There are, of course, still plenty of rules-based aspects to the new capital framework: it's difficult otherwise to understand what the many hundreds of pages of the Basel II document are needed for. However, the point I want to stress is that the advanced approaches, and especially IRB, introduce a new element into banking supervision. For want of a better term, I'll call this process-regulation. Whereas the old Accord focused on rules, the IRB approaches focus instead on the processes by which risks are managed. Rather than prescribing detailed rules for assessing capital adequacy, supervisors will in future need to assess the adequacy of the internal processes used by firms to manage their risks. This is reflected, for example, in the approach that we propose to take to the validation of IRB systems: we will not be prescribing specific numerical standards that we expect internal risk measurement systems to achieve. Rather, we will discuss with each individual IRB bank how its system performs in relation to the bank's own internal objectives and appetite for risk. IRB will require us to engage in a dialogue with AIs to understand how they go about developing and approving their IRB models. As a result, the future for banking supervision is likely to take the form of an active discussion with our counterparts in the risk management and credit control functions. It will be less a matter of us setting hard and fast rules, and more a matter of us holding a dialogue with risk managers.

Done well, this can have a long-lasting effect on behavioural change towards greater adoption of e-payments. To strengthen this proposition to customers, financial institutions should continuously enhance their security features, and put in place while actively promoting their product arrangements that will give customers the peace of mind. This may include strengthening the effectiveness of fraud detection and prevention engine using the latest technology such as artificial intelligence and machine learning. Additionally, offering liability protection programs and a commitment to resolve disputes within a stipulated timeframe would go a long way in providing assurance to customers. Supporting this, financial institutions’ mobile applications and Internet banking channels must provide seamless ways for users to track their expenses. This would include budgeting features, instant notifications and possibly smart money management tools. Some of these enhancements may be small tweaks with a potentially big impact to get users to be more comfortable with e-payments. Going beyond payments to enhance value proposition to end-users This brings me to second key priority – the need to go beyond payments in response to certain “new normals” in the payments landscape. Today, customers increasingly expect payments to be fast, frictionless and free. Competition has also heightened. Non-traditional players such as fintechs and bigtechs are increasingly relying on payments as entry point into financial services. Against this backdrop, payment service providers must rethink their strategies to remain relevant and be sustainable in the long run. Today, going cashless is more than just e-payments.