Enabling financial institutions to get to speed
The Prefect Payments Storm
The VUCA World describes a situation of constant, unpredictable change that is now the norm in the financial industry, we are in the midst of a Payment storm which we will describe below.
The move to ISO 20022 is considered as the biggest change to the payments sector in the last 20 years. The changeover from the legacy MT messaging standard to the data-rich ISO MX messaging is a great step forward for all participants in the payments value chain.
The ISO standard allows transportation of richer data sets as well as introduces standardization across previously different types of payments. This change will deliver major benefits for banks in terms of efficiency, cost and STP rates.
The extra information available now, can enable easier, real-time tracking of a payment message in an ISO 20022, open standard that anyone can contribute new candidate models and messages for approval by the ISO 20022 registration bodies.
This significant change will be rolled out globally between the end of 2022 until November 2025.
Regulation
New regulations are continually being introduced in various geographies such as PSD2 in Europe as well as Open Banking, which is growing from strength to strength in Europe and evolving in other regions, with more stringent fraud requirements driven by the rollout of immediate payment schemes.
Time To Innovate
This digitalization-transformation creates new exceptions, more and more fintechs are joining the industry and creating disruptive services and overlay services, FIs need to play fast in this arena in order to compete to ensure customer stickiness. 68% of the bank executives stated that the biggest threat of not executing a payments transformation is the loss of existing clients and prospects (World Payments Reports Capgemini 2020)
Move to RealTime payments
Immediate payments, enable businesses and consumers to make and receive payments in real time, providing convenience, speed, and faster availability of funds 24/7/365 services as well as creatying liquidity for businesses. The momentum of immediate/real time payments is growing globally as more schemes are being introduced, accelerating the velocity of commerce and revolutionizing the payments landscape.
Legacy Cost
Cost of maintaining legacy systems and multi systems are becoming a real barrier for the banks to compete and innovate in THE new Fintech landscape, staying behind is not an option in this fast paced environment. Banks are investing in future proof systems to allow them stay relevant competitor in this new scene.
Upgrades
Banks considerations when it comes to deciding whether to take action and upgrade:
Technology
The banks executives and arteichtcts need to aim for a modernize open platform to reduce TCO (total cost of ownership) to allow them competing the new landscape . A platform that will be able to serve and consolidate multiple rails schemes globally, platform need to support Microservices which allow extensibility and reduce risk when implementing new functionality. Modren GUI and Cloud ready Platfrom is a must nowsdays.
Open API is being part of the core functionality to facilities interaction with channel & preferable systems also smooth integration which think about expeding the busienss to other countries new schem and to provide new services.
Business outcome and customers
The Upgraded system will enable the bank to offer customer’s with value added services and data driven services which contribute to customers stickness and allow the bank to create new revenues streams.
Competition and the market
The financial institute competition landscape is exploding with competition from Fintechs Big Tech – like facebook, google Wechat and others and Digital banks which banks didn’t face before and forcing to move fast and provide more better values to their clients.
“Banks need to show up into the 20 century” Tim Maclean Citi MD they must to adopt Open API to compete,
Real time 24x7 and rich services should be intrude not leaving Big tech to get Oxygen where to eliminate any vacuum and allow radical alterative to get in
Product
Unified and Single Product Version for all customers for all our offerings and all deployment options –Having one product roadmap means all their resources are invested in one version therefore the customers will benefit greatly from each release and changes introduced with it.
Isolate customization from mainstream product that will allow all customers to enjoy product developments and improvements without the risk involved in getting other banks’ customizations
Achieving self-sufficiency, allowing banks to do more configuration and customisation using their own resources or a third-party SI. This should help banks to reduce their cost of customization and offer them greater flexibility to control the time-lines associated with the changes they may need to make with no dependency on Finastra.
Regulation
As we spoke with the pace of changes is increasing and banks must accommodated.
To become a platform player, banks need to act now!
In payments 68% of our clients are in discussion on upgrading to our latest fusion GPP version and 44% are already being engagement,. We are seeing more and more engagement globally and new banks which are looking to onboard.