Transitioning through trust – securing the future of payments - speech by Deputy Governor Mary-Elizabeth McMunn at Electronic Money Association Conference

Transitioning through trust - securing the future of payments - speech by Deputy Governor Mary-Elizabeth McMunn at Electronic Money Association Conference

Introduction

I'd like to thank Thaer, Judith and the team for their invitation to come here today to close what is the Association's 25th anniversary conference. Congratulations on hitting that impressive milestone.¹

I hope it has been a productive day, coming together to discuss how we can harness the very real opportunities for the industry and your consumers, while understanding and tackling the risks - some novel and many traditional - which we face.

As one of the most fundamental financial services, payments is the very lifeblood of the economy.

In many ways payments are very simple - the exchange of one value for another; but as we all know the payments system, is also complex. And serves as the invisible underpinning of the modern economy.

While payments are older than money itself, they have continuously evolved, and in recent times quite rapidly.

From the human-to-human transfer of a physical notes and coins, to the movement of money by finger or thumb, to programmable digital money and a future where the advent of agentic commerce may see a human all but out of the loop.

But despite the means and mode of payments changing, some things remain the same.

In particular, the fact that none of this is possible without trust.

Trust has always been core to the concept of money and the increasingly complex system which we have built on top of it.²

Without it, none of this works and so the importance of trust to the payment system is absolute.

In the context of a fast changing payments ecosystem, this is something we must bear in mind. And so I'd like to explore this theme with you today from a number of different perspectives.

First, I will speak about the exciting pace of change in the payments system right now - and why the maintenance of public trust is crucial.

Secondly, our supervisory priorities for the sector, aimed squarely at delivering that trust in the matters that consumers say are most important to them.

And finally, I will touch on how the Central Bank has adapted in terms of how we engage with innovation - to ensure we can deliver on our mandate and mission into the future.

The Changing Face of Payments

So, firstly the changing face of payments - which as I said is rapidly evolving.

Technology and innovation are leading to new payment instruments and new payment infrastructures - both public and private - all against a backdrop of the significant and rapid structural change in the global economy.

Interlinkages between traditional and digital finance are increasing and it is at this intersection where innovation in payments is gaining a foothold.

Digital finance, DLT and tokenisation represent a new horizon for payments - promising the opportunity for new products and efficiencies. And AI frontier models and agentic capabilities have the potential to transform who and how we pay.

While these technological developments present real opportunities, the technology is not an end in itself - and technological developments alone will not deliver a payments system operating in the best interest of consumers and the wider economy.

And so, I see two principal risks related to the pace of developments.

The first is that public money does not keep up - and we transition to a world without it as our anchor. This is something we in Europe are very alive too, and why we are modernising central bank money for the digital age - given it represents the ultimate form of trust in the monetary and financial system.

This includes projects such as Pontes, launched last month and which bridges between traditional TARGET Services and DLT services to settle wholesale transactions on-chain, in central bank money.

And of course, the Digital Euro. While we are committed to ensuring there is sufficient access to cash and in protecting the resilience of the cash system, we are also committed to having cash for the digital world, in the form of a Digital Euro, which will also provide an integrated, European-native retail payment rail for our economy.

And lastly, central banks also need to keep up with private sector developments, which is why we have increased our focus on digitalisation and tokenisation across our gatekeeping, regulation and supervision work - as well as our Tokenisation Discussion Paper earlier this year.

The second risk I see is that as firms rightly seek to "keep up", they rush ahead without a well thought out strategy - investing unwisely and proliferating products and services which may be new, but are not interoperable, sustainable or scalable. And that such rapid developments actually lead to further fragmentation, "walled gardens" and cul de sacs - working against the potential eco-system benefits of these innovations.

Such an approach could, paradoxically, drive up costs and create interoperability hurdles for consumers and businesses. It could also breed doubt, leaving many to wonder what is genuinely innovative - and what is simply an innovation for innovation's sake.

I don't think this is the future payments system any of us want or envisage. So how do we ensure that the payments system is innovating towards a better future?

There are many possible answer to this, and ongoing discussion, but I would like to focus on something simple - and that is remaining focused on the outcomes, and the ends, rather than solely on the means.

And a good place to start is what matters for your customers - and recent central bank research reminds us what is important to them.

While efficiency is always crucial in economics - security, reliability and fraud protection are what households told us matters most to them.³

Which should give us all pause for thought in what we are innovating towards.

That insight should inform you in terms of how you innovate. And inform us in how we, as regulators, approach our payments policy development and supervision.

It is indeed already something we have firmly in mind, so I want to take some time now to examine those identified concerns around security, reliability, and fraud prevention through our supervisory lens, as we seek to ensure the payment ecosystem is delivering for consumers and the economy.

