Disruption and Analytics: Driving Payments to the Next Generation

As words and phrases like big data, analytics, next gen, and more move from jargon to colloquial, another word comes to mind: Cohesiveness. With a more connected world featuring faster information flows and better visibility, the financial and payments industries have a lot to gain, as well as a lot to lose if they do not adapt to current and future payment technologies.

A Perfect Storm in the Financial Services and Payments Industries

With the payments infrastructure becoming more connected, more developed and faster, IBM recently released analysis in a whitepaper to highlight how the next iteration of payment infrastructure will develop, and what it can ultimately do for financial institutions upon adoption.

The whitepaper discusses in detail the following three trends in the ‘next generation’ of payments infrastructure and how stakeholders and innovators can adapt:

• The state of the next-generation payment architecture and how it offers financial institutions a more streamlined, efficient platform for handling their multiple payments businesses
• How the rise of real-time payments and new settlement mechanisms presents a challenge to banks as they begin the process of replacing their payment systems.
• How the next-gen payment infrastructure provides banks with not only cost savings but also the ability to create new products and services for their customers through deeper insights

Streamlining payments processes across multiple lines of businesses, channels, and platforms is the intent, but this movement can be a complicated path, according to a PYMNTS recap of the whitepaper.

A Global Push for Payments Evolution

Whether it’s in consumer, commercial, or wholesale banking; regulation, roles, and responsibilities are changing for financial institutions, and disruption is creating a need for evaluation and reevaluation of current and future practices.

With this, the whitepaper points out opportunities for advancement:

• The Payment Hub and the ability to bring together multiple customer types (consumer, commercial, treasury), multiple channel types (In person, online, mobile), and multiple settlement mechanisms (ACH, SWIFT, wire).
• The Benefits of Centralized Payments and the strategic goals in updating a payments structure:
  • Removal of Silos
  • Reduced Complexity
  • Process Improvement (Reusing common processes across business lines)
  • Renovating Legacy Systems
  •  Reducing Costs
  • Consolidation and Competitiveness
• How the payments environment has created a need for new products from the efficiencies
• Real Time Payments and the challenges that exist to make these payments happen

How to address all of these issues? IBM recommended in the paper that executive leadership and long-term strategic vision must dovetail to bring payments processes to the next generation. In addition, analytics solutions must be broad in scope and modular in implementation, rather than focusing on a key area such as fraud or risk.

For more information on the next generation of payments, please download the whitepaper from PYMNTS, and to keep up with all the latest in payments evolution, follow WEX on LinkedIn.

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