Payments are integral to any financial institution. Regardless of the product or service, everything revolves around payments.
The financial services industry is moving away from closed systems and limited offerings, and towards a future that is truly digital, open, personalised and connected. It’s an environment that allows institutions to adapt quickly to evolving customer and regulatory demands. To operate within this new era of financial services, businesses must realise that a cloud-based payments engine is no longer just a ‘nice-to-have’, it is critical for success.
For example, having access to payments data provides valuable insights into customer wants, needs and behaviours. The challenge many financial institutions with legacy infrastructure face is not the lack of data. Rather, it’s having access to the right data and the ability to convert it into actionable insights. With a cloud-based payments system at the core of their operations, this is much more accessible and can be easily used to generate predictive and prescriptive analytics. Institutions can then use this information to develop existing – or create new – products and services built around customer demands.
Additionally, with a cloud-based architecture, financial institutions can embrace open finance and benefit from third-party offerings that complement their own. Rather than building these capabilities themselves, banks can implement applications from fintechs specialising in services such as payments clearing and settlement, as well as ‘know your customer’, fraud and sanctions checking. Cloud is the gateway to operate within this ecosystem where financial institutions and fintechs meet.
For example, Finastra’s Fusion Payments to Go – a cloud-based payments engine deployed on Microsoft Azure – helps financial institutions to use their data and innovate at speed. And through FusionFabric.cloud – our open platform for collaboration and innovation – it can also be integrated with a variety of fintech applications for fraud prevention, cross-border payments and more.
While the benefits are clear, many financial institutions struggle to see the business case for the upfront costs of migrating to the cloud. In reality though, truly digital banking cannot be achieved with a mainframe architecture. This short-term thinking is no longer an option if institutions want to future-proof their business, and any upfront costs will be offset by the cost-savings from the cloud.
Paul Thomalla is head of industry and regulatory affairs at Finastra
This article was originally published in the Autumn 2022 issue of Technology Record. To get future issues delivered directly to your inbox, sign up for a free subscription.