Banks Now View Payment Hubs as ‘Mission Control’ Centers

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Payment hubs are emerging as the linchpin for financial institutions striving for efficiency, security and superior customer experiences as money travels across the globe. ‘

“I like to think of them as ‘mission control’ for modern-day money movement,” Elaine Duff, senior vice president of Money Movement and Retail Solutions at FIS, told PYMNTS. “Hubs are responsible for guiding every transaction from instruction to settlement.”

This unified platform assumes comprehensive responsibility for an array of payment types, including batch payments, domestic transfers, cross-border transactions and those processed via card or non-card instruments.

A key function of these hubs is to ensure the “full lifecycle of a payment is being monitored, is providing real-time status, and ensuring that the bank has full capabilities to see the processing and the routing of each payment,” Duff said.

A Single Interface

The hub provides banks with a singular interface through which to manage and oversee all these diverse payment flows, eliminating the need for disparate systems and offering a holistic view of operations. This singular interface is critical as the payment landscape becomes increasingly complex with faster money movement and a growing number of stakeholders involved, she said.

A primary driver behind the adoption of payment hubs is the imperative to deliver a seamless and transparent experience for financial institution customers.

In today’s fast-paced environment, consumers and businesses expect immediate answers regarding their transactions.

“When a payment is being made, the consumer is looking to see whether that payment is available in the next account and is left to guess if it’s not available immediately as to when it will be available and if there are any problems,” Duff said.

The objective of a money movement hub is to resolve this ambiguity by routing payments based on consumer preferences, providing customers with visibility at every stage and offering confirmation upon successful payment, she said.

This intelligent routing capability extends beyond transaction completion; it’s about optimizing the customer journey based on a customer’s specific needs and the bank’s relationship with them, Duff said.

Intelligent routing can factor in the cost of a payment to the financial institution, “whether it’s an instant payment or a wire or a same-day ACH, there are different economics with sending those types of payments,” Duff said.

“If someone sends a payment on the 15th of every month and logs in on the 17th to make a payment, the bank’s intelligent routing could say that payment can’t be late — and can make sure that that same recurring payment is now done on a same-day basis,” she said.

Anticipating user intent and optimizing the payment rail accordingly can enhance reliability and customer loyalty, she said.

Helping the Banks, Too

Payment hubs are proving instrumental in helping banks navigate the complex challenges posed by legacy systems and the associated technical debt. Traditional banking structures often involve single rail solutions supported by outdated software, leading to a patchwork of manual efforts to maintain daily processes.

Banks frequently approach providers like FIS with these single rail solutions, seeking modernization, but they are not looking to overhaul everything simultaneously, Duff said. The aspiration of a payment hub, particularly for a provider like FIS with its Money Movement Hub, is to guide banks to a more efficient operating model, moving beyond simply “re-engineer[ing] an existing process on a new system.”

This methodical approach allows banks to prioritize modernization efforts based on their growth needs, tackling one rail at a time over several years.

The modular design and availability of APIs are key to how banks can effectively scale and future-proof their payment operations.

This modularity allows providers to work with clients on their specific modernization plans, enabling them to pursue incremental goals, she said. For instance, a bank processing bill payments via ACH might want to transition to offering real-time payments for this service as a differentiator for its client base.

Similarly, Duff said, “we’re hearing a lot of conversations around stablecoin, and we’re hoping that for large and small banks alike, they can look to FIS and some of our money movement capabilities to … add stablecoins as an additional rail alongside some of the more mature rails that we have today in North America.”

One of the most critical advantages of payment hubs is their ability to integrate fraud and compliance screening.

There’s a critical shift with the hub system. Vital checks happen in real time, before confirmation is provided, “instead of a payment being made and a fraud or compliance alert happening after the fact — and with instant payments that is too late,” Duff said.

Payment hubs mitigate risks, which is essential in an era of instant transactions where recovery time is minimal. A payment hub provides a unified solution to manage regulatory changes like ISO 20022, which impacts Fedwire today, SWIFT later this year and ACH in the coming years.

Beyond security and regulatory compliance, payment hubs reduce manual intervention and redundant tasks, thereby creating cost savings and operational efficiencies for banks, Duff said.

A single payment hub consolidates operational efforts, allowing teams to become true experts in payment rails and client support, rather than navigating legacy technology quirks. The intent is not merely to reduce staff but to enable operational teams to perform “more value-added work, providing analytics, helping to think through ways to optimize that consumer experience and to think about ways to grow the deposits for that bank,” she said.