A new study from FIS outlines why instant payments will herald a second revolution in digital finance. In the report, FIS explain how banks can best modernise their payment systems to cope with huge increases in transaction volumes, new products and growing regulation…
In a recent article, we explained how adopting a step-by-step approach to digital transformation helps banks minimise risk while delivering rapid improvements in service and controlling costs.
To deliver significant cost reduction, greater efficiency and improved client service from your transformation programme, it’s essential to carefully select projects in priority areas.
In doing so, banks reduce their overall running costs and free up more capital to invest in innovations – such as the new products based on the ISO 20022 standard we discussed in a previous article.
As customer service improves thanks to these new products, usage will grow in terms of transaction volumes and values. This in turn reduces a bank’s costs per transaction and drives greater profitability.
Selecting priorities for maximum gain
Based on an evaluation of system performance, banks should select those areas of their operations which are currently demonstrating sub-par performance – and which thus offer opportunities for low-cost improvements that make a big difference.
As we discuss in the report, most banks’ core systems are currently inadequate in terms of core processing capacity when it comes to instant payments.
Outside core systems, the software layer for functions such as treasury receivables, liquidity management, user service management apps, digital onboarding and more could all be considered for upgrades.
As they are upgraded, these new systems should be “compliant by design.”
This means it should be possible to update these systems over-the-air using a Software as a Service (SaaS) arrangement.
This ensures your systems will be future-proof and easy to update to new compliance standards – as well as being less expensive to maintain.
By extension, over-the-air updating also free up resources to invest in innovation, rather than allocating huge sums to legacy systems maintenance.
How FIS can help
As one of the world’s leading providers of on-premises, fully-outsourced and “as a service” financial software solutions, FIS has developed a range of low-cost, high-impact modernisation packages designed to help banks achieve modernisation at their own pace, within their budget and risk appetite.
For example, our microservices deliver superior control, flexibility, agility and a lower total cost of ownership by giving each functional domain its own service that runs on a stand-alone basis and communicates over APIs.
The result is that iterations, changes or even failures of one component will not impact the other services.
The impact of our microservices is amplified by Payment Order Management (POM), which makes gradual, step-by-step migrations to modern systems easier by decoupling channels from payment scheme execution engines.
This reduces risk and provides a future-ready architectural micro-services design which enhances agility and flexibility.
FIS has also created GI-PEX, a cloud-native payment hub platform that features unparalleled performance and scalability based on next-gen Java architecture and compliance with ISO 20022 standards.
With the ability to process thousands of transactions per second, GI-PEX ensures low-latency instantaneous payment processing while optimising resource utilisation to reduce infrastructure costs and minimising operational costs.
Likewise, our Payments as a Service (PaaS) product is also based on the ISO 20022 message standard and can be accessed through a single API.
Faster Payments, BACS, CHAPS and the EU’s SCT Inst for SEPA Instant Payments combine with reconciliation, settlement, fraud and sanctions screening options to deliver a full end-to-end service available that meets bank requirements today and in the future.
Ready for the instant revolution?
The last decade and a half has seen the start of wholesale changes in how companies and people pay and get paid.
Over the next five years, instant payments will act as a fulcrum for the complete transformation of payments and banking to a fully digital service model.
Successful banks will work with trusted, proven providers of quality, modular software solutions to deliver step-by-step transformation in their core banking systems.
By taking an approach that identifies those areas most in need of change and upgrading these areas first, banks can cut cost, control risk and improve services rapidly – reaping the rewards in terms of customer loyalty, increased product use, higher revenues and improved profitability.
Find out how FIS helps transform core payments architectures for an instant future: download our new report now.
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