The PAYTECH Book

A Blueprint for Change

By Marion King

Director of Payments, NatWest

If someone was to tell you that the foundations of our banking system stem from a theological order of monks fighting a holy war, you would perhaps raise an eyebrow. Stick with me. In 1185, the monastics of the Knights Templar could deposit large sums of cash in return for a letter of credit. The Templar would voyage to Jerusalem with his letter, which would be exchanged to withdraw cash. Here we have an early example of an independent organization storing money for the benefit of its affiliates, using a payment mechanism of value exchange to prevent knights from having to transport heaps of cash across the world. This independent organization was, in effect, a primitive bank.

Fast forward to today and you will see that the banking industry has not deviated away from this core dynamic. Institutions continue to exist in order to serve the financial needs of customers, albeit through more complex and varied means. In payments, institutions collaborate and compete to facilitate the exchange of value between customers. As we look to the future, technological change will drive further collaboration and competition, generating more choice for customers. The UK saw 38.8 billion payments in 2017, a number which owes its size to technology.¹ Payments are faster, more frequent, more secure and larger in both quantity and value than ever before. In this chapter we explore the blueprint for change, analysing how the payments ...