When it comes to payments innovation, the problem with banks and other large financial institutions (FIs) isn’t a lack of interest or aspiration. The modern consumer is digital in many ways: in how they shop, pay, interact with brands and manage their finances. FIs that want to hold onto these customers have every reason to eagerly embrace the digital future — because, as go the consumers, so go those who serve them.
But the need for financial services innovation and being able to actualize it are two rather different things. Because, as i2c CMO Marc Winitz noted to Karen Webster in a recent conversation, all too often, technology infrastructure dictates business needs and strategy, instead of the other way around. That’s a very big hurdle for FIs seeking to introduce those innovative payments offerings that consumers expect and that differentiate their brand in the market.
“On a global level, financial institutions face underlying infrastructure for basic payments and banking functions that is old technology for the most part,” said Winitz. “These are systems and technologies that were designed decades ago and created from a two-dimensional perspective of the physical world.”
And that infrastructure worked just fine in the world it was developed for — where consumers largely paid with cards, in stores, in person. And while physical payment methods still dominate, the market has vaulted forward. The payments landscape is undergoing a broad-scale and rapid transformation, driven by the move to digital and mobile technologies. Consumer interactions are becoming more digitally integrated across the board.
And FIs need to act quickly. New technology and ideas are spreading faster than ever. Today’s superheated digital environment has compressed the timeline between early adopters and laggards, driving much shorter product development cycles.
Unfortunately, most card issuers rely on legacy payment processing technology that was never designed for today’s environment. “The existing infrastructure simply isn’t capable of being able to meet the demands financial institutions have on them, and meeting those expectations is not only about a luxury or a thing they should aspire to; it is becoming a necessity.”
Where the need to meet market requirements exceeds FIs’ capabilities is where i2c goes to work, Winitz told Webster. I2c bridges that gap with Agile Processing, a highly configurable next-generation payments processing solution that gives issuers the control to create and execute their product roadmap vision.
“Control is important for issuers. Not having control no longer works. They have to be able to respond quickly to changing market dynamics.”
Payments Innovation At Scale
FIs have a clear understanding of the market need and consumer expectations when it comes to rolling out innovative digital products and services. According to Winitz, there is no lack of good ideas and creative product roadmap vision, but they are held back in their ability to execute them quickly.
“We are living in a real-time economy, but the infrastructure in payments and crafting better products and solutions just isn’t there,” Winitz noted. “Nearly half of all payments execs can’t deliver on their roadmap because they are too reliant on their payment processor or the infrastructure driving it. That is backward in today’s economy.”
The goal, Winitz said, is to give the issuers and payments providers a chance to decide what innovations their businesses require — and the timetable they want to pursue them in — instead of letting their legacy infrastructure decide that for them.
Agile Processing, according to i2c, puts issuers in a position to develop the types of solutions they want, get them into the market for testing and tweaking and then quickly get those solutions into production and available at scale.
Innovation Is A Business-Driven Activity
Financial services executives are stuck with a disconnect between the types of products and features they want to roll out and what their current infrastructure allows. Issuers should be able to think strategically about business requirements that drive their product roadmap vision. Payments innovation should be applied as a business-driven activity. Today, they can’t do that. Instead, they have to deal with technical constraints of their processor or legacy payment infrastructure as part of innovation.
Winitz noted that understanding this often involves business owners and payments issuers rethinking everything they’ve been doing up until that point.
“The first thing they need to do is take a realistic look at whether the business infrastructure in place now can support their product roadmap vision,” he said. “If the technology can’t support it, then they need to take a hard look at changing to a modern and flexible technology, and there are processing solutions in the market, like i2c’s, that can support any business requirement.” The alternative choice of continuing to rely on legacy technology will likely result in rolling out the status quo of undifferentiated “me-too” products or dealing with coding request changes that are costly and have lengthy time delays associated with them.
“We work with global FIs that connect to our platform and utilize a more agile way of doing things to see how it works themselves and to really how show them how to focus on getting products into the market more smoothly and quickly,” Winitz said.
The goal, he noted, is to offer issuers a solution that is both backward-compatible with the technology they have but also future-enabling for the solutions they will want to build going forward as customer demand continues to evolve.
The Right Tools For The Future
FIs can’t know today what every customer it will ever have will need in terms of services. But, Winitz noted, if you don’t know the future, the best strategy is to have a system to manage it. That’s where the flexibility of the Agile Processing architecture comes into play. I2c’s highly configurable and reliable platform is comprised of a library of blocks of functionality that, like Lego bricks, can be quickly assembled so issuers can build new solutions and bring them to market. For i2c’s clients, no coding or special changes from an IT perspective are required.
“We constantly innovate new capabilities into our platform; those are made available as Lego pieces,” said Winitz. “Our clients can then take those, as they come, and rapidly assemble them into new solutions or add new functionality to solve different problems. This solution lets them scale innovation, and they don’t need to predict the future by building static point solutions. With Agile Processing, they can respond to market needs in the moment and build highly customized solutions.”
Agile Processing can help level the playing field for issuers of any size, enabling them to deliver a distinct, branded service and payments experience and scale up or down profitable card solutions to match the needs of different market segments, geographies and changing consumer demographics.
“In banking, it is all about segmentation,” said Winitz. “If you can provide richer sets of capabilities and features across the board and put them into market quickly, you have the ability to set yourself apart from your competitors, regardless of their size.”
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