Past sibos: Singapore 2015

When will we ever get the incentives for faster payments right? Analytics to pave the road toward future money

13 October 2015
14:00 to 14:30
SWIFT institute SWIFT Stand
Professor of IS, Associate Dean (Faculty)
Singapore Management University

In the digital economy, everything wants to be faster. Faster product delivery, faster sales capabilities, and faster access for consumption – but in the middle of it all, faster payments need to be given more attention. Making payments faster is challenging though, due to the need to align the incentives of the different participants in the payment system. Big and small banks, commercial and savings banks, and banks in different countries — and their customers — will have different perspectives on whether to delay or accelerate payments. Crafting the ‘right’ incentives are central to the performance and success of a faster payments mechanism. Tradeoffs between costs and benefits are what drive the timing of payment settlement and the success of the systems. We have developed a hybrid priority queuing mechanism to align the banks’ incentives to achieve faster settlement. This allows payments to be prioritized by the participants or the system intermediary, and be delayed or processed and settled immediately. Our interactive visual demo illustrates how bank participation, payment demand, settlement frequency, and the reserve funds available affect the system’s performance. But without coordination and harmonious collaboration, faster payments will not become a reality. Our analytics approach addresses the complex incentives associated with clearing and settlement, and through the understanding it offers, paves the road toward future money.

Community session
13 October 2015
14:00 to 15:00
Community session Conference room 1