DEEP DIVESExclusive to Strategy Plans
December 6, 2017
The brave new world of global finance is getting braver. Real-time and near-real-time payments systems have changed the fabric of online commerce. - Patricia Pozuelo, Enterprise Technology Specialist, Intel
30+ countries have real-time payment processes of some kind (for example, Faster Payments in the UK, Singapore’s FAST); several have been in use for decades.
The reasons the US lags in development of its own RTP system: 1. The sheer number of financial institutions in the country compared to the rest of the world – the US has roughly 5,300 commercial banks and more than 6,000 credit unions; 2. Complicated regulations process; 3. The US’ complex regulatory process – 50 regulators + more than 20 federal agencies that all need to provide approval in order to implement RTP restructuring. The UK has one single agency.
The majority of Europe is already onboard with these streamlining banking upgrades as well, with countries like Spain, Denmark, Sweden, Poland, and the Netherlands putting RTP services into practice nationally.
The Swiss National Bank has been ahead of the curve since 1987 when it introduced its 24-hour payment-processing SIC system and revolutionized the world of pre-internet banking.
China’s mobile and digital payment market was the largest in the world at $1.83 trillion in 2016. Most of that activity comes from two companies: Alipay and Tenpay.
Japan has had their Zengin System running near-RTP for years, which is about to get an upgrade. SBI Ripple Asia recently announced the creation of a consortium of 42 member banks that will use Ripple’s new round-the-clock blockchain technology for payments and settlement.
The rest of the industrialized world has already implemented or started implementing fast-payment systems, including Nigeria, South Africa, Brazil, Chile, Mexico, India, and Australia.
US P2P payments users are expected to grow to 126 million by 2020, with non-banks leading much of the charge. WEF estimates that 80% of banks are currently developing blockchain projects. About 19 of the biggest financial firms in the US all signed on for a new P2P payments network Zelle.
FIS and The Clearing House also launched a nationwide RTP system during the first quarter of 2017, which could garner up to $1.1 billion in revenues. Both banks are also members of the Federal Reserve’s Faster Payments Task Force Steering Committee, which will soon start evaluating new approaches for implementing RTP across the country.
Morgan Stanley has launched its online platform, Access Investing, with an annual fee below those of its wirehouse rivals. The program fee: 0.35% of assets under management per year. The robo portfolios include mutual funds and ETFs with both active and passive strategies. They also feature automated rebalancing and tax-loss harvesting at no additional charge.
Merrill Edge Guided Investing robo-service charges 0.45%, and Wells Fargo’s Intuitive Investor offering has a 0.50% fee. Discount brokerages Schwab, Fidelity and Vanguard all charge less than Morgan Stanley for advisor-focused robo-services: 0.28% for Schwab Intelligent Advisor, 0.30% for Vanguard Personal Advisor Services, and 0.15% for Fidelity AMP. These fees don’t include expenses on the underlying funds.
While Morgan Stanley’s has a $5,000 account minimum, the competing Wells Fargo service can be accessed with $10,000 or more of client assets.
Morgan Stanley Access Investing is an opportunity for financial advisors to grow their book of business by making connections with prospects earlier and eventually establishing full-service relationships when clients are ready. - Naureen Hassan, Morgan Stanley’s Chief Digital Officer.
Target introduced Wallet in the Target app – a new way for guests to pay and save at Target stores. With Wallet, guests can pay using their Target REDcard and save with Cartwheel – all in a single scan of their phones at checkout.
Target claims the in-store checkout time with the new Wallet is up to four times faster than other payment types.
The Wallet combines digital savings – Cartwheel offers and Weekly Ad coupons – with the 5% REDcard discount.