In a constantly evolving world, keeping payment systems compliant while managing customer expectations can be a tall task for financial institutions. Cost overruns, service disruptions, and fear of delays are some of the challenges holding back financial institutions as they seek to grow their payments businesses, all of which can be addressed with an enterprise payments infrastructure.
Laura Clary, senior director of product management, Enterprise Payments Solutions, Fiserv, shares five primary barriers for financial institutions to overcome in order to grow their payments business.
Increasing Operational Costs
A top consideration for many financial institutions is the cost of managing and staffing additional new payments initiatives and rails. Building and maintaining payment capabilities across multiple payments rails is resource-intensive, with significant underlying risks. Operational costs can be high, with multiple customer-facing and back-office operational and IT teams needed to provide support. Further, maintaining and updating existing ageing systems can be difficult and expensive.
Consolidating support for multiple payment rails onto a single platform can drive down operational, resource and technology costs and improves customer experience.
Growing Compliance Costs and Regulations
Running multiple platforms to process payments raises several complications. Compliance requests or regulatory changes are likely to impact multiple platforms. Members of IT and operations must be trained on each one, leading to dedicated staff that are not easily redeployed between departments. This, in turn, results in slow service, both internally and for the customer.
Annual compliance and regulatory updates are aligned with a regional or global timeline, rather than on a schedule related to the payment rail, leading to unevenly timed and resourced payment system updates requiring large teams to be created and disbanded for a limited period only.
By contrast, an enterprise-scale payments platform supports the application of compliance updates for both market infrastructure and regulatory updates. This consolidation allows financial institutions to more easily identify the impact of changes for themselves and their customers while driving down the cost of compliance.
Risk from Financial Crimes
As payment schemes were created, they adopted the message formats and data elements available at the time. Not all have migrated to new and modern formats and data models now available.
With a single enterprise payments platform, financial institutions can analyse all payments and send enriched and normalised data on one centralised platform, all in real-time. In this way, financial institutions have full visibility of payment flows and can more effectively identify attacks. Additionally, limits and thresholds can be set across payment rails and customer or product profiles to address total risk, rather than managing risk mitigation across individual customer-facing platforms.
Another benefit of a centralised platform is that it can provide a financial institution with a full view of customers’ activity. This offers an opportunity to better understand the usual behavioural patterns of each customer, making it easier to identify abnormal activity that could indicate crime is taking place.
Non-utilisation of Payments Data
Connecting multiple departments so they can all benefit from the data generated by multiple payment systems is traditionally a difficult and complex task. Most often, financial institutions accomplish the job by sanitising and simplifying data and then storing it in a centralised data store. This process, however, can often remove any links to the context in which the data was generated and greatly reduce its value. To add another layer of complexity, manual methods of monitoring and pulling information from disparate systems can be time-consuming and prone to human error.
Next-generation payment platforms are designed to normalise data and link all elements of business interaction to ensure the context of the data isn’t lost. Platforms such as these allow information to be held in a central location and easily accessed throughout the financial institution’s departments and teams in real time, greatly increasing its value and relevancy.
Lack of Agility
Market and customer demands are changing at an ever-increasing rate, with the adoption of new payment capability measured in months rather than decades. Disparate systems can significantly hamper financial institutions’ ability to respond quickly to these changing demands.
Further, a patchwork of inflexible IT platforms used to process transactions creates a reliability concern. Maintenance is complex and expensive, and new products and services must be customised for each platform. These constraints can impede development, lengthen time to market and potentially add significant risk.
A flexible, integrated infrastructure helps financial institutions remain responsive to customers and competitive in the market. Using one system to process reduces errors, increases processing speed, and provides the flexibility to launch new products and services quickly.
By using a centralised enterprise payments infrastructure, financial institutions can overcome payments and compliance challenges. In addition, they will be well positioned to support new payment types, such as instant and digital currencies.