Security & Reliability

First, let's take the topics of Security and Reliability together - which relate to consumers being able to trust that their money is safe, and that it will be transferred without issues.

These fundamentals directly relate to two key supervisory focus areas of ours, namely safeguarding funds and operational resilience which I would like to touch on now.

As vital intermediaries in the payments ecosystem, your customers trust to you to ensure that their money is safe. That you have the controls in place to protect this money, and have the ability to return it in full, and without delay, at all times, even in times of operational disruption or in the event of firm failure.

This is why, over the last number of years, the Central Bank has carried out significant supervisory work and interventions to ensure firms are living up to their responsibilities and "safeguarding" customer monies in line with their obligations. And indeed one of my first speeches to this sector I set out how important this issue is.⁴

Throughout this time we have seen improvements in safeguarding practices, particularly in the areas of governance and Board oversight. This is very welcome, and a testament to our collective efforts.

However there continues to be pockets of weaknesses in the sector.

And more recent safeguarding incidents have centred on control failures where parts of the process were outsourced. As with all outsourcing, it is crucial this is managed with appropriate and robust risk management frameworks and oversight arrangements - commensurate to the criticality of the function.

Given its fundamental importance, we will continue to focus on safeguarding as a key supervisory priority for the sector - so that customer monies are safe, and you maintain their trust.

The second supervisory priority I would like to discuss is Operational resilience, which put simply is the ability of a firm (or the system) to identify, prepare for and recover from operational disruption, howsoever that disruption is caused.

There has never been a time where there are so many threats which have the potential to disrupt your operations and the broader system. These threats are already severe, and they are rising - raising the bar for the very meaning of resilience.

For existing and any new payment service providers to sustain themselves in the payments ecosystem, maintaining the resilience of their operations and the safety of payment flows is critical.

Increasing digitalisation and technological advancement, with all the benefits they bring, also elevates risk exposure to fraud, system outages, and cyber-attacks.

The requirements set out in the Digital Operational Resilience Act (DORA) are taking on increasing relevance in an evolving cybersecurity landscape.

While you must of course comply with DORA, this should not be merely a compliance exercise. Rather, it should be seen as a vital tool which firms can use to ready themselves for serious technological disruption.

We have messaged it clearly, but it bears repeating - in the modern financial sector, ICT governance is not a matter for the IT department, but a critical role of the board of each firm. Investment in identifying areas of vulnerability and mitigating them is critical.

This means having a deep understanding of your critical business services, outsourcing arrangements and technology dependencies.

And it means setting impact tolerances and conducting regular testing of your recovery plans.

All of which are designed to ensure your firm is in the best position to identity, prepare and recover from any disruptions - and meet your broader responsibility to the collective payments system not to be the weak link in terms of disruption.

In the current challenging environment, existing weaknesses that remain unresolved may become increasingly material and pose significant risks to operational resilience.

Artificial intelligence is, of course, relevant on both sides of this and I want to touch on it briefly.

It could be used by criminals to drive ever more pernicious cyber-attacks, prompting the need for ever more vigilance to put in place preventative measures.

But it can also be deployed as a tool to assist in early warning indicators, threat detection and scenario testing, to name just a few.

While there is no doubt that it can have a part to play as part of a suite of measures, I more generally worry about over reliance and the undue confidence that might come with that.

This is more of a macro concern as we look to exploit the potentially profound potential of this technology.

As a colleague from the New York Fed recently remarked: resilience is, in part, the capacity to adapt - a "capability that depends heavily on human judgement, and which takes years to build. We should be very careful about optimizing away the mechanisms that create it."⁵

This is a wise observation - and we need to be mindful that efficiency and resilience do not necessarily move in the same direction, and significant adaptive work may be required to maintain resilience while striving for efficiency.

Fraud Prevention

Financial crime risks represent another critical area of supervisory focus for the Bank.

This includes working to combat the risks of money laundering, terrorist financing, evasion of financial sanctions, market abuse - and, increasingly of course, fraud.

In addition to all the benefits technological advancement is capable of delivering, it also enhances the capability of cyber criminals to infiltrate, impersonate, deceive and steal people's money.

This is increasingly relevant as payment preferences of Irish households we surveyed are becoming more digital. For example, mobile wallet is now the payment preference for just under half of those under the age of 35⁶, and 60 per cent reported digital bank transfer as their preferred method to do account to account transfer.

But alongside the rise in digital adoption of payment forms is a rise in the risk of digital fraud.

As the most recent figures from the Central Bank have shown, during 2025 €179 million in fraudulent payments were recorded by Irish resident Payment Service Providers (PSPs) - up from €140 million in 2024 and so representing a 27 per cent increase.

