Technology Record - Issue 26: Autumn 2022

Thanks to the ubiquity of cloud computing, core banking processes such as payments are transforming into real-time services. This is helping banks not only meet the demands of the modern customer, but to deliver insights that are essential to drive innovation and boost revenue. Microsoft’s Peter Hazou tells us more BY ANDY C L AY TON - SM I TH AND L I ND S AY J AME S F E ATUR E The path to real-time payments Our world is going real time. As consumers who live increasingly digital lives, we expect instant access to relevant information, products and services. This has implications across all aspects of our lives, and payments are no exception. “Shaped over time, payment processing has traditionally been an overnight business,” says Peter Hazou, Microsoft’s business strategy leader for worldwide financial services. “But the world is adopting real-time everything, and this has significant implications for payments.” While over 118 billion real-time transactions were made globally in 2021, this figure is expected to rise to almost 428 billion by 2026, according to ACI’s Prime Time for Real Time report, which was released in 2022. The report highlights a clear correlation between real-time payments and economic growth – real-time payments helped generate an additional economic output of $78 billion in 2021 across 30 countries. But this is just the start. By 2026, this figure is set to rise to $173 billion. “The move to real-time payments is happening fast,” says Hazou. “There are several reasons for this. First, we have seen rapid digitalisation following the Covid-19 pandemic. We’ve also seen an increased focus on supply chain resilience and risk management following the war in Ukraine. “But that’s not all. Banks face stiff competition from digitalnative non-banks, which are often born in the cloud and free from many of the legacy challenges facing traditional financial services firms. As a result, banks have realised that they need to find a way to level up if they want to succeed in the future. Delivering real-time payments – via a cloud-based platform – enables them to do that.” Indeed, the cloud is instrumental in the success of real-time payments. “The cloud is not just a data centre in the sky, it's a series of very powerful technologies,” Hazou explains. “These technologies can facilitate business transformation by dramatically improving payment processes.” Moreover, the cloud can also help aggregate and process the data from 130