Media Release - Challenges to Payments System Innovation - 14 March 2006

Continued investment in an efficient payments system and a simple, low cost and fair regulatory system are the foundation stones for innovation and competition in the financial system, National Australia Bank Director Finance and Risk, Michael Ullmer said today.

"To achieve this we must confront a number of issues including:

• how can existing participants in the payments system generate an adequate return on their historical investments?
  
  
• how should new entrants into the payments system pay their way?
  
  
• what is the best way to ensure system stability and develop payments policy and access arrangements?
  
  
• what are the appropriate roles for the RBA and ACCC in determining interchange access arrangements?
  
  
• do we need an independent agency or mechanism to review the credit and debit card schemes?"
  

Mr Ullmer told the ABA - VISA Payments System conference an independent review to look at these questions was one option that should be considered.

"If the review route is to be followed, the focus, in my view, should be: what can we do better in the future?  Are there lessons to be learned from others offshore or from our own experiences to date?"

Mr Ullmer said compliance costs were also an issue that had an impact on the capacity to invest in customer-related innovation.

"In simple terms, regulatory and compliance requirements have knocked future investments in the payments system off the project slate," he said.

Basel II, IFRS, Sarbanes Oxley, FSRA, Anti-Money Laundering have absorbed an enormous number of people hours and required specific and complex technological responses.

"I am not here today to argue against these legislative initiatives.  Indeed our challenge is to turn this investment into a competitive advantage," he said.

Please click here to read the full speech

For further media information please contact:

Brandon Phillips
Group Manager, External Relations
T  03 8641 3857
M  0419 369 058

Hany Messieh
Head of Investor Relations
T  03 8641 2312
M  0414 446 876

Kim Lovely
External Relations Manager
T  03 8634 4982
M  0406 035 243