In Europe, as has been seen elsewhere, banks and other financial institutions (FIs) must grapple with payments modernization but are burdened by legacy systems and infrastructure.
To that end, Broadridge Financial Solutions said this past week that it has partnered with Hamburg, Germany-based payments consultancy and supplier PPI and debuted a Payments-as-a-Service (PaaS) initiative in Europe.
The two institutions will help banks realize a shared-service approach in a bid to improve core payments technology as they contend with broader payments infrastructure changes and implementation of PSD2 and migrations to systems such as SEPA ISO.
In an interview with PYMNTS, Alastair McGill, general manager of Data Control Solutions at Broadridge Financial Solutions, said payments processing in Europe has undergone significant change over the last decade.
“The pace of change shows no signs of slowing down,” he said. “The continued acceleration of digital and mobile payments affects both domestic and international payments.”
Expectations are changing, too. Consumers and businesses expect that payment channels and systems can cope with payments being made at any point and from any location.
The challenge of keeping a payments platform and the associated processes in line with these market innovations, the latest regulations and the evolving standards and rulebooks are significant.
McGill noted that payment schemes such as SEPA are marked by evolving rule schemes, and a new rulebook is expected to come out in November — two years from now.
“We’re also seeing existing standards such as EBICS — the Electronic Banking Internet Communication Standard — emerge across Europe,” he said. “Originally a protocol for the German market, it has now been adopted by other countries, including France, Austria and Switzerland.”
Against that backdrop, legacy systems at FIs lack core underlying designs that take into account best practices.
With a nod to PPI, McGill said the solution gives banks an alternative to maintaining in-house and legacy payments platforms.
“Together with PPI, we offer a modern, scalable payment platform designed for the payments community and the market and regulatory requirements within which they exist,” he said.
Clients, he said, benefit from using mutualized services for their non-differentiating functions.
“We’ve seen this trend in a number of securities processing areas, and the same holds true in the payments space,” he told PYMNTS. “By utilizing platforms that are designed for multiple firms with trained staff skilled in maintaining and operating those platforms, clients are able to lower their operational costs.”
Drilling down into B2B-specific use-cases that are enabled by PaaS, he said PaaS gives banks “an extendable platform that provides a hosted, managed application that can be augmented with operational staff to work alongside a core retained team.” PaaS teams can take responsibility for specific components of the payments process or take on tasks that are specific to each bank.
Anti-money laundering (AML) and know your customer (KYC) are optional elements to the PaaS.
“For those banks that want to keep control of that in house, we integrate to their existing provider,” said McGill.
For firms that are seeking for it to be part of the service, it can be delivered through a number of different application provider choices.
“Both the application and the operational team support cross-border transactions,” he told PYMNTS.
Asked about product and regional roadmaps, he told PYMNTS that the company intends to focus, at least in the short term, on the European payments space.