Rethinking Card And Payments Processing

The financial sector in the Asia Pacific region is undergoing significant change. At one time, financial institutions had a stranglehold on payments processing. Now, however, nimble rivals are entering the market as viable competitors.

To remain competitive, financial services organisations need differentiation from competitors in addition to meeting the demands of consumers’ rapidly evolving needs. This requires updated card processing services, while controlling risk, reserving capital, streamlining operations and facilitating the growth of differentiated - as well as profitable - electronic payments.

Most established financial services companies run legacy payment systems that are rigid and complex, making it difficult to deploy new payment products and services. Forward-looking financial services firms recognise the need to transform to a customer focused approach, introducing value services that generate new profitable revenue streams.

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Legacy Systems Hinder Flexibility

Many financial institutions are constrained by existing card processing technologies that are slow, inflexible, costly to operate and vulnerable to sophisticated fraud and data security threats.

Outdated legacy systems require laborious, time-consuming coding for adjustments. This limits an organisations ability to rapidly adapt to customer preferences, market conditions and new product demands. This lack of flexibility also adds time and cost to new product development.
Typically each payment type – cash, cheque or card payment – has its own IT system, delivery/service channels. These silos create an inconsistent delivery environment that reduces efficiency, negatively impacting the customer experience and therefore customer loyalty.

Modernising With A Payments Hub

To reduce costs, increase flexibility, and create a consistent platform, companies need to modernise their infrastructure and applications. The question then becomes, “What do we need to do to bring our payments processing into the future?”

The answer is a payments hub founded on service-oriented software and operating on a consumption-based pricing model. A payments hub is a comprehensive solution consisting of hardware, software and services that underpins a payments systems’ architecture.

A payments hub enables a financial services company to process any payment type, including cheques, wire transfers, micropayments, securities and foreign currency. It cost effectively adapts to changes, and easily integrates existing back office systems with new front-end systems.

A modern, integrated payment services platform offers the flexibility needed to deliver innovative services to customers, as well as the ability to develop products that are unique in the marketplace.

Leveraging efficient shared processing services reduces long-term operational costs and capital investment. Improving the service quality of the customer experience also enhances loyalty; increases spend and drives business growth.

Benefits Of An Agile Payments Model

Overall, the payments hub delivers an agile cards and payments framework. This framework facilitates competitive cost structures while allowing internal resources to spend more time on differentiating the business from competitors.

An agile cards and payments framework provides a choice of services. Institutions can retain customer contact, query handling or other activities, or route those functions through a payments hub for external servicing.

This flexible pay-for-use model controls costs, which enable an organisation to focus on growing business and retaining customers. It is a comprehensive business-oriented approach that addresses the challenges of a growing competitive landscape as well as a demanding, potentially less loyal, consumer.

Forward-looking businesses offering cards and payments processing are using this approach to improve efficiencies, enhance product innovation, increase customer satisfaction and control operational and capital costs. It is an approach that meets the needs of today’s rapidly changing financial sector.

The author is CTO, Enterprise Services, HP India.