The UK’s Department for Work & Pensions (DWP) pay out an estimated £165 billion in benefits and pensions to customers in the UK annually. Traditional payments systems are now being reviewed and overhauled in anticipation of continued demand, this has led a shift towards the blockchain and distribute ledger technology (DLT).
In a recent blog, Richard Laycock the deputy director of DWP’s digital delivery shared platforms stated they are now investigating the use of DLT to improve current payment systems. To put Laycock’s thoughts into context he stated that ‘The payments industry is evolving at pace. In Digital Payment Services we are helping to shape those changes, allowing us to transform our services and deliver the best for our users.’ At present the DWP service the needs of 20 million customers annually (approximately a third of the UK)
Looking to the future Laycock referenced an aging population which is likely to increase the demand on DWP’s services. Looking ahead 5-10 years Laycock noted that their payment services ‘need to be efficient, modern, fast, scalable, flexible, innovative and available 24/7’.
Several disruptive trends have been highlighted to the DWP recently, most notably the use of DLT. As an example, Laycock highlighted recent full production implementations like Santander’s ‘One Pay FX’. Time and cost efficiency along with reduced failure rates where noted as key deliverables associated with DLT.
The potential changes come ahead of a major revamp due to take place through DWP’s payment architecture. ‘Forecasted to start implementation in 2021, a common payment message standard will be introduced, the existing schemes will be consolidated and new overlay services, such as Request to Pay and Confirmation of Payee, will be available.’
As part of the DWP’s ‘Open-Banking’ plans, API’s would be enabled which would allow third party developers to build further apps and services, benefitting both the DWP and its users.
Open banking – the use of open APIs to allow third-party developers to build apps and services around a banking institution – also offers a way to improve aspects of the DWP’s payment services.