In a world of increasingly complex technology, the need for clarity is evermore a much-required reality. And nowhere is this clarity ever more important than in the payments industry. Learning to navigate this involving stream of complexities is very much a task for industry stakeholders and as it is for the individual. That is the purpose of the Key Regulatory and Industry Initiatives (KRIIS), which seem to paint a picture of clarity for the modern man who stands on the cusp of the singularity.
For it is a truism that what man creates, it in turn creates him back. It is a scaffolding of the Technological Age man, whose skin is the technology he creates. I want to highlight some of these KRIIs and hopefully set us on a path of crystallization. But first we have to understand what a KRII can be: It can either be a regulation or an industry initiative where all players are needed to participate or an existing KRII whose implementation/execution is in progress and the KRII should not be more than three years old or at least have a good reason for remaining; well, at least according to the research methodology used by the conveners of the World Payments Report (World payments report 2015 from Capgemini and RBS | article, no date).
Increasingly, implementing KRIIS has become quite tasking, like a maze, because of three things, one being the number of KRIIs, the overwhelming level of detail, where some are still in development, thus open to the avenue of interpretation, a recipe for conflict and delayed implementation. We see a resounding shift in regulatory agenda, too, especially in the implementation of KRIIs and the need to create the environment for thriving innovation.
Through a series of initiatives, very much aided by competition and definitely, novel technology, the regulatory technocrats are intensifying their efforts to promote innovation. For instance, thinking about Kenya, we see an administration that wants to understand the Bitcoin-Blockchain. It is a general rule of thumb that regulatory action is essential for transmuting KRIIs from the inception stage to the proliferation stage in their life-cycle.
It is important to note that KRIIs with a regional nature are becoming global, which expands the regulatory agenda, making it difficult for harmonization. And we all know all the stakeholders- clients, PSPs, government, etc., can benefit at greater harmonization, especially with regard to the timing and content of KRIIs. There are four essential elements that are part of the KRII habitat: Risk reduction, competition, standardization, transparency, and innovation.
These KRIIs include on a global scale:
Emergent Payments Security and Technology
Mobile Wallet
e-Government
Payments Governance
Access to Clearing
Virtual Currency and Distributed Ledger Regulations
Internet Payments Security
Cross-Border Low-Value Payments Processing
Bank Payment Obligation
CPSS-IOSCO
Basel III Capital Forms
Immediate Payments
AML/ATF
ISO 20022 Standard in Payments
Data Privacy and Protection including Cyber-Security
Basel and Intraday Liquidity Norms and Reporting
While each of the KRII here is essential, what really tickles my fancy is Virtual Currency and Distributed Ledger Regulations, being a vocal proponent of the technologies, I am keen to understand what is going on. According to the online survey of payments industry experts carried out for WPR 2015, 70% of them believe that this industry’s regulation will impact their business models. The blockchain technology indeed has the potential to improve the financial infrastructure globally and give much needed efficacy to the global financial network. Not only can it elevate the velocity of money, it creates a path of legacy to the monetary system, especially for the banks to inter-operate. And in this vein, Central banks, financial firms, technological companies are talking on how best to undertake the enormous task. Upon this light, I can only hope that the Kenyan regulators show a genuine desire to communicate, listen, and commit to the wisdom of dialogue.
To move forward, all stakeholders, from the bureaucrat to my grandma in the village, there needs to be a transformational approach to the adoption of these milestones. Developing use-case scenarios in the full domain of discourse, understanding the relevant taxonomies from inception to proliferation, is key to progress in this regard.
World payments report 2015 from Capgemini and RBS | article (no date) Available at: https://www.capgemini.com/thought-leadership/world-payments-report-2015-from-capgemini-and-rbs (Accessed: 24 January 2017).