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Featured Story
Bethan Cowper, Vice President, Business & Market Development, Compass Plus Technologies
THE PAYMENT MODERNISATION CONUNDRUM: FRONT TO BACK, OR BACK TO FRONT? Customer centricity is key for any modern-day payments business. Customers are, after all, the end user. The days when product design was driven solely by what the FI wanted to offer are long gone, and what the customer wants is now at the epicentre of all business product decisioning. This is by no means a bad thing, but there are always consequences whenever there is a significant shift in strategy. Any focal change tends to be magnified over time, and as such, we find ourselves in an era of hyper fixation on UX/CX. Fixation on one area of the business is, without exception, detrimental to the business as a whole. Depending on size and scope, a fundamental tug of war begins on where investments are spent, whether in terms of money or resources, and how success is measured. Front-end fixation, for example, leans heavily towards success metrics such as how many customers do I currently have, and how many new customers have we onboarded in the past month, rather than efficiency of service. The irony is that the payments industry desperately tries to eradicate its history of siloed systems and processes, by jumping into a new version of the same siloed environment whereby areas of the business are overlooked in order to achieve quick results that impress board members and stock markets. The system architecture and payments ecosystem on which an FIs business is built is at the heart of everything and this cannot be brushed aside. Any outdated technology leads to outdated and often manual approaches, integration issues and complexity. And most importantly, any major inefficiency in the back-end automatically affects the frontend, whether in terms of operations, service stability, or allocation of resources. Payments experts and consultants herald that the best payments process is one the customer doesn’t notice, the so-called “invisible payment” experience and this is what we should all aspire to, therefore we must all agree that this is only possible by having a
well-oiled engine. When it comes down to it, if your competition moves faster, scales easier and adapts quicker, it’s about more than just their glamourous frontend capabilities. Let’s take a look at Fintechs. For Fintechs, their front-end is existential: it encapsulates their USPs and differentiators against the established players in their entirety. However, Fintechs have their own challenges associated with frontend fixation: namely the struggle to scale their backend to meet the requirements of an increasingly engaging, adaptive and successful frontend. As such, once launched, Fintechs tend to find themselves in the reverse situation; hyper focusing their resources on their backends due to unanticipated complexities. The initial product that stimulated their growth expands to encompass whole new product ranges, whole new regions and whole new regulatory and technological unknowns. The immediate focus then urgently shifts from business to operational, namely integration, in order to bolster the technological capability to successfully underpin further growth. The quickest route tends to be partnerships with backend vendors to help ensure that the Fintech’s reputation for quick time-to-market products and services that are both innovative and reliable remains unblemished. Traditional players are intimidated by Fintechs and are immersed in overcompensating by spending the lion’s share of time, money and resources on CX/UX in order to remain relevant. But FIs looking to truly compete with newer payment giants are still on the back foot. Their architecture wasn’t built with today’s payment landscape in mind and instead, grew organically, with a new acquisition here, a new region there, and so on and so forth. This payment ecosystem quickly becomes cumbersome and challenging to manage. The cost of managing a multi-payment integration environment that has expanded over time can weigh the FI down financially and operationally. Losses in productivity mean that staff are diverted
from mission and business critical tasks, onto maintenance and fire-fighting. According to Gocardless, every year businesses stand to lose more than $2 million in uncollected revenue due to system failures. For an FI to maintain control of its technology and innovation strategy, it needs a future-proof core built across a select number of mission-critical systems. This way, it can embrace change from a position of strength, rather than being constantly swayed by the technical limitations of its existing systems and their suppliers. Outsourcing core or strategically important elements of the business to one vendor or orchestrator makes the risk of lock-in very real, essentially handing all the power to a third-party and being at the mercy of taking a backseat to their roadmap, development cycles and strategies. Whether an FI or Fintech is top heavy or bottom heavy, there is a clear need for balance and stability. A successful payments business with legs to stay the distance has a clean, useable, and intuitive front-end, driven by a reliable, scalable, and technology-first backend, with resources, both monetary and operational, spread evenly and a focus on evolving the business rather than just staying afloat. This may sound implausible, but we are no longer in an era of rip and replace, big bang migrations and acquisitions. The right technology partners, strategic consultants, software solutions and outsourced services are out there. Each step taken to create a more coherent payments environment is a step in the right direction. Don’t get turned around and overwhelmed. Get back to front of mind, front of wallet and back to business.
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