Nearly two years after the official launch of DIGICASH on the Luxembourg market, Mr Gilbert Ernst, member of the Executive Committee of the Luxembourg State and Savings Bank (BCEE) and member of the board of the Euro Banking Association (EBA), draws up an interim report in the capacity of the solution’s first issuing bank.


Mr Ernst, what is the BCEE’s vision regarding payments and what trend are you following?

Regarding electronic payments, the BCEE has always adopted a pioneering position in Luxembourg, as was also the case with the integration of DIGICASH for example. Thus, we intend to meet our clients’ increasing need for ever easier and more innovative solutions and the businesses’ need for the creation of new payment methods.

Today, the vast majority of people own a smartphone or a tablet; devices, which assist them in their daily lives to communicate, to gather information, to play, to find one’s bearings… This tendency of ever more mobility directly influences the client’s expectations, particularly regarding their banking needs. Clients are already accustomed to use their e-banking products on a daily basis and thus benefit from a proven security and serenity they are used to. Today, the challenge is to always offer our clients more mobility for their everyday banking operations. Therefore, we remained attentive to the technological opportunities offered on the market and the different models available to us. DIGICASH was amongst the most appropriate solutions to meet our various obligations and ambitions.


As a retail bank, what are the arguments that encouraged you to adopt the DIGICASH solution?

As mentioned before, at the BCEE we try to identify future trends and are getting ready for new players entering the payment market. Today, the traditional retail bank is being challenged by these new players, who are service or third party providers that force it to be innovative and offer new solutions. These new players no longer worry me: instead of seeing them as competitors, we consider them as partners and believe in the resulting potential and mutual benefits. Interests converge and lead to win-win situations, as was the case with Payconiq International.

Thus, as a retail bank, the DIGICASH model (based on SEPA bank transfers) caught our particular attention. Its major advantage lies in the fact that it allows us to keep direct contact with our clients, without any disintermediation. We manage the configuration of the APP ourselves, which allows us to maintain control over our relation with our customers. By providing them with this new payment tool on top of the usual mobile banking products, the solution even enables us to multiply the “touch points” with our clients, who now have an additional direct access to their bank account. Hence, a solution such as DIGICASH allows retail banks to be well prepared for the market’s evolution, which will manifest itself by the arrival of ever more new players in the payment sector.

And finally, on top of a reduction of card-issuing and technical costs through dematerialisation, DIGICASH has also been an efficient means to best prepare ourselves for the current evolution of the economic model of banks issuing payment instruments. DIGICASH is a means to diversify and improve the range of tools offered not only to the payer, but also to the retailer by providing him with high value-added services. Consequently, this approach allows to better accompany this evolution through a decrease of implementation and management costs for the banks, while diversifying the product and service offers for payers and retailers.

Speaking of pricing, at the moment we offer DIGICASH free of charge to our private customer to make their payments. Regarding retailers, we have chosen, together with Payconiq International, a pricing model positioning the product on a scale similar to those applied for card payments. For the retail bank, there is thus no “mobile payment equals revenue decrease” automatic reflex. On the contrary, it’s an opportunity for a bank to position itself differently and to convince with a product and services that have high added value for all the members of the ecosystem.


From an operational point of view, how is the DIGICASH solution being operated in Luxembourg and how did its integration into your bank go?

DIGICASH is a shared innovation, where all the major Luxembourg retail banks have finally adopted the same payment solution. Thus, the access to an infrastructure available to all banks operated by an independent company, embodied by Payconiq International, which develops and updates the applications of each bank, has spared us from developing heavy and costly infrastructures in-house. The integration of DIGICASH into our payment system was easy and fast, requiring only some hundred man/days.

We have thus been the first to collaborate with Payconiq International, which was destined to grow and open itself up to other retail banks. At the beginning, we did not have the knowledge of how to manage such a collaboration with a new player, but we have learned quickly and the partnership has fast become very dynamic and efficient. And this goes well beyond the technical and purely operational aspects: the Payconiq International teams coordinate the marketing with the various concerned services in order to maximise the benefit from the opportunities, regarding functional, strategic and market aspects. Working in tandem with each bank, our partner defines the overall guidelines for the solution, in particular concerning product development with new functionalities, such as peer-to-peer payment.


What is your assessment of these first two years of production and what are the main future developments?

After two years of production, some 7.5 % of our home banking clients have downloaded the DIGICASH solution. This number is constantly increasing and should most likely jump in the coming weeks with the launch of a first large-scale national marketing campaign. Another highlight of the DIGICASH solution concerns security. For two years, we have detected not a single case of fraud.

Concerning the future, DIGICASH now allows almost the entire population to have access to the solution, thanks to the effective inclusion of the product by the four main Luxembourg retail banks, which are either already offering it or are on the verge to. Moreover, as the network of retailers is in the process of becoming relevant for a number of sectors and contexts, the large-scale promotion of the solution can now begin. The first phase is planned for October 2014, focusing on bill payments, for which the solution is, already today, the most pertinent payment solution available, taking less than ten seconds for a transaction.

From a product point of view, we also work with Payconiq International on the launch of a peer-to-peer payment module, which should be made available at the beginning of next year. It will be used as an additional booster to establish the product on the market and have it enter consumers’ daily lives. Additionally, it is equally important to mention the DIGICASH Beacon innovation, which is destined to revolutionise the used experience at the points of sale by offering clients an even more direct and faster payment experience.

Lastly, from a strategic point of view, DIGICASH will need to face the challenges of standardisation: to follow and adapt to the regulatory standards issued on a European level and to support openings to alliances and parallel systems.