Payment Transactions and the March of Digitalization

Digitalization is one of the main drivers of automation in payment transactions. Automation allows the focus to be placed squarely on client needs and further optimizations.

— Just how important are payment transactions?

Payment transactions play a crucial role in the way Vontobel operates. From client payments and creditor invoices to liquidity management at the Bank, ensuring timely, professional processing of global payments is a must. We also offer a payment transaction processing service for our partner banks via an automated interface.

Today’s highly regulated environment continues to make things more challenging, and the focus of our activities has changed massively over the last few years. Regulatory guidelines and the implementation and monitoring of sanctions are just a few examples. The pursuit of cost-efficiency and security has also been, and continues to be, an important driver of innovation in the field of payment transactions.

— How do you deal with these challenges in business analytics?

To increase the focus on these issues in transaction banking, business analysts can provide support in the form of a methodological basis, for example a lean management approach. They can also contribute to the entire value chain by helping to increase efficiency and improve processes. There is also the implementation of initiatives and projects in the Swiss and/or global financial center to factor in. Topics such as ISO 20022, open banking, and instant payments pose considerable challenges, but at the same time, they will facilitate more efficient, risk-aware processing in the future world of payment transactions.

— What are a business analyst’s most important tools and methods, and how does implementation actually work?

To achieve continuous improvements in process management, one of the most important bases is an appropriate evaluation of numerical data with regard to existing processes. In this way, you can conduct a detailed analysis of which subprocesses offer scope for improvement, whether by means of technical adjustments to the systems or operational and organizational adjustments.

One of the main approaches is lean management. The purpose here is to continuously address improvements across the entire value chain, so that any processes that might not be necessary can be eliminated or improved. The focus is on maximizing the benefit for clients.

— Technology is playing an increasingly important role. What does this mean for the Payment Transactions team, what will their role be in the future, and how will this benefit our clients?

From physical payment transactions to automated processing – put simply, that’s the direction we’re heading in. In the past, the focus was on recording payment orders manually; now, with the march of technology and the developments seen in recent years, this has clearly evolved into digitalized monitoring. In concrete terms, this means the role of the payment transactions professional is moving increasingly toward what is known as exception handling. Most payments now run through systems automatically and are posted directly to clients’ accounts. This requires employees to have broader, more in-depth knowledge so they can monitor automated processes such as e-banking, TWINT, and other electronic interfaces. This changes the required skill set from that of a data entry typist to one that includes more technical expertise and a greater understanding of IT processes along the entire processing chain.

As far as clients are concerned, smooth payment transactions are essential. And that’s exactly what we’re here for. We try to use our experience and expertise in payment transactions to make things as easy as possible for clients in terms of payments. Our clients also benefit from us sharing this expertise with them so they can adapt their own processes and make them more efficient.

— So with payment transactions continuing to change, what will be the next challenges for Vontobel, and what benefits can our clients expect?

Digital development in the global financial center, and particularly in the Swiss financial center, shows no signs of slowing down. Below, I would like to discuss the key developments that will have a direct impact on Vontobel and our clients:

ISO 20022

ISO 20022 is a global standard for the exchange of electronic messages between financial institutions. It has also paved the way for a further step toward digitalization in Swiss payment transactions. The aim is to standardize and simplify payment transactions around the world. In Swiss payment transactions, procedures used to be based on different documents and formats. Now, with the implementation of ISO 20022, all parties involved have seen their processes standardized and simplified. SWIFT MT formats are currently used in cross-border payment transactions. These will be replaced by the ISO 20022 standard, which uses message and file types in XML format, as of the end of 2025. With this new standard, our clients will be able to process payment messages in a clear, efficient, and structured manner. I can see an obvious benefit for our clients here, as with these kinds of structured messages being transmitted, it will be possible to make global payments even more quickly. There will also be greater flexibility, making it easier for clients to manage their own liquidity, for example.

Open banking

The term open banking describes a model that allows various financial data to be exchanged between third-party providers. In the future, this type of new technology will enable clients to access a wide range of financial products and services from a single point of access. This is based on a standardized, secure exchange of data between banks and trusted third-party providers via an application programming interface (API). In addition, this creates a new requirement for banks to incorporate client experiences, for example with Airbnb, Instagram, Amazon, and Google, etc., into a holistic process. This is the only way for them to meet the higher requirements.

One example could be to use open banking as a platform to bring together all the financial data from different banking relationships and thus provide clients with an overview of all their assets. This concept is also known as multibanking, and means clients do not have to log in to all their banks separately. Might this even serve as a basis for collecting assets at different banks from a single platform (client front end) and bringing these together on a tax return? A user-specific front end could also offer other additional services, such as

• managing payment transaction services;
• all bank accounts at a glance;
• online payments by bank connection or credit card;
• managing credit cards; and
• managing Bitcoin wallets.

The advantages are different for individuals and companies. I think the advantage for individuals lies in the fact that you can use apps offered by third-party companies to view all your accounts at various banks in one place, meaning you do not have to log in via several portals to check your finances. For companies, I can see advantages in being able to link open banking services and accounting software. Then there is the benefit of being able to reduce transaction fees, since companies will no longer have to pay for various services from different providers.

Instant payments

Instant payments will give Swiss payment transactions a further boost in terms of digitalization and new technologies. Instant payments are made around the clock (24 hours a day, 7 days a week, 365 days a year) in real time, with no delays due to weekends or holidays. It’s fair to say that electronic payment systems have already done a lot to simplify cashless payments. Now, the next phase of evolution is in full swing, and with instant payments, settlement processes are complete in a matter of seconds.

TWINT, already a familiar name in the Swiss financial center, is a good example of the direction payment services are taking. It enables users to transfer up to CHF 5,000 instantly between cell phones. What most users of the app don’t know, however, is that TWINT actually only simulates instant transfers. The money is ostensibly transferred in real time, while behind the scenes, the parties’ respective banks make advance payments.

I’m convinced that the introduction of instant payments in the Swiss financial center will have a groundbreaking effect when it comes to making payments around the clock. It will give individuals an incredible amount of freedom in terms of how they make their payments. Yet for the banks, including Vontobel, which are implementing these services in collaboration with SIX Group, there will likely be certain technical requirements to contend with. The respective core banking systems still need to be connected to SIX’s external platforms. The rollout could take until the end of 2026, depending on the size of the bank.