Australian banks need to catch up with the rest of the world and make financial transactions faster for customers, Reserve Bank of Australia boss Glenn Stevens says.
In a world where people conduct financial transactions on their smartphones while travelling to work, the wait time for receiving funds, usually the next business day, is not good enough, Mr Stevens said today.
Speaking at the Australian Payments Clearing Association Limited's 20th Anniversary Symposium in Sydney, Mr Stevens said Australia's payments system would need to meet the demands of new technology and the associated expectations people have.
The challenge, he said, was to ensure that Australia was not behind the rest of the world where payments were concerned.
"With systems for real-time transfers available in countries ranging from the United Kingdom to Mexico, Australia's approach is starting to look a bit dated," he said.
"It is our belief that availability of real-time transfers would fill some important existing gaps, but would also open up enormous potential for innovation on top of that system."
Mr Stevens said the maintenance of safe, competitive and efficient running credit and debit card payments systems was a key part of the central bank's role.
And, one aspect of that is the automatic transfer of funds the moment a payment is made.
"Some systems, such as card payment systems, give the impression of operating 24 by seven," Mr Stevens said.
"In reality, no funds move between financial institutions out of hours, constraining the services that can be offered to end-users of the payments system."
Mr Stevens said this would likely become an outdated approach, as people's expectations changed.
"It is not that long ago that it was accepted that if a person wanted to ensure that they had enough cash to see them through the weekend, they had to make sure that they visited a bank branch by closing time on Friday," he said.
"But we would all see that as completely unacceptable these days and I think we have have reason to hold the rest of our payments system to the same standards."
The RBA is due to release the findings of its Strategic Review of Innovation in the next few weeks, and Mr Stevens said that changes to the system would keep it in-line with innovation in other areas.
"If we think about the rapid rise of PayPal, the spread of chip and now contactless card payments, and the enormous amount of energy that is being focused on mobile payments at the moment, there is clearly no shortage of innovation in payments," he said.
Mr Stevens said the types of cards now being used in the payments system are increasing its complexity.
