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Real-time payments in the Iberian Peninsula

As the international payments landscape continues to evolve alongside technology and emergent regulations, some regions have been faster than others to implement and embrace new payments solutions. This has been particularly true for banks operating in the Iberian Peninsula, where the ongoing rollout and utilization of modern, innovative real-time payment systems continue to accelerate at a rapid pace.

In this blog, we’ll take a brief look at the current state of instant payments in Spain and the broader Iberian Peninsula, in addition to highlighting some unique opportunities for banks throughout the region to emerge at the forefront of innovation.

A Harmonious Transformation

In addition to embracing and implementing technological change, payments modernization requires an actual demand for emergent payment solutions among both consumers and corporate entities. And naturally, when it comes to exclusively digital processes like instant payments, nothing could be more beneficial for banks than operating in a region where overall digital engagement is trending upward.

This is what has set the Iberian Peninsula apart from other EU nations in recent years, as consumers in the region continue to maintain an increasingly healthy appetite for digital payment solutions. According to a 2022 PYMNTS report on current rates of digital engagement around the world, Spain has so far consistently outperformed its European peers when it comes to embracing new technologies, with particularly strong growth in the use of digital and mobile wallets.

This corresponds to what Volante learned in our recent conversation with Pedro Cervera, Managing Director of Operations at Ibercaja Banco in Spain. According to Pedro, Spain continues to benefit greatly from a harmonious acceptance of new payments solutions from both the market and its consumers, with around 50% of the bank’s clients already transacting through modern real-time payment platforms like Bizum.

In addition to reaping the immediate benefits of real-time transactions, this bodes well for the region’s overall readiness to address new international regulations such as the integration of the ISO 20022 messaging standard. Moreover, it gives Spanish banks confidence in navigating emerging compliance initiatives specific to the EU, including the recent proposal of a widespread instant payments mandate.

Setting the Future Standard for Payments Innovation

Importantly, while it’s hard to predict the future impacts of regulations, leaders in the region like Pedro remain optimistic that new standards will be readily welcomed by both the market and consumers. But more than successfully addressing regulatory developments, banks in Spain and the Iberian Peninsula also have a unique opportunity to influence the international payments landscape by enacting and setting the bar for further innovations.

For example, emergent new standards such as Request to Pay (R2P) provide an opportunity to complement the existing benefits of real-time capabilities tailored for Iberia. More specifically, R2P has the potential to establish considerably more efficient, flexible communications and transfers of credit between billers and payers, increasing cash-flow visibility and significantly reducing the overall cost of reconciliation for businesses.

Given that R2P is still in its early stages, Pedro views R2P innovation as a “second chance [for banks] to think about monetizing payments and not missing an opportunity, as a few will have missed with real-time payments.”

Of course, R2P is just the tip of the iceberg for banks looking to prioritize payments innovation, and it’s likely banks in the region will benefit further through the embracement of cloud and Payments-as-a-Service technologies. According to Pedro, there has been a dramatic shift in cloud sentiment in the region, with the use of cloud solutions today often being viewed as “Plan A,” after being largely considered unviable as recently as a few years ago.

“For me it’s pretty clear,” he said, “that if I created a new bank tomorrow, it would be based upon the cloud.”

To learn more about the state of payments modernization and innovation opportunities in the Iberian Peninsula, access the full conversation between Volante and Pedro Cervera here.

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