12 months on, PayID still not completely implemented by Australia's big four banks

Slow implementation casts doubt on the big four banks being completely ready for open banking on July 1.

Australia's New Payments Platform (NPP) went live in February last year; the platform allows for the transfer of money from one person to another in near real-time, using an email address or phone number rather than the traditional BSB or account number process.

The NPP infrastructure was built by the Reserve Bank of Australia (RBA), in consultation with the Commonwealth Bank of Australia (CBA), the National Australia Bank (NAB), the Australia and New Zealand Banking Group (ANZ), and Westpac, which hold around 95 percent market share of the entire Australian finance industry between them.

The new platform was in the works for years; the RBA had originally announced its plans as far back as 2012, inviting input from industry to determine the most effective way of delivering on its plan to make real-time payments, among other objectives.

The banks faced parliamentary scrutiny in October last year as part of the House of Representatives Standing Committee on Economics review of the four major banks.

During the third round of probes, the committee informed Westpac CEO Brian Hartzer that RBA Governor Philip Lowe was "disappointed" that the banks had not been sufficiently ready for the NPP go-live.

"They had many, many years to get on top of this and so to discover, as we were going live, that they weren't ready, was a bit disappointing really," the committee quoted Lowe as saying during a hearing in August.

"Because it is a network, unless you have everyone on board, it is really not going to get used because I'm not going to be interested in joining it if I can't pay someone who banks with someone else. It's critical that we have everyone on board and, in the next month or so, we will have all the majors on board and I think that will be a big stimulus."

The committee raised concerns with Hartzer over his bank's subsidiaries St George Bank and Bank of Melbourne as being "behind the pack" with NPP adoption.

"The NPP is a program that's been imposed by the regulator on the industry to lift the underlying plumbing of the system ... I think it's a good development technically. Yes, it's taken us longer. We have always been committed to implementing the NPP. Our systems are complex. The fact that we have the legacy of the St George acquisition means we have quite a number of very old, complex systems," Hartzer told the committee in October.

"We have spent many hundreds of millions of dollars implementing this for no return, and we will do that. It's taken us longer, and I wish it hadn't, but we're doing it and we are now live."

While Westpac may be live, the capability still is not available to customers that opened an account in New South Wales or the Australian Capital Territory as yet.

"Currently, all Westpac personal customers across Australia and a small number business customers with eligible accounts can receive fast Osko payments from a participating financial institution," a spokesperson told ZDNet this week.

"Westpac personal customers with eligible accounts opened in Victoria, Queensland, Tasmania, South Australia, Western Australia, and the Northern Territory can also make fast Osko payments and create a PayID."

The functionality is coming to personal customers in NSW and the ACT "shortly", the bank said.

Meanwhile, customers of Westpac's subsidiaries St George, Bank of Melbourne, and BankSA, will have "fast Osko payments", followed by the bank's PayID offering, rolled out in phases.

Osko by BPAY is the first consumer payment service out of the NPP to use the PayID functionality. Some financial institutions may require a customer to choose Osko if they wish to pay to a PayID, and that was the case for Westpac while it was building out its own PayID capability.

During his turn facing the Economics Committee, ANZ CEO Shayne Elliott revealed his bank was also a "little bit slow" where the NPP is concerned.

"As CEO, I'm accountable for that, and I don't want to be creating the remediation problems of the future. So we've taken a cautious and conservative view on that, to get it done properly," the blue bank's chief told the committee. "It's up and running now. People are using it. It's being progressively rolled out. And I'm really confident it's going to be of benefit to the community." 

While ANZ has made PayID payments possible, those using mobile banking cannot pay to a PayID; but they can through online banking, with a spokesperson telling ZDNet the bank prioritised internet banking for its NPP rollout and is "working on the app capability to complete it".

"ANZ has rolled out New Payments Platform payment capability on internet banking to more than 3.4 million retail and small business accounts," the spokesperson continued, with the figure accurate as of January 2019.

"We are currently responsible for nearly 60 percent of total payments value across the platform despite having only 20 percent of the volume. This is largely because we enabled our small business customers to access NPP on internet banking ahead of competitors."

When asked about his bank's "tardiness" by the Economics Committee in October, NAB CEO Andrew Thorburn held firm that the black and red bank was ready for the go-live.

"I think we have committed a lot of resources and I don't believe that we're a laggard in that at all, in terms of the New Payments Platform," he said in October. "I think if you believe in your organisation and its capability and its ability to adapt and its skills -- and we're investing more in that than ever before -- you should be willing to take on all comers and you should lead change.

"I did review to check that we weren't the laggard and I was assured we're not."

NAB consumer and business customers can make payments to all types of PayIDs using either mobile or desktop banking. NAB customers can also make and receive fast payments using their transactional BSB and account number -- a smart move by NAB that doesn't require a PayID for the money to leave one party's account and appear in the other's within seconds.

"At NAB, we've made significant and ongoing investments in our digital banking channels to continually improve the customer experience," NAB GM Payments Paul Franklin told ZDNet this week.

"From the outset, we have given our customers the option of making payments to traditional BSB and account numbers or to PayIDs. Since the launch of the NPP, over half a million NAB customers have registered a PayID. As people become more familiar with fast payments, we expect the use of PayIDs to grow."

With reports coming out of the Banking Royal Commission of misconduct, and Austrac and APRA both investigating CBA during 2018, the bank's newly minted CEO Matt Comyn was not probed about his bank's speed to adoption with technology-based mandates.

A spokesperson for CBA, however, confirmed with ZDNet that the yellow bank made PayID registrations available through the CommBank app the day NPP was launched.

Since launch, and correct as of this week, around 985,000 CommBank customers have registered for a PayID, a spokesperson said.

"We are proud to be among the first Australian banks to offer the NPP to our customers, which is consistent with our track record of being at the forefront of real-time banking technology," the spokesperson added.

CBA customers can pay to a PayID through the mobile app.

The bank's subsidiary Bankwest made PayID available to customers with "eligible transactional accounts" in September.

By July 1, 2019, the four banks will be forced to make consumer banking data available.

The mandate comes by way of a new open banking regime that forms the first phase of a new Consumer Data Right (CDR) which will allow individuals to "own" their data by granting them open access to their banking, energy, phone, and internet transactions, as well as the right to control who can have it and who can use it.

Banking is the first cab off the rank and the banks now have just under six months to get the capability ready. The Economics Committee is concerned that they will not collectively meet the deadline, as was the case with the NPP go-live.

Hartzer predicted the initial financial damage due to Open Banking to be around AU$200 million to his organisation.

"For technology projects, the investment required in these things are enormous. Open Banking in the first instance is probably going to cost us somewhere in the AU$150 to AU$200 million to implement because of the complexity of our systems environment," he told the Economics Committee in October. "There's only so much investment and so many technologists who can work on all these things at once."

With Thorburn telling the committee his bank was "absolutely" committed to Open Banking, NAB CIO Yuri Misnik told ZDNet in November the red and black bank was "pretty well-placed" to handle the impending regime with the internal data strategy and cloud-first strategy it is already implementing.

"We're not planning to over achieve here and do more than Westpac, we actually think we're more lean and much more efficient," he said.

Read more: ACCC unsure how consumers will receive their data under impending mandate

Meanwhile, Elliott reminded the committee that his bank was supportive of the mandate when it was first raised.

"In front of this committee, when the concepts were first raised around open banking, I believe we were the only major to be supportive of that regime," Elliott said. "I believe there are benefits to the economy from it ... I think there's an opportunity, if we get our act together, to actually benefit ANZ as well."

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