In my last blog post, I discussed the challenges faced by banks in the payments landscape and emphasized the importance of partnering with the right technology providers to overcome these challenges. Over the years, I have had the opportunity to partner with some of the world’s best technology firms – and some who’ve fallen short of my expectations. Based on my experience, I have identified key characteristics that banks should look for in a technology partner to drive success.
1. Partnership/ecosystem approach
Firstly, it is crucial to seek technology providers that foster a partnership and innovation to drive the best outcome for the bank and its clients. These providers should enable the creation of a broader payment digital ecosystem, allowing banks to collaborate with third-party providers and offer innovative services. By building a collaborative partnership, banks can leverage the expertise and resources of their technology providers to enhance their offerings and deliver greater value to customers.
2. Proven track record of delivery
In Capgemini’s World Retail Banking Report 2021, 63% of bankers consider vendor stability and track record as the most important criteria for selecting a technology – therefore, banks should prioritize partners with a proven track record of consistently delivering high quality products and services that align with the banks budget and implementation timelines. The vendors must demonstrate that they can deliver high quality functional change that can be implemented safely in the bank’s environment. As importantly, the partner must be able to demonstrate that they are delivering a highly available and resilient product that is capable of being ‘always on’ 24×7 including during product upgrades.
3. Pricing models aligned with commercial interests
Pricing models that align well with a bank’s commercial interests are another important consideration. Banks should choose partners that offer pricing structures that are transparent, flexible, and suit their specific needs. By selecting vendors with pricing models aligned with their commercial interests, banks can manage costs effectively and optimize revenue generation, to ensure a faster ROI and mutually beneficial partnership.
4. Deep payment domain expertise with functionally rich and real time enabled solutions
The provider must prove that they have staff with deep payment expertise to partner collaboratively with the bank, and that they have the rich capabilities fit for the bank’s needs. This includes the complex functionality required to process payments in multiple geographies and related payment schemes. It is imperative that the vendor can offer real time payment processing as that becomes the norm globally.
5. Demonstrate use of latest technology
Whilst selecting a technology vendor it is key to ensure that they are using the latest proven technologies and can demonstrate a commitment to a technology roadmap to keep pace with the fast-changing environment.
In a recent industry survey by BankDirector, 45% of respondents identified “reliance on outdated technology” as a top concern about their bank’s technology expertise. Therefore, from a technical perspective, there are specific characteristics to consider when selecting vendors.
Cloud-native
Firstly, banks must look for vendors that offer cloud-native, cloud agnostic hosting solutions. This must include offering a Payments as a Service (PaaS) hosting solution. These solutions provide a lower cost of entry and faster time to market and reduced total cost of ownership. Cloud-native solutions also offer scalability and flexibility, allowing banks to handle increasing payment volumes and peak days without excessive costs.
Microservices and API
It is important to ensure that the vendor uses the latest technology and has evolved from a monolith to a modular micro services architecture. This enables the banks to deploy and maintain the services they require faster and at a lower cost. An API-first approach is also essential principle of the product architecture enabling more standardised integration that also empowers the bank to connect with the broader digital ecosystem and delivering enhanced business capability to their customers.
Low-code capability
Vendors with low-code capability are particularly attractive, especially for complex bank specific integration and configuration. Low-code solutions allow non-technical staff to build and maintain their own integration and business services reducing reliance on limited IT resources and accelerating development cycles. A good example of the value of low-code approaches is with corporate to bank integration, one of the most time-consuming aspects of onboarding new corporate clients. Low-code corporate to bank integration solutions can enable non-technical bank staff, or corporate staff themselves, to onboard customers without requiring professional services or software updates.
ISO 20022 fluent
Another critical technical consideration is the expertise of vendors in ISO 20022, the global standard for financial messaging. Ensuring that vendors are fluent in ISO 20022 demonstrates their ability to handle the standard effectively and implement solutions that align with industry requirements. This expertise is crucial for banks looking to upgrade their payment systems and achieve compliance with regulatory standards.
In conclusion, selecting the right technology vendors is vital for banks to overcome the challenges they face in the payments landscape. By partnering with vendors that foster a collaborative partnership, possess a track record of delivery, stability and innovation, align pricing models with commercial interests, and have a team of experts in the payments domain, banks can position themselves for success. Additionally, choosing vendors with cloud-native solutions, an API-first approach, low-code capability, ISO 20022 fluency, and real-time payment capabilities enables banks to modernize rapidly, enhance flexibility, and deliver innovative payment services. These considerations will help banks navigate the complex payments landscape, drive growth, and deliver exceptional customer experiences.
