason why the ECB has not mandated banks to adopt it. If as you say it is so easy, cheap to install and the answer to everything, the ECB would have given every bank 5 years to implement it. Even now, they are not mandating banks to offer it. Only just over 50% of European banks offer SEPA instant. When it comes to payment, that is not a standard. SEPA is a standard. SWIFT is a standard. SEPA instant isn't.
As for the APP itself, I know very little about what they are doing but as far as I know it will be available for any institution to join. Banks often cooperate to create market solutions. SWIFT itself is owned by its members. There is nothing uncompetitive about it.
 
Hi Sunny,

Please do a little more research on the Irish "offering", I think you'll find there are potential barriers to entry, for non-developer Banks - they will only be allowed to join, at the description of the (three) developer Banks.

I don't accept the point that you make about Irish banking infrastructure - not because I disagree that it's a mess, and has been underfunded for most of the last three decades - but because allowing them to continue down the same path only makes matters worse, for the future.

By the way, are you implying that SEPA Instant isn't compatible with the three Irish Banks systems, because I have it on fairly good authority that it can be implemented, and not at "crazy" money?

Referring to the ECB not having made SEPA Instant the common standard is a bit of a red herring - they haven't set any standard, and they may not be due to their view on SEPA Instant, it could be for any one of numerous reasons. The simple fact of that the market is essentially setting it's own standard, by adopting SEPA Instant.
 
..and the Central Bank of Ireland 'authorisation process' [read: not interested in consumer benefit] had nothing to do with this - do you hear!

Also it should be noted that PTSB had instant transfer facilities to its own accounts for years - just didn't appreciate the consumer interest.
 
This was inevitable. The Irish banks' slothful incompetence has cost them dearly once again. Maybe now the Irish banks can do something that benefits their remaining customers and focus on SEPA Instant by reallocating whatever resources they had committed to Synch.
 
Connard said:
I think this is the first time I heard they were going to call it Yippay. That is an absolutely awful name. Who came up with that.
Click to expand...

I am sure that they paid some clever marketing consultancy €100k to come up with that.

It does sound ridiculous.

" She will be coming 'round the mountains when she comes...

Singing ay, ay, yippee, yippee ay. singing ay, ay, yippee, yippee pay"

No, it wouldn't have caught on.





Brendan
 
But we are seeing a pile up of exiteers from the market with hints of Central Bank over doing it (always when the horse has bolted e.g. vultures etc)
 
I wonder how many millions the Banks blew on this project, before finally acknowledging that there was no point in trying to "invent" a lesser version of SEPA Instant?

Whatever the amount, at least they've now stopped throwing good money after bad.
 
Irish banks didn't upgrade their technology for decades because they effectively operated a cartel and didn't think they would have to. Now, anyone remotely interested in instant transfers & functional banking apps has long had a Revolut account, which means that Irish banks still don't have to gain much by catching up. If I was them I'd just give up on daily banking and squeeze out whatever is left of the mortgage, personal loan, and business loan markets until Revolut starts doing these things too.
 
ClubMan said:
For the reason mentioned in the article perhaps?
Click to expand...
You don't think it's concerning the 3 remaining Irish banks, who dominate the market, and have ended up back with a near monopoly on all banking are trying to avoid Central Banks oversight?

I'm actually surprised the boys in AIB and BofI allowed the guys from PTSB in on this.
 
The EU agreed last week on instant payments, so banks are going to have to implement and provide instant payments to customers by law in the next few years. That was probably the final nail in the coffin for Synch Payments, also the fact that it was probably never going to be profitable.


In 2022, EU Commissioner Mairead McGuinness, responsible for financial services, proposed new laws to make the service mandatory. The commission argued its move would free up billions of euros that, at any given moment, aren’t available for people or businesses to spend because they’re in transit through payment systems.

Under the new plans, banks will have to provide the service to their clients at no extra cost, under strict deadlines, said Dutch lawmaker Michiel Hoogeveen, who shepherded the proposals through the European Parliament.

EU seeks to make 10-second instant bank payments a reality

A legal deal struck late Tuesday could put an end to long waits to transfer money across borders
www.euronews.com
 
The SEPA instant payment model does not inc;lude this 'bill splitting' feature which is a usp of Revolut.

The Business Prevention Department (also known as Central Bank of Ireland) escapes criticism.
 
WizardDr said:
The SEPA instant payment model does not inc;lude this 'bill splitting' feature which is a usp of Revolut.

The Business Prevention Department (also known as Central Bank of Ireland) escapes criticism.
Click to expand...
If all this was about being able to split a bill this was never going to be a 'business' just a glorious waste of money.

If people don't have a Revolut account they weren't going to bother signing up for a poor Irish imitation.
 
