Department for Work and Pensions claims payments progress

The Department for Work and Pensions (DWP) has celebrated the progress made around evolving its payments setup and outlined the role of new technologies in changing, developing and maintaining services.

Commenting on the ongoing transformation of DWP’s payment services – which cater for about 20 million citizens and handle £170bn of payment transactions a year – the department’s deputy director of digital payments and banking systems, Richard Laycock, outlined successes so far, which include the insourcing of a number of payment services.

Additional achievements include the migration of hosting for the DWP’s core payments system from external suppliers to on-premise hosting, Laycock wrote, with payment systems being managed and modernised in-house.

“We have delivered some fairly significant change: introduced a new Faster Payment solution, allowing for near real-time payments; and migrated our banking services to the new Government Banking Services,” he said.

DWP’s future vision around payments will see the department investigate how emerging tools can support the evolution of its complex payments estate.

“The way the industry is changing has not only influenced our design thinking, but has also challenged our understanding of the needs and demands the next five to 10 years could bring, as well as the known challenges and pain points,” said Laycock.

“A key principle of design thinking is to challenge our mindset and put the users and their experiences front and centre. Before shaping the future, we need to consider the influencers and disruptors that could have direct and indirect implications,” he added.

Key disruptive technologies that Laycock’s team is watching include blockchain and distributed ledger technologies (DLT), such as Santander’s One Pay FX.

“The benefits [of DLT] include reducing time, cost and failure rates associated with making transactions whilst data is stored on a secure immutable ledger,” Laycock noted.

The competition in the payments space driven by the standardisation of banking data under the open banking concept is another trend DWP is following closely, as is the New Payments Architecture (NPA).

With implementation set for 2021, NPA is defined by the industry as the biggest change to the way payments are processed in the UK since the 1960s. It will introduce a slim central clearing and settlement layer for the UK’s domestic payments schemes and process payments in real time.

The NPA is hoped to drive competitive innovation and unlock new business opportunities, from smarter uses of banking and payment data through to new transactional services. According to Laycock, the NPA can also transform public service delivery.

“I’m keen for us to consider how we can harness the payment innovations coming out of these trends and how we can influence the NPA to help shape the future of payments across government,” he pointed out.

To incentivise the development of new ideas in a safe environment away from criticism, the department introduced the DWP Dojo, which is a “machine of ideas” focused on areas such as payments innovation.

Areas being investigated by the DWP Dojo team include the use of blockchain to facilitate faster payments and the creation of a hyper-ledger fabric to create a payment messaging platform, which is now being taken to the next step through a proof-of-concept with the Bank of England.