Blog· 9min March 17, 2021
Transforming a payments infrastructure that has grown organically over time can seem like a daunting task. Endless customisation, expensive on-premise technology and point-to-point connectivity with multiple systems can turn even the most trivial of changes into a significant undertaking.
The pace of change in the banking industry has increased the urgency to address the need for remote operations and new service delivery models. In a report by the FCA in February 2021, the average number of changes for a financial services firm was 35,000 a year. The impact of Covid has also seen 5-year technology plans accelerated to under a year, while electronic payment volumes are growing exponentially thanks to the digital revolution.
Building real-time capabilities and adaptability for future innovation is becoming increasingly important. The only way to successfully adopt a low cost, scalable and agile payments operational model is to choose new architectures that leverage APIs and micro-services to deliver a robust and flexible foundation for future product and service innovation.
This guide is divided into 2 parts:
1. Key considerations when transforming your payments infrastructure
2. Four big questions you should ask of potential payments technology providers
Define a clear vision and roadmap
You will need a compelling vision around which to rally your people. This should outline the cost benefits and reduced risk, while also highlighting the opportunities to develop new products and services. Also consider how you can realise those early wins, particularly for multi-year programmes. How fast can the organisation run?
The roadmap for change should align with your digital strategy and help to future proof product and service innovation.
Providing clarity up-front will help your organisation make future decisions that align with your strategy.
Organise your teams for success
Moving to a cloud-based, payments technology as a service model will require a shift away from traditional on-premise thinking of the past few decades. Working with fast paced fintechs will require a different, open mindset across the organisation, with flexibility on both sides; from C-level leaders to project teams:
Educating your operational, procurement and other internal functions on the fundamental differences between ‘As A Service’ vendors and legacy application providers will help smooth the transformation journey.
De-risk customer migration
Given the critical importance of payments, explore ways to protect you and your customers from the impacts of change. Understand how the change will impact customer journeys to help plan each of your transition states and migration events.
Depending on the complexity of your customer base, different strategies may apply, from a big bang migration to a phased approach across dimensions such as customer type, sort code, inbound / outbound and payment type. Other measures include running a sandbox environment in parallel to the existing solution before cut-over.
Key design decisions
Big questions to address include:
When selecting a payment technology provider, we believe you should set the bar high and ask searching questions to establish the right partner for your needs.
A traditional approach to vendor selection involves issuing an RFP to assess providers based on a pre-determined set of questions. We believe it is more important to spend time with the organisation, align objectives, plan and culture. This isn’t about a tick box exercise of what functionality is in a product but about capability to deliver it together.
Meeting functional requirements should be a given. We believe ongoing access to capability is a key differentiator. Whatever the solution implemented, you can guarantee that it will continue to evolve. Therefore, you need access to the very best technical and product skills to future-proof your investments.
A truly world class partner will:
1. Be a good cultural fit
2. Offer outstanding technology, born in the cloud
3. Demonstrate a proven track record of onboarding
4. Be a partner you can continue to rely on after the sales pitch
1 - Establishing a good cultural fit
“How do you add value to your customers?”
A best-in-class provider will demonstrate a genuine partnering approach, moving beyond a supplier/customer relationship, for example to bring best practice insight and guidance to your teams. Written responses from providers, coupled with follow up conversation should give a sense of the cultural fit: from product to onboarding to engineering.
“What is your product roadmap?”
A good response will provide clear signals of transparency towards customers. Vendors that go above and beyond should also demonstrate a collaborative approach to co-creation.
2 - Outstanding technology, born in the cloud
“Many providers say they are cloud native. How do I distinguish between them?”
Truly cloud-native technology takes advantage of distributed microservices infrastructure, with built-in resilience and flexibility this enables. Hosting legacy applications in the cloud may simply transfer existing problems elsewhere.
“How much downtime can I expect during an upgrade?”
Put simply, the best answer for a contemporary payments provider is zero downtime. The most progressive service providers adopt a CI/CD (Continuous Integration / Continuous Deployment) approach.
“Provide examples of the lengths you go to keep information safe”
Best-in-class information security goes beyond a mere tick box exercise of assurances and certifications. The most passionate infosec practitioners will demonstrate to you how security is built into the fabric of the provider’s DNA, from pairing-up engineers to utilising the latest tools.
3 - A proven track record of onboarding
“What does a typical implementation look like?”
You should receive a clear and proven approach to scheme on-boarding and migration. A shift in language from ‘implementation’ to ‘customer onboarding’ indicates a provider able to rapidly add you to already-live services. The best partners will offer dedicated support and access to subject matter experts throughout the relationship.
“How quickly can you stand-up your service?”
A partnering approach to onboarding, with API based integration will allow for rapid deployment. Early access to API documentation, a staging environment and scheme simulators will give your engineers a leg-up when it comes to development.
4 - A partner you can continue to rely on
"What is your pricing structure (...and don't leave anything out)?"
Pricing structures provide insight into a company’s culture and competence. A simple, transparent charging model with a fixed onboarding fee shows confidence in the provider’s ability to deliver and gives you an accurate picture of exactly how much it costs to process a payment. Separate upgrade, maintenance and other hidden fees plus additional T&M billing may not align with your best interests.
“In the event of an incident, who from your team is on point to investigate it?”
Multiple layers of triage and support typically slow down the incident management process. The most effective companies must demonstrate a robust service model, 24x7x365 support, automated incident management with a DevOps approach. Public-facing incident pages are a sign of transparency and coordination. Having the engineer who built the feature on hand to troubleshoot the issue from the start is by far the quickest and most effective way to resolve problems.
“How do you ensure we keep pace with the market?”
Gone are the days of expensive customisation. Using a multi-tenanted platform means that all customers benefit from the enhancements they are driving forward. This provides economies of scale and ultimately frees up your people to focus on customer propositions and channels.
“How can our people learn more about your service?”
A holistic approach to sharing knowledge encompasses training, meeting SMEs and on-demand access to a library of information. Anything less is insufficient.
There has never been a better time to modernise your payments infrastructure. Adopting a Payments Technology as a Service platform significantly lowers capital expenditure when compared to managing and maintaining expensive and rigid on-premise systems. It also lowers operational risk as the constraints of legacy internal IT systems are removed through the agility enabled by a cloud-based service models.
Imagine if your payments architecture was simplified, with straightforward API integration into the payments processing engine. What if changes were managed on your behalf? What if scaling happened automatically as demand increases? What if deployments could happen with zero downtime? What if resilience and security were baked-in from the start?
By moving to a cloud-native, fully managed service, you can reduce risk and cost, improve the payment experience and open new possibilities for your people to add value to your customers.
Set yourself up for success up-front, by clarifying your vision and roadmap, think about how to organise your teams, and agree key design principles.
Select a best-in-class payments technology partner by asking differentiating questions listed above. These will establish who is the best cultural fit, who offers outstanding technology, and who you can rely on long after the sales pitch is done and dusted.
This will ensure you select the best, and most appropriate partner for your needs.
Dan Birchwood is a Customer Delivery Manager at Form3. Before working at Form3, Dan worked in management consultancy, helping banks navigate complex business and IT transformation programmes. He also ran vendor selection processes to select electronic payments providers, giving him a firm view of what good looks like!