Expert Insights: BIL – A bank’s perspective on the payments landscape
In this cross interview, we delve into the insights of Serge Munten, Head of Business Transformation and Maria Kristensen, Business Innovation Lead at BIL and Raoul Mulheims, CEO of Finologee, as they discuss the dynamic landscape of payments, bank account management and collaborative efforts shaping the industry.
How does BIL position itself in the area of corporate payments?
In highlighting BIL’s pivotal role, Serge Munten, the bank’s Head of Business Transformation, states: “BIL’s historical position as a Swift Service Bureau and payment infrastructure operator is crucial, not only for our institution but also for other banks and infrastructure entities in Luxembourg and abroad.” This strategic standing enables BIL to actively drive and facilitate transactions and provide a solid foundation for operations and partnerships within the financial industry.” Mr Munten adds: “Our rather unique position allows us to influence the evolving payments landscape, contributing to both our institution’s growth and the broader financial ecosystem in the Grand Duchy. BIL is actively looking for opportunities to collaborate and create partnerships across the financial marketplace to be able to bring standardised solutions to regulatory or market infrastructure requirements without hindering competition.”
What recent evolutions in payments drive and fuel innovation?
Raoul Mulheims, CEO at Finologee, emphasises: “In broad terms, regulatory frameworks such as PSD2, PSD3 and PSR are restructuring the payments landscape for all participants in the financial industry.” According to Mr Mulheims, these transformative changes not only drive innovation in open banking but also elevate security and pave the way for the introduction of novel financial services. The emergence of instant payments, as highlighted by Mr Mulheims, significantly alters the fundamental dynamics of transactions, creating a more responsive and efficient financial ecosystem. “Moreover, the implementation of ISO20022 represents a monumental shift, unlocking more comprehensive data and enhancing the transparency of global transactions.”
Maria Kristensen adds “Correct, while ISO20022 promises significant benefits, it also presents challenges for the financial players as they adapt to this new standard. Standardisation among the different players is key to reaching those benefits. Legacy systems are not designed for ISO20022 and standards interpretations could slow down the move to rich data. This is where collaboration within the industry can help identify smarter ways of incorporating ISO2022.”
Mr Munten also emphasises the need to explore new service layers and features such as the Swift Essentials value proposition to effectively integrate additional data into payment systems and channels.
As the correspondent banking landscape evolves, Mr Munten highlights the industry’s shift towards digital payment services, exemplified by major developments such as central bank digital currencies (CBDCs). He stresses the valuable lessons that can be learned from the experiences that Sweden and Singapore, for example, have had with their CBDC projects. Singapore will trial the issuance and use of wholesale digital currencies by the central bank in 2024, he explains, while the Riksbank launched an e-krona project back in 2017, developed a proof of concept and has since been studying the technological and policy implications of CBDC in depth. Mr Munten suggests that ongoing initiatives such as the digital euro could benefit from exploring these and similar approaches. Of particular importance, he says, is the sensitivity of the data associated with central bank money: “It is recognised that this data, if handled carefully, could find valuable applications in a business context.”
What are current topics high on BIL’s agenda?
“What is particularly noteworthy is the topic of seamlessly integrating payment flows into economic operations, making payments less visible and ensuring a frictionless experience”, Mr Munten stresses. The current perception of payments as potential obstacles is evolving, with the industry shifting towards more integrated solutions. He envisions a future where payments effortlessly blend into the overall economic landscape, becoming an integral and harmonious component. This evolution will bring benefits especially to corporate clients who would be able to better manage liquidity flow via faster, more transparent and more secure payment solutions. Raoul Mulheims agrees: “Yes, this is also something that we at Finologee, especially with our banks and accounts management platform LYNKS, are trying to facilitate.” According to Mr Mulheims, the aim is to transform corporate payments processes, by streamlining them and by reducing friction. He provides a concrete example of this effort, sharing: “We have just launched a feature on direct debit fee collection through LYNKS, which can be triggered via the LYNKS platform or another corporate system in use, directly integrated within our platform. This avoids lengthy and cumbersome processes, allowing for streamlined fee charging across all accounts, including those for fund administrators.”
Maria Kristensen adds: “With the EU Instant Payment regulation making payments within 10 seconds the new normal in 2025, there is a lot of work for BIL to do in 2024. BIL has been the first bank to offer Instant Payments to customers, already in 2020, via our mobile banking solution, but we will be expanding this service in 2025. In addition, BIL will offer the possibility for other PSPs to connect directly or indirectly to our solution to be able to provide instant payments to their own customers. This is how BIL wants to support the marketplace.”
Where do you see further opportunities in payments?
“In the realm of payments, numerous opportunities abound”, stresses Serge Munten. First and foremost, there was immense potential in exploring Swift’s enhanced and new products such as the gpi tracker, leveraging their capabilities to enhance transactional efficiency. He also highlights that the evolving landscape shaped by PSD2/PSD3 and the access to accounts through third parties via APIs opens up avenues for innovative solutions. Open banking, extending beyond SEPA payments, presents opportunities in account management, cross-border and international payments, automation, as well as non-payment accounts access and actions.
Raoul Mulheims adds: “Initiatives like Payment Pre-Validation and “Request to Pay” showcase the ongoing evolution in corporate and institutional payments. It’s crucial to approach these advancements gradually, adding new levels to ensure a seamless transition.”
“New technology offers new opportunities but also new risks. New sophisticated types of frauds are examples of this.” Maria Kristensen remarks “To get the benefits of solutions like Instant Payments we also need to ensure the risk of fraud does not increase. Luxembourg, as a significant player in the financial industry, must use this position to improve the financial security for banking clients.”
Mr Munten reiterates: “The payments value chain, considering examples like Ripple and others, demands a close look at liability, user protection and the responsibilities that, while not entirely machine-based, may be increasingly machine-driven.” He stresses that despite the maturity of the field, ensuring a comprehensive and user-friendly experience for clients remains a priority. Payments, according to BIL’s Head of Business Transformation, continue to offer intriguing possibilities, prompting us to protect our stakes in the market by understanding other players and emerging technologies.
Mr Mulheims echoes the sentiment, expressing: “There are significant opportunities to enhance the value proposition for joint clients through diverse setups, additional service layers and a variety of integrations on the client side. Our focus at Finologee extends to servicing Luxembourg’s financial industry, institutions and corporates for their bank connectivity, account management and reporting needs. I truly believe that by partnering up and connecting amongst service providers and banks, the best experience for end-clients can be achieved.”
