The Payments Superhighway

Any chief technology officer (CTO), in any financial institution big or small will tell you that the challenges in payment processing are the same. After all, a payment is a payment and people want them to be fast, really fast.

Speeding up payment processing is one thing but being able to handle the complete, end to end payments journey from first customer interaction to processing, clearing, settlement and reconciliation in milliseconds is game changing.

Why everyone’s talking about cloud-based platform architecture.

The key is the payments architecture – what’s going on under the hood. The back-end payment processing plant needed is a huge problem in a fast paced, 24/7 real-time environment.

The traditional agency bank model of batching payments and receiving transaction reporting in hours or days is no longer fit for purpose in the changed world. But it is still mainstream in many big banks – and that shiny new app just launched now has to wait because it is relying on the legacy technology to run it. And, what about the cost of maintaining that legacy stack? Data centres, infrastructure and in-house software are expensive to buy and maintain.

The need to scale and take advantage of new technology while controlling and reducing costs is imperative in the new ‘instant’ world. People and businesses want to be paid instantly, they want to track their payments and get instant notifications.

UK and European banks and fintechs are now expediting their two or three-year digital transformation programmes into just 18 months, moving critical services to specialist cloud managed service providers.

Why cloud-native adoption is the new normal

Transforming critical payments infrastructure from a fragmented, on-premise environment to a cloud-native, modular component-based model is how the payments industry is meeting the digital demands and growing payment volumes in the new world.

Driving efficiency and optimisation through tactical technology investments is firmly at the top of the to-do list of most banks. But these investments must go beyond the new standard of shiny front-end customer applications and fundamentally drive structural change at the bank’s digital core.

Cloud-native technology enables banks to deliver services in an agile and efficient manner, cutting costs and meeting customer expectations. This kind of transformation journey is as much about cultural shift as it is about embracing new technology.

Transformation starts at the core

Let’s face it, patching over legacy technology is probably not going to be a long-term solution. Neither is joining and maintaining connectivity to national and regional Clearing and Settlement Mechanisms (CSMs) on an individual basis, which is time consuming and difficult. Getting it wrong is not an option.

Unfortunately, as banks have grown organically and through acquisition, so has their reliance on custom applications and integrations to many payment schemes (three SEPA Schemes, three UK Schemes, Swift etc), often with multiple internal systems for many different brands under one roof.

Operating a bank with up to 80 individual integrations into one scheme across a network is what is known as payments spaghetti. Cloud technology simply removes this.

Rationalising the payment processing into a single platform, through one integration to many schemes, on the same API and moving away from many messaging formats significantly simplifies your access to central payment infrastructure.

Working with a standard product and standard implementation methodology along with simple API-driven technologies allows the bank to simplify payments processing to create a solid foundation for deploying new products, improving operational processes and standardising data processing across the banks systems. It’s low cost, low risk and highly scalable.

Focusing on areas that you specialise in and outsourcing those that you are not is key to winning the digital race. Finding the components that can be efficiently outsourced at speed and scale will free you to devote resources to servicing your customers better.

Form3 has disrupted the traditional payments infrastructure model and built from scratch an award-winning, cloud-native, Payments-as-a-Service platform. Today, Form3 is trusted by some of UK and Europe’s biggest Tier 1 banks and fast-growing Fintechs to handle their critical payments architecture.

Form3 has been ranked in the Top European Fintechs to watch by Sifted 2020 and Fintech 50 2019, it was also named as the Best Digital Innovation by Bobsguide 2019 and runner-up in British Bank Awards for Best Technology Partner 2020.