Why NPV-Native is the UK’s Best Route to Open Banking Pedigree

by Nadish Lad, Managing Director and Global Head of Strategic Business for Volante Technologies

Though our island nation has long-offered the competitive market a prosperous blend of innovation and regulation, the payments ecosystem is in need of a face-lift.

Consider the challenges around credit card payments – when customers use credit cards, merchants and retailers typically receive only 92% to 94% of the purchase price. The remainder is lost to card and processor fees. And because many remain frustrated by the credit card costs they incur, person-to-person or business-to-business bank transfer is a huge opportunity in the UK, in which open banking stands to gain. In many ways, open banking has been a UK success story with over 11.7 million active users. But this only accounts for 17 per cent of the population.

The UK’s National Payments Vision (NPV) is the next bold move toward modernising the payments ecosystem, with open banking at its core. If executed successfully, it will position the UK as a global leader in open banking and payments innovation, setting a new benchmark for customer-centric financial ecosystems, alongside developments in DLT and digital currencies. The latter, a hot topic with our EU neighbours close to finalising their rulebook for a digital Euro.

So, there’s a huge imperative to get the NPV right.

Though its “obligations” set out specific, enforceable rules guiding regulatory activity, a swathe of non-mandated recommendations exist in the fineprint. Come the Vision’s mid-2025 implementation, these suggestions – offered to industry in plain sight – give those bold enough the creative expression to differentiate themselves in the race to open banking, digital identity, digital currency, and finally, security and fraud protection pedigree.

The NPV will quite simply provide an ethical pathway to delivering the most competitive financial capabilities. But to actually move the needle, we see a real requirement for most financial institutions to get back to basics. Infrastructure basics.

ISO 20022 is expected to be the lingua franca of payments. Banks will not be able to compete without ISO 20022 enablement, and this requires more than just compliance in clearing and settlement systems, such as BACS, FPS, and CHAPS. It demands an ability to send and receive ISO 20022 messages end-to-end, without data spills.

Most UK institutions have FPS down pat. But the premium on being truly real-time, 24×7 increases with NPV, and that will place pressure on all other payment modes to get with the programme. So, time is of the essence to address long-left inefficiencies in those systems.

Finally, banks will ultimately have a better shot at getting NPV right when their infrastructure choices deem them NPV-native, over NPV-compliant. The former puts legacy systems in the rear view, with the headlights shining bright on the implementation of cloud and payments-as-a-service. And rarely, will this modernisation effort be an isolated investment with the benefits of AI, crypto, and other emerging technologies most commonly delivered on cloud.

For end-users, individuals and corporations combined, a NPV-native institution is primed to offer greater financial inclusion. This comes down to their ability to send and receive funds faster, at lower cost, while delivering personalised data analytics through ISO 20022.

Modernisation is the key ingredient. Without it, banks create a veneer of “NPV compliance” around their current systems, and the whole enterprise – its open banking efforts included – will have failed.

Nadish Lad is Managing Director and Global Head of Strategic Business for Volante Technologies, based in the United Kingdom.