Why are non-banks denied access? There are four key restrictions associated with the current model that act as barriers to alternative payments providers. 1. Hesitance from this, whilst still updating the status quo to ensure that traditional banks new, regulated FinTech firms can be granted entry. Let’s be fair to banks, when the system was created Proposed solution: Banks need to understand in the 1960s there were no FinTech players. Likewise, that FinTech players are not out to gain a free ride on there were no thoughts that anyone besides banks the infrastructure that they spent billions of pounds would ever need access to payment systems. developing – FinTechs simply want a fair system that doesn’t block them out entirely, purely because they Banks built the system (the ‘rails’) that we all ‘ride on’ arrived later to the market. today. Billions have been spent over the past 50 years to create a fantastic payments environment It is fair and reasonable for the founding fathers of whereby today’s payments can be sent and received the core payments infrastructure to expect some in seconds – this entire capability was initially funded sort of ongoing compensation. So let’s give it to by the banks. them. FinTech companies, certainly in the short term, do not have the economies of scale that banks have. It is therefore understandable that banks are During this time it is right that smaller players should putting up resistance when it comes to opening pay a higher unit cost than those that process – in up the payments rails to alternative players. There some cases – tens of millions more transactions. is a fear and frustration amongst banks, that they FinTech providers that desire direct access to the would be expected to open up their systems for traditional payments infrastructure need to be free, to competitors who have not contributed to the realistic about what it is they are demanding and be development of the infrastructure. open to paying for this service. As the overall cost would still be less than the banks currently charge Banks hold a sacred responsibility to look after the for accessing the system indirectly, this approach system. With that in mind, they are right to fear that would likely be attractive to many FinTech providers. ‘FinTech cowboys’ could disrupt the whole system. Any move to open up the infrastructure must address If new entrants were allowed access, these 6 | Payment infrastructure: a call for fair and equal access for FinTech