Future Proof Payments Systems

Dominic Broom, Treasury Services, at BNY Mellon introduces the weekend’s theme and introduces the challenge

The payments business is undergoing a period of enormous transformation.In fact, even our understanding of the word “payment” is evolving, as we explore new definitions and iterations of what constitutes a transfer of value.

So what has caused such unprecedented change?

  • Firstly, the digital era is very much upon us. Technology is embedded in our every-day lives, fuelling greater expectations for flexible and mobile solutions, capable of facilitating modern-day lifestyles. Global commerce has become increasingly digitised and 24/7;supported by sophisticated technology that enables instantaneous multi-channel transfers of value and accompanying data, irrespective of location or payment type. Technology has also enabled the entrance of new types of payment providers, to a market traditionally dominated by banks; thereby creating a fundamental shift in service and product provision.
  • Secondly, shifts in economic power are creating a much more multi-polar and international world, which coupled with changing demographics, is leading to shifts in global commercial activity.  This is resulting in a renewed focus on payment speed, efficiency and cost, which in turn is driving innovation in new types of payments, and the need to navigate a broader range of markets, through a broader range of channels.

But the fact is that banks are struggling to respond. Cross border banking infrastructure has simply been unable to keep up with the pace and extent of these market and customer changes, and most legacy payment systems were not designed to provide real-time payments.As a result, banks face numerous challenges:

  • They need to provide a digitally enabled, seamless and easy-to-use service to clients, when the behind-the-scenes reality is anything but that. This is especially challenging when payments infrastructures, payment scheme standards, business practices, cultural preferences and regulatory requirements currently differ between countries.
  • Banks also need to both comply with and adjust to an unprecedented and increasing onslaught of regulation.This affects the business strategy, revenue streams, and requires far greater transparency and control of the reporting and interpretation of data, resulting in significant additional cost.  This cost is both financial and an opportunity cost, as limited technology resources can result in non-regulatory innovative projects become deprioritised.

So how can we overcome these challenges and provide the commercial payment capabilities that new and future business leaders expect? How can we provide a payment mechanism that is fit for the 21st century: one that can be layered onto or built into legacy infrastructure, whilst remaining flexible to future adaptation in line with market developments, and taking into account the more complex monetary and data components of a modern-day transfer of value?

This is your task: to conceive a future-proof payments infrastructure that seamlessly supersedes existing payment systems,whilst addressing the need to provide greater transaction speed, security, flexibility, accessibility and data-enrichment. This all needs to result in lower cost, while complying with current and upcoming regulation, and take international payment standards and legacy infrastructure into account.

BNY Mellon experts will be on hand to offer guidance and answer any queries. Be creative; as unparalleled change equates to an unparalleled opportunity to reshape the world of payments.I look forward to seeing your visions for the future.

Author of post: Dominic Broom, Treasury Services, at BNY Mellon.

Biotech – An Evolving Sector

Biotechnology — the use of living organisms to develop drugs and therapies – is an area of increasing focus for investors, the pharma industry and the general public for the impact it will have on their lives. In 2014 McKinsey explained: “Investing in biotech R&D has yielded better returns than the pharma-industry average. The current biologics-development pipeline supports an outlook of continued healthy growth.”

Between 2000 and 2010, the number of Biotech companies which were generating revenues greater than $500 million rose from 9 to eighteen. Investors interest in the sector has been increasing. During the first half of February 2015, eight biotech firm launched IPOs in the US and combined raised $500 million. In the past 12 months biotech firm share prices have risen by almost 60%.

Valuations may be, as Linda Thompson head of AXA’s Framlington Biotech fund said in the FT, “substantially stretched”. Stelios Papadopolous, a veteran biotech investor, has been arguing that the increase in share prices is due to more companies delivering on their promises. As a company delivers and puts their drug into the market, they stand to benefit from the drugs being patent-protected which enables confident predictions of revenues

This is, however, an industry which is far from “sure things”. Boston Consulting Group estimate that 90% of the money invested in biotech will be spent on drugs that fail.

For startups in this sector the technical and financial challenges can be daunting. For financing, some large firms finance the scientific work of smaller companies and then takeovers the development once clinical trials are needed. AstraZeneca’s Chief Executive, Pascal Soriot, has explained that they “will do what a biotech would do” to build a development model based on “entrepreneurial spirit and speed.”

There is also the venture capital and fund industry to tap into. One firm making headlines is the new Patient Capital Trust Portfolio being launched by Woodford Investment Management which plans to invest £200 million in start-up and early-stage businesses. The Telegraph has reported that many of the businesses in which they Trust is likely to take “stakes are likely to emerge from collaborations with British universities’ science and medical departments.”

An alternative funding route which is beginning to be tested is crowdfunding. In February 2015 in the UK, Cell Therapy closed a £700,000 round. They are working to advance a heart disease treatment pioneered by the Nobel prize winner Sir Martin Evans. In Scotland, Parkure raised £60,000 for researching Parkinson’s disease, while in France, EyeBrain a medical diagnostics company closed a €1.3m round.

If you want to meet and work with likeminded people from diverse backgrounds and professions on new biotech venture ideas for 54 hours, then join our Startup Weekend which is being held from 20th to 22nd March 2015.

To book your ticket, visit Eventbrite or for more information visit the Cambridge Startup Weekend page. To get 5% off your ticket, use the discount code: Blog5.