Think back to an old episode of the hit show “Homeland,” the mini-series that seemed to put main character CIA agent Carrie Mathison (Claire Danes) constantly navigating an intricate plan to stave off the threat of full-scale annihilation by terrorists — but grappling with newfound challenges as they came in real time.
To hear Kathleen Pierce-Gilmore, senior vice president of Issuer Solutions at Visa, tell it — as she noted to Karen Webster in an interview — there’s a parallel to be drawn here, where planning has its backup plans. Banks, in pursuit of innovation, from digital wallets to tokens, find that there are fires to put out when addressing the challenges of their core infrastructure while messaging standards such as ISO 2022 loom large.
All the while, they’re trying to get their arms around digital card issuance, personal finance apps and meeting consumers, digitally, where they want to be met.
“There are endless ways a bank could choose to invest their dollars for the purpose of creating that great customer experience,” Pierce-Gilmore said. “They can’t do them all,” but they must consider how to use existing (or new) technology to meet their goals.
Making a change to a system that is monolithic means that issuers must sit down and think through all the potential downstream impacts versus the strategy of using modular technology.
That’s easier said than done.
“In some cases, banks do not even have a full view of their current architecture because it’s been built on top of, and over, for years,” Pierce-Gilmore said.
The age of COBOL is past, and for many banks, the tried-and-true staffers who knew how to fine-tune and maintain those legacy systems are retiring, she said. The pressure is mounting as banks move toward addressing the proverbial elephant in the room in terms of technical debt (and their own providers are not even supporting the legacy infrastructure). Innovation may feel like a luxury in the current environment, but it’s a necessity.
Pierce-Gilmore recounted to Webster that during her own tenure at an issuer, before she came to Visa, there was no real support to help address the issues tied to legacy systems as her firm sought to launch new digital products into the marketplace, a process that took months longer than had been necessary.
Banks in 2024 are choosing from a wide range of strategies as they think about legacy systems, although it’s rare to see a wholesale rip-and-replace approach, Pierce-Gilmore said. In some cases, they are changing one system after another in a piecemeal fashion.
In other cases, they are linking with providers such as Visa, which acquired Pismo earlier this year. Pismo aids the company in helping its client firms (including banks) embrace cloud-native, composable microservices tied to APIs, she said.
“What we’re able to do with a bank is essentially tailor that [tech] strategy,” Pierce-Gilmore said. “We can sit down, collaborate with them, and side by side help them think through what kind of transformation they’re going to go through, whether they’re talking about their core banking platform or issuing and processing … we’re helping them advance to where the puck is going.”
The modular approach means that issuers can keep the infrastructure they want in developing, say, a personal finance app while opting elsewhere to use a FinTech or Pismo to “take” a ledger from the latter while keeping the pricing in-house, she said.
“The reason you can do that so easily is because the risk is managed through the architecture,” said Pierce-Gilmore, who added that the API connectivity ensures that security and scalability, underpinned by data, are in place — and real-time event data helps issuers react (and anticipate) market demands while sidestepping the frictions of end-of-day batch processing.
“The quality of the consumer experience you get is completely different,” Pierce-Gilmore said, as consumers can send their cards to digital wallets with the click of a button.
In essence, the cloud-native, modular banking approach offers banks a bunch of Lego blocks from which to craft a series of end-user experiences from a slew of providers and offerings, she said.
“If you’re getting these out-of-the-box solutions, what you can do when you actually just buy the parts and orchestrate it … it’s streamlined,” Pierce-Gilmore said. “It gives you the ability to innovate, it’s a lot less expensive, it has much easier process, and it’s easier to manage risk.”
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