This thread has confused me a bit. I transferred money from my BofI account to my foreign bank account last week and it arrived the same day. And I paid my Irish accountant last week and he had the money either that day or the next (he's with BofI too)

Now it's not as fast as Wise, which literally is like a minute for me doing Euro payments to sterling accounts.

How long are payments taking? Does it depend on who you bank with?
 
That dopey yippay name has been around since the outset. The domain yippay.ie was registered by Synch in December 2020 and it has appeared in a number of newspaper articles over the years. It sounds like something chosen by the elderly suits in an old world Marketing Agency for its appeal to the yoooth....

Regarding cost, the amount must be substantial. This 2022 article mentions a figure of €10m already incurred, but the total cost will be a multiple of that, especially when development costs (both Synch and the costs incurred by the individual banks modifying their own systems) and other internal costs are added. And there may well be a significant write off in order to close out the contracts with the Italian software developer. Not that the banks give a jot about this given their current profitability and the fact that it won't cost any Bank Director a penny; isn't shoring up expenses and losses what customers and tax payers are for after all.

Regarding the Central Bank being at fault, far be it from me to defend them, but throwing mud at the CBI is disingenuous to say the least. At the outset of this project Synch will have set up a number of work streams such as Finance (Funding, Revenue and Profitability), Operations, IT and of course Compliance, Regulatory and Legal. The last of these will have been well staffed by highly respected and even more highly remunerate consultants who, if they were on the ball, would have on day 1 set-out the regulatory requirements. On a project of this nature, as with any such project of scale in financial services, it is inconceivable that somebody didn't look towards the CBI and ask themselves "do we need to go there?". And in such cases, if there is even a sliver of doubt, someone would have picked up the phone and asked the Central Bank for their view - they are normally very receptive to such queries. The suggestion that Synch woke up one morning, three years down the road, and found the CBI unexpectedly banging down their door is farcical. If the banks didn't realise that they required regulatory approval it gives rise to a whole different set of competency questions. Pointing at the CBI at this stage is just a crass attempt at deflecting blame. The Banks are 100% responsible for getting themselves into this mess.

This was a daft idea from the outset. The notion that our slothful pillar banks could lock themselves in a room and quickly and efficiently and profitably and successfully challenge a disruptor like Revolut was never going to fly. At best they would have produced some clunky, limited function, me-too imitation. If, as the saying goes, a dromedary is a racehorse designed by a committee had Synch completed its work it would most likely have presented us with a three-legged three humped camel.
 
@Freelance the departures from the Irish Market and the non-entry is all about CBI at least that what the horses said. Any in FI that would say that openly would be fired. Mr Burgess is one of the few that says it without fear of reprisal.
 
@Bronte
How long are payments taking? Does it depend on who you bank with?

Would that there was a simple answer to your questions. It depends on who you as payer banks with, who the payee banks with, which interface (web or app) you are using, the day of the week, the hour of the day, and almost but not quite whether the wind is blowing from the East.

The banks have a same day value service for which they charge €25. There are time of day restrictions. Generally only used for high value time critical transactions (e.g. final conveyancing payment or similar settlements).

Payer and Payee accounts in the same bank (e.g. AIB or BOI)
Standard transactions between your own accounts often but certainly not always occur immediately.
Transactions to a third party may show up the same day, or the following day. Recipent balance may or may not be updated at the same time

Payer and Payee in different domestic retail banks with clearing system access.
Usually next day, but can be second next day, especially where weekends are involved.

There are a number of other anomalies. For example, when you pay your AIB credit card by transfer from your AIB current account the money goes walkabout for at least 24 hours. And while the incoming transfer may be listed on the recipients account, the updating of the account balance may take another 12 or more hours. And there are plenty more oddball happenings.

Foreign transactions, non SEPA, transactions, Credit Unions all introduce other variables which impact the timeframe.

The sum total of this is that there is an enormous amount of money “in limbo” which is of no benefit to either payer or payee. You’ll not be surprised to learn that while the banks are tardy in the extreme about they way the handle and record this at the customer side, no such carelessness occurs on their side. All of this “up in the air money” is happily accounted for on overnight deposit earning them handsome interest.

The banks have had the technology available to the to facilitate instant transfers for many years. And have done diddly squat about it. Fortunately, change is finally on the way, and as is so often the case, only because the EU’s size 9s are behind it. And hopefully, the EU will ignore the lobbying by the banks across Europe and force its adoption as the default quickly and without charge.
 
@Freelance PTSB for example have instant transfers to all its own customers except credit card.
With SEPA and the number of 'batches' the payments to and from other banks can be same day.
I agree with most of your sentiments.
 
Instant payment is only half of the problem that Revolut solved; the other is 'identity', i.e. being able to pay someone stored in my phone address book, rather than having to deal with 34-character IBANs.
 
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