Team Intello
Team Intello

New Payments Platform (NPP) opportunities

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Early in 2018, the New Payments Platform (NPP) will become operational and enable (almost) real-time processing of transfers between financial institutions. The implications of this for SMSFs and the financial services industry as a whole cannot be underestimated. The NPP will be a game changer.

Think of the NPP as the rails and overlay services as the trains.  The first overlay service that will be live will be a centralised addressing service called PayID which will enable payments to be made between banks using an easy identifier such as an email address, mobile phone number or an ABN.  Giving out a BSB and account number will no longer be needed to receive payments.

Simplified and real-time money transfers are just the beginning. The NPP will enable innovation to occur based on market demand – it won’t be fettered by the Australian banking oligopoly. Examples where the NPP could be leveraged may include stockbrokers automating settlements by adding holder identification numbers (HINs), one-touch payroll and super payment processing or a tradesperson providing an invoice with an integrated payment request to a customer creating a strong audit trail available for both parties as well as authorised third-parties.

Businesses servicing the SMSF space will be major beneficiaries of the NPP. Once all SMSF related transactions are occurring via overlay services (including complex transactions such as property settlements) administration headaches for trustees and their advisers will disappear as all core elements of SMSF compliance will become automated.

By 2025 – if not sooner – accountants will not exist in the SMSF space. They will either be pushed out by large scale specialist administrators or more likely will pivot to become higher value technical and strategy advisers.  Independence requirements aside, the line between SMSF administrator and auditor will blur as auditors move forward in the value chain to identify compliances breaches and fraudulent activity as it occurs – SMSF security guards if you like.

 

SMSF evolution

The technology genie has been let out of the bottle and the only guarantee is that significant change will continue.  Fintech players are making an impact, even if that impact is simply forcing the incumbent banks and institutions to lift their games and become more client centric.

Although the fintech players haven’t yet grasped the complexities and uniqueness of the SMSF market, anyone working in the SMSF space can learn a valuable lesson from them: making the complex simple is incredibly valuable.

As previously stated, for the world of SMSFs to evolve and continue to flourish beyond 2020 industry participants need to start thinking and acting like digital start-ups. Look for problem areas of client pain and friction, re-design and re-think how those problems can be solved, utilise technology to deliver and most importantly don’t forget the human element as the robots arrive to help us.

 

 

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