Taking the Pain out of Payments Change

For FIs looking to change their payment workflow or technology stack – an exercise that can be triggered by everything from regulatory requirements to M&A – the cost, complexity and time involved in the exercise can be daunting. Legacy stacks often make it harder for financial institutions to deliver transformation, create new products, and compete in an increasingly crowded market. 

So why is payments change so painful? And how can a new solution being developed by Form3 take the pain out of payments change? Let’s take a closer look.  

FIs may need to make changes to their payment estates for a number of reasons:  

• New payments proposition or workflow change. FIs may be setting out to create a new payments proposition, or changing the way that an existing payment flow works with different types of customers.   
• Regulatory compliance. FIs may need to update their payment estates in response to regulatory change, for example – the upcoming New Payments Architecture in the UK or SEPA's new instant payments mandate in Europe.
• Technology transformation. FIs moving towards more efficient, future proofed technologies will need to make changes to their payments technology estate.  
• M&A activity. When FIs acquire another FI or a fintech, they will typically need to combine their technologies and propositions with those of the acquired firm, resulting in a raft of changes.  

These changes are vital if FIs are to remain competitive in a rapidly evolving landscape. Research by IDC found that 73% of financial institutions have payment infrastructures that are ill equipped to handle payments for 2030 and beyond. Likewise, a 2022 report by Capgemini, Winning with SMBs: Optimizing Technology and Data to Drive Deep Engagement, found that a reliance on outdated systems is stifling digital transformation. According to the report, “More than 80% of payment executives agree that significant retooling is needed to integrate and interoperate new technologies with platforms of varying ages and formats.”  

Whatever the catalyst, it’s clear there are many reasons why FIs may need to make changes to their payments estate – and the cost of doing so can be significant due to legacy infrastructure, multiple systems and integration points.

In practice, FIs do not always have the capacity to prioritise innovation spending, particularly given the growing cost of regulatory compliance. The Capgemini report, for example, found that only 26% of the payment executives polled ranked innovation IT spending as their top priority. The survey also noted that much of FIs innovation budget is spent on the front-end, rather than on middle and back-office systems.  

Changes to the payment estate can also be time-consuming to complete, in terms of development and testing – and this, in turn, can affect a FIs time-to-market when it comes to launching new propositions.

There’s a clear need to speed up the implementation time and reduce the costs involved in changing payments workflows. Other players in the market have attempted to address this problem by creating payment hubs – effectively a giant engine that aims to solve every problem and process simultaneously. This type of solution is often complex, bespoke, and changes have to be implemented across multiple integration points.  

Fortunately, there’s another way to approach this challenge. Payment Orchestration is a new product being developed by Form3. The solution sits outside of a FIs existing technology estate and connects with it using an integration layer. It can also work alongside a payment hub.   

Form3 manages changes to payment workflows on the FIs behalf, with the FIs payment related systems connected to an integration layer, based on the FIs configuration and guidance. In this way, we can support FIs whenever they wish to make propositional or payment technology changes. Other benefits of the solution include end-to-end visibility over payments, full observability of reporting to aid monitoring and alerting on the performance of workflows, and a faster time-to-market.   

For example, a FI might want to carry out a funds check for every outgoing payment and carry out a secondary approval check based on certain liquidity thresholds with specific accounts. The required configurations and thresholds will also need to change over time depending on market conditions. With Payment Orchestration, the FI would be able to change its configurations, without the need for Form3 to manually validate those changes.  

Collaboration with suitable partners is an important ingredient when it comes to creating innovative new solutions. In PwC’s Payments 2025 & Beyond survey, for example, 86% of respondents agreed that traditional payments providers will collaborate with FinTech’s and technology providers as one of their main sources of innovation.  

For FIs that have historically developed a lot of technology in-house, with full control over payments, it might seem counterintuitive to consider relinquishing some of their control over the payments estate.   

However, Form3’s solution offers configurability so FIs can maintain control over how their payment workflows are managed. The difference is, we can provide the technology needed to help them manage that change. By taking advantage of a single connection point and integration layer, FIs can tap into all the usual benefits offered by Form3. These include a cloud native, scalable, and fully managed service, that makes full use of API & microservices-based technology.  

Some of Form3’s customers are already tapping into the benefits of Payment Orchestration across a variety of use cases. One customer, for example, was looking to make ledger updates to its ledger system, based on different outcomes for different payment types and customer segments. Using Payment Orchestration, Form3 connected to the customers ledger system via an interface layer. The customer’s ledgers were thereby able to access payment transaction data and status updates based on payment workflow and outcome, in accordance with the configuration they had specified.  

This enabled the customer to speed up its transformation programme, while reducing the interface points within its own technology estate. The customer has also gained the ability to configure when ledger updates take place, based on payment flows and outcomes, and enact changes more rapidly at a lower cost.

To conclude, payments change is essential for FIs as they seek to compete effectively in today’s landscape.

We believe this change doesn’t need to be painful. By providing the technology needed to interface with the FIs payment related systems, Form3 can help FIs speed up implementation while offering a competitive SaaS pricing structure – all while giving configurability over their payment flows.