RBS: Value-added partnerships – Teresa Connors and Steven Hoy

Whether it is the current slew of regulations or the impending SEPA end-date, the payments market is in the throes of change. By actively collaborating with the industry and regulators, RBS is one such organisation looking to offer a full-value partnership to its customers, as Teresa Connors, director, market engagement, GTS financial institutions, and Steven Hoy, director, GTS sourcing solutions, explain.

Future Banking: In reflection of the current economic climate, what regulations are affecting the payments industry and how is RBS adapting to them?

Teresa Connors: As RBS is present in over 35 countries, it is imperative that we understand both global and regional regulation. Our understanding helps us shape the industry and support our clients, particularly those who operate in multicountry environments.

We share expertise with clients in a number of different ways, one such channel is via the 'World Payments Report', an annual report, produced with partners Capgemini and Efma, which explores the payments industry. A key focus of the 2011 report was regulation, which analysis shows to be underpinned by one of five transformation trends: systemic risk reduction, standardisation, convergence, transparency and innovation.

Looking to Europe, there is huge focus on PSD and SEPA initiatives. The latter is really gaining momentum, with ongoing dialogue in anticipation of the end-date. RBS would welcome a single end-date for credit transfers and direct debits. In fact, our colleague Simon Newstead, RBS's head of FI market and business strategy, has been instrumental in these discussions. This means that RBS is at the forefront of change, helping to shape the future European landscape and is well placed to provide advice to clients.

You mention SEPA, which requires a certain amount of future-proofing and compliance. How has RBS worked with software vendors to implement the appropriate technology?

Steven Hoy: It is most important that software from our suppliers becomes embedded into the delivery of value to our clients. Functionality and reliability must, of course. be of industry standard and capable of scaling to our volume needs, but the overriding concern is to obtain functionality that will support our clients in achieving their business outcomes. So we start from there - what are the important problems our clients are trying to solve? We tailor our software and processes, to delivering solutions to these problems.

What underpins RBS's approach to forming partnerships?

SH: There needs to be a common, shared vision: both sides must agree about their business outcome ambitions. The conventional view of a sourcing relationship is based around the service level agreement, as well as various metrics and performance levels.

However, we have also found that if you focus solely on the mechanics of the agreement, there is the danger of both companies losing sight of the shared business outcomes. So, in our sourcing arrangements, we always try to keep the business outcomes and vision uppermost in our minds, thus making sure that any issues that may arise are quickly identified and corrected.

In order to foster a relationship that focuses on business outcomes rather than the mechanics of the service level agreement, we try and structure the incentives by, for example, sharing revenues. We make sure that our interests are aligned with the expansion of the customer.

What new products does RBS have in the pipeline to facilitate this expansion?

TC: RBS has expertise and experience in euro and sterling clearing, and to complement this strength we develop solutions to meet clients' wider needs.

An example of this is our recently launched trade document checking service. Trade documentation is prone to inaccuracy, which has a detrimental impact on clients' business and often results in delayed payments. RBS now offers an outsourced solution in which our highly qualified team - the largest of its kind in the world - check trade documents for potential problems and discrepancies.

SH: This service significantly reduces the amount of time and resources that document checking would take up if the customer had to build their own capability in-house. By using RBS, our customers effectively have infinite available boundaries in terms of extra work. We are sufficiently staffed and resourced to be able to deal with the throughput of volume from all our customers.

As a leading transaction bank, how do you aim to stay ahead of the curve?

TC: The RBS approach is to ensure that our propositions are right for clients and suited to the territory in which they are delivered. We ensure this by listening to our clients and then acting accordingly.

We have seen the payments market open up over the last couple of years, particularly at the consumer and retail end where we have new players such as Google and PayPal offering services. In addition, new mobile and tablet technology with the ability to initiate and make payments is beginning to be seen in the market.

In terms of the GTS space, the fast-approaching SEPA end-dates will bring the next piece into play in terms of the digital agenda. It is an exciting prospect and something into which we are investing a lot of resource.

To stay ahead of the curve, we will also continue to work collaboratively with regulators and industry bodies to help ensure that new regulation and initiatives do not have unintended consequences for our clients.

SH: When we collaborate with a customer, we try and look at their overall business model - we consult with them and really try to understand the nature of the business model that they are using.

Our aim is to compose a solution from the customer's problem up, rather than from our products down. We find the better we focus on the problem, the better able we are to deliver value to the customer.

What I am driving at is that the overall value to our customer is more than merely consuming a payment service offer. That payment service has to be a component part in the entire value delivery system to customers.

To help our customers compete more effectively in their markets, we have adopted a more collaborative approach, away from mere sales, in order to tune and compose solutions that fit our customers' business models rather than solely providing a clearing product.

It goes beyond products - it's very much about getting access to RBS's thought leaders around the world. These are people who are truly shaping the industry worldwide and building tomorrow. We can share that insight and expertise with our customers.

"When we collaborate with the customer, our aim is to compose a solution from the customer’s problem up, rather than from our products down." – Steven Hoy
Teresa Connors is director, market engagement, GTS financial institutions at RBS.
Director of GTS sourcing solutions at RBS Steven Hoy.