Looking at the data in overall value terms, fraudulent credit transfers were the largest driver of this increase. However, in relative terms, fraudulent e-money payments saw the biggest increase for the second year in a row, increasing by 57.7 per cent to €40.42 million.⁷

While the fraud rate is still relatively low, such growth should give pause for thought. A trusted financial system is critical to households and businesses and in our collective interests - from an economic and societal perspective. Financial crime - and the rising rates of fraud in particular - poses a fundamental threat to that collective interest.

And so, the collective focus should be on what is required to maintain robust fraud prevention measures, to quickly recover stolen funds, and to appropriately compensate victims (particularly vulnerable consumers).

This is why combatting financial crime is one of our key focus areas this year.

In terms of supervision, we are enhancing our data, and have undertaken a cross-sectoral thematic review of controls on certain types of fraud as well as the fair treatment of customers who fall victim to fraud. In essence we are looking at both how you prevent fraud - and how you respond in the best interests of your consumers, when it happens. The review has been completed and we will communicate the findings in due course.

In addition to this supervisory work for regulated entities, we are also increasingly helping to combat financial crime which takes place outside the regulatory perimeter.

This includes using intelligence tools to scan the internet for scam website posing as financial service providers, and - in our role as Trusted Flagger - to report these sites to internet services providers. In the 9 months to end 2026, we reported 333 URLs, 99 per cent of which were removed.

And we are also strategically deploying our criminal investigation team and are assisting the Gardai with investigations including international fraud investigations. Part of the collaborative response necessary to combat financial crime.

As with many of the risk we face, clear ownership and collaboration is crucial. We cannot allow a lack of connected action to lead to gaps - in particular if we are to properly tackle a problem that does not respect borders or mandates, and that exploits every system weakness and human vulnerability.⁸

Innovation in the interests of us all

Finally, I want to address our approach to ongoing engagement with firms - as we seek to collectively deliver innovation that meaningfully improves the system for all who rely on it.

Part of our strategic focus over the last number of years has been a shift in our approach - to be more future-focused, so to anticipate and support innovation; and to be more open, so as to strengthen our engagement with external stakeholders.

Over this time, we significantly enhanced our engagement with the innovative ecosystem - recognising that such engagement helps deepen our own understanding, better informs our regulatory approach, as well as helps to better explain to you what being regulated entails. This helps embeds a regulatory culture - which sets you up for success.

In our engagement with the payments sector, be that industry representatives or individual firms, we have sought to be clearer in terms of our activities, our actions and our expectations. This applies to firms that we supervise, but also to those firms meeting us for the first time in the authorisation process.

And throughout this time, we have both enhanced our Innovation Hub and established our innovation sandbox programme which is going from strength to strength.

The Hub itself continues to grow. Last year we had 78 engagements with firms, a 10% increase on the year before, and we're well on track to pass that again this year. That growth tells us something. Firms want to talk to us early, and we want to hear from them.

In terms of our sandbox, this year's programme focused on Payments - selected for being the part of the financial system which touches people most directly, and offers a good example to how we are trying to foster innovation that delivers in the public interest.

In the payment's sandbox we set out three problem statements: from frictionless and transparent money movement; to inclusive access to the digital economy; and safe integration of emerging payment technologies.

And we accepted 8 projects tackling these problems, with a wide breadth of means:

• On money movement, we saw work on instant cross-border transfers and on biometric authentication at the point of sale, aimed squarely at the friction and the fraud that consumers meet every day.
• On inclusive access, we saw artificial intelligence and open banking put to use to bring financial guidance to small businesses; solutions looking to make pension contributions easier; or to bring efficiencies to sustainability reporting.
• And on emerging technologies, we saw a live test of how tokenisation might channel customer savings into sustainable lending, in a way that helps people understand the core role banks play in turning deposits into loans.

In addition to providing regulatory guidance and advice to participants, for our part, the sandbox also served to deepen our own understanding of innovation - from the practical realities of tokenisation outside the core deposit book, to the role of generative AI in the regulation of financial advice.

We will publish a report on the outcomes and findings from this programme in November, as we did for the first sandbox, so the learnings are shared across the ecosystem.

We also intend to launch a third sandbox in the coming months, building on what we have learned from the first two, and we welcome continued engagement from firms across the sector.

Conclusion

Let me conclude.

Payments and the payments system are rapidly changing.

But the fundamental importance of trust on which money and the system relies remains constant.

As we face into an uncertain but also exciting future, we must remember this well.

Equally, the importance of security and reliability. And of protection of consumers and the money they entrust you with.

As well as the need for regulators and innovators alike to engage, to collaborate and to work together.

To deliver a better future, and innovation in the interests of us all.

Thank you