Payments As A Service Help Banks Build Resiliency

The pandemic has shone a light on some glaring inefficiencies in B2B payments. But Deepak Gupta, global head of PaaS at Volante Technologies, told PYMNTS that the cloud – and payments as a service (PaaS) – can help banks serve the payment needs of their corporate clients, building resiliency for both financial institutions (FIs) and the enterprises they serve.

Resiliency must be approached on two levels, he said: business resiliency and technical (or infrastructure) resiliency.

“You cannot have business resiliency without resilient technology,” Gupta said, adding that “it’s becoming critical to ensure that your payment infrastructure is highly resilient, highly scalable and highly available.” Commerce as conducted by consumers, he said, takes such robust infrastructure for granted. Consumers know that when they swipe their credit cards or conduct PayPal transactions, the infrastructure is likely to hold up just fine.

B2B payments have none of those hallmarks, Gupta noted. And the pandemic has exposed some pain points in B2B transactions, as banks have to process payments no matter where their corporate customers are (B2B payment volumes are growing even as overall GDP has taken a hit, he added).

“Now the question is: How do the financial institutions and the banks provide the same quality of service, which is provided today in B2C, to their B2B customers?” he said.

That’s easier said than done, considering that banks – regardless of size – must grapple with legacy systems and applications. Many of those FIs have their own data centers on-premise. But digital-first firms, Volante among them, are able to offer cloud-based, microservices-based technology that is tied to Azure, providing an active environment to process their wires that scale as volume scales.

As to what an active environment entails, Gupta explained that banks’ firmwide infrastructure can be run across far-flung data centers, which offers resiliency and redundancy. If one data center goes down, the others will still be running.

Why Resiliency Is Critical

“The resiliency is very critical, and it has to be almost a given for financial services efficiency these days,” said Gupta – especially for high-value transactions that must be delivered with speed and accuracy. After all, the bank that gets hit with a denial-of-service attack, goes dark for a few days and is unable to process wire payments for corporate clients will likely see those clients depart for a competitor.

Gutpa noted that right now, banks are most concerned about keeping the business they have, even as they look to the post-pandemic world to grow transaction-related revenues and ideally shorten the time it takes to get a corporate client on board.

Cloud-based deployments help cut down on the costs of banks serving their enterprise customers, as they don’t have to spend millions of dollars to buy licenses, hire consultants and purchase infrastructure just to run payment functionalities. As Gupta said of Volante: “We provide payments as a service, which means you don’t have to buy expensive licenses. And you don’t have to worry about expensive and long implementation cycles or connectivity with payments rails, whether it’s TCH or SWIFT.” Platform models enable white-label services, he noted, which can also take care of compliance and regulatory hurdles and smooth banks’ transitions to ISO 20022.

Gupta also noted that PaaS can speed up laborious, time-consuming and paper-heavy transactions such as real estate sales, where seconds count and minutes are too long, adding costs for all stakeholders. Real-time payments are also gathering momentum, making payroll more efficient and generally improving liquidity among corporates.

Gupta predicted that eventually, almost all FIs will embrace cloud-based initiatives to offer their clients payments as a service.

“I’m seeing that over 80 percent of our prospects are showing a strong preference for payments as a service,” he told PYMNTS of FIs, adding that “two or three years from now, 99 percent, if not 100 percent, of all customers will go the ‘cloud way’ and embrace payments as a service.”