INFRASTRUCTURE: INTEROPERABILITY Innovation in the payments space is as dynamic as it has ever been. New challenges to the old ways of doing things have led to a boom in fresh payment options, prompting major changes in what users expect from their providers. For Bottomline and the UK’s Payments Systems Regulator (PSR), integrating this surfeit of new functionality is a process of balancing innovation and inclusivity: how to implement great new features while maintaining interoperability. This balancing act poses a particular challenge in an industry where players must communicate effectively all along the payment chain to deliver a positive customer experience – given that it is built on a foundational layer of ageing legacy infrastructure. So, how do organisations pull together diverse and often divergent tech stacks to enable an innovative, dynamic set of solutions that work well for customers? And how can new entrants and established players be encouraged to play nicely together, something their individual success is increasingly dependent on? Charles de Rougé of Bottomline Technologies and Nicole Coates of the PSR, two organisations pursuing a complementary desire to help the payments space evolve, have powerful insights around
the challenges and opportunities facing payments providers. They each represent a different piece of the payments processing jigsaw: Bottomline is a software-as-a-service provider that helps financial institutions manage modern payments, while PSR, an independent subsidiary of the Financial Conduct Authority, with competition and regulatory powers, helps decide how those payments flow best. In Bottomline’s report The Future Of Competitive Advantage In Payments Banking, more than 300 banks and FIs globally identified the following as the main issues with their current payments infrastructure: legacy systems (47 per cent), lack of operational efficiency (42 per cent), lack of interoperability between internal systems (40 per cent) and scalability (40 per cent). These results indicate why this is such a sensitive topic for businesses everywhere. Additionally, 55 per cent said that adopting new payment rails was their top priority in the next 12 months, with 64 per cent making digital transformation their biggest focus, despite 36 per cent being sceptical or highly sceptical of their current strategy. For de Rougé, the first step to solving these pain points is to ensure interoperability. “We’ve new technology, new regulation and new payment rails coming to the
market. The ability to communicate from one system to another, the scalability, the ability to onboard more volumes… these are strategically critical for a bank. Today, that makes the difference between a successful banking business or not,” he says. This commitment to dynamic interoperability is reflected in the PSR mission statement: a five-year commitment to support user choice in payment selection, to properly protect consumers from harm and fraud, to promote payment competition, and to encourage industry innovation. For Coates, achieving these aims is a matter of making sure different tech stacks can communicate with one another effectively. “There are so many different perspectives, and so many different interests – and a lot of technological problems are in fact political ones,” she explains. “There’s a real challenge here, for the payments industry to think about how we all get better at moving forward agreements that define how we use these new infrastructures, how we use new types of architecture, to set ideas about how we can work together.” For Coates, facilitating evolution is about fostering consensus on what to pursue, something she describes as the ‘core philosophies of payments’.
Bottomline’s Charles de Rougé and Nicole Coates from PSR discuss how mutual support is the best way for providers to crack the payments interoperability challenge once and for all
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