Payments Innovation

The Future Of Payments Transformation

Legacy banking systems are, well, legacy systems. Robust, but notoriously inflexible and slow to change. That’s a problem for financial institutions looking to grow revenue with their payments programs and grab for top-of-wallet status with new, innovative card products. Of course, flexibility and innovation alone are not enough. No financial institution can compromise reliability, security and scale for flexibility. I2c says that, to master payments transformation now and in the future, FIs need a processing platform that fuses flexibility and innovation with reliability so they can quickly configure and scale new payments solutions.

The way we shop and buy has changed drastically in recent years. Consumers want what they want, when they want it, and payments is no exception. The transformation in payments is happening now. More purchases are digital and mobile and are influenced by social channels. Today’s consumers have more options than ever, and FIs are beginning to worry. According to Celent, more than half of all FIs say they feel a loss of control, and more than 80 percent worry about becoming and staying top-of-wallet status in a digital world.

Take credit, for example. Even with healthy growth in the global credit card market — 7.3 percent in North America and Europe and 13.2 percent in developing countries* — competition is getting more intense, and not just from other banks. Crowdfunding and alternative lending models from FinTech firms remain top of mind for consumers, and tech giants, like Apple, Samsung and Facebook, and other nontraditional payments players are disrupting banking and payments.

For the consumer, access to credit is crucial, but only if the offering is differentiated and provides value over and above the existing alternatives, a 2015 study by the Federal Reserve found.

All this brings added pressure on financial institutions to differentiate their products and services from the rest. And with the accelerating pace of technology innovation and adoption, this requires that traditional players transform themselves into innovators.

But that’s much easier said than done. In addition to keeping up with changing consumer expectations, banks need to scale profitable card solutions to match the needs of different market segments, geographies and changing consumer demographics. Unfortunately, most issuers rely on payment legacy processing technology that is inherently inflexible and that was never designed for today’s environment. The result is that issuers are stuck rolling out the status quo of undifferentiated “me-too” products — a losing formula.

That’s the problem that i2c hopes to help card issuers solve — offering a unique, highly configurable and reliable payments processing model that allows them to quickly create new, customized solutions on an inherently secure platform. I2c likens the solution to LEGO bricks. The platform is comprised of a library of blocks of functionality that can be rapidly assembled so issuers can build new solutions and bring them to market. Given the right tools, issuers can create and execute their payments roadmap vision.

Called “Agile Payment Processing” by i2c, this model uses software tools on a single, global platform that requires no custom coding. It takes into account cardholder preferences, purchase history and other information so issuers can respond to customers’ needs to create personalized purchasing experiences in real time.

Its Agile Processing model allows issuers to try new ideas and programs in response to market demands and do so with little risk. Issuers can build new features or programs in a sandbox, test them and quickly and cost effectively bring them to market. Once deployed, programs can be adjusted based on market feedback, returned to the sandbox and then redeployed for rapid scaling.

The model gives financial institutions the control and the tools to respond to rapidly changing market dynamics, without compromising reliability and scalability. Those are the keys to success in the age of payments transformation. I2c CEO Amir Wain believes that issuers that don’t adopt a configurable, flexible and secure architecture are exposed to increased risk: “The gap between early adopters and laggards for technology is much smaller than ever. In the end, if a company does not invest in the architecture to support this, they will lose competitive advantage.”

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