The appetite of both merchants and consumers for alternatives to traditional payment options is top of mind and big tech companies, fintech’s, challenger banks, and other non-bank entrants are driving market disruption by offering customers better user experiences and lower prices. And, with the continued displacement of cash and checks, accelerated by consumers adoption of digital shopping, combined with their desire to avoid contact with physical infrastructure and objects, will create even more opportunities for disruption in the Payments Ecosystem.

Historically, Financial institutions have handled Payments, including ACH and wires as part of their core integrated banking platforms. However, adding new payment rails like Real Time Payments (RTP) or integrations with new products like ‘Zelle’ and other digital wallets and compliance with new protocols like ISO20022 is recognized as a hurdle as the core platforms are too monolithic in architecture to make quick changes and support rapid innovation. Microservices based architectures and API first payment, cloud platforms are making it possible for financial institutions and others to implement new Payment solutions in days, instead of weeks or even months.

With FinTech’s chipping away a large part of the bank’s core payments revenue, banks have brought their focus back to Payments as a separate revenue earner and have either already made or are making Payments as a separate business units. Modernization will continue to be a central theme to make it possible to streamline existing payment rails, onboard new payment rails, like RTP, and transition to new emerging global and open, data-rich standards like ISO20022 targeting business lines.

Banks are diligently working towards creating profitable payments cost centers while paving the way for digital enablement and overall business growth. This is focused on a 3-step process aimed at the transformation:

  1. Moving payments out of the core banking system
  2. Adoption of a centralized universal payments processing platform
  3. Creating a foundation for Payments Innovation and Ecosystem Enablement

Banks are seeking to streamline their operations and prepare for the eventual prevalence of real-time 24×7 payments, as well as the increased operational complexity this will bring. Modernizing payments is a US$300 billion opportunity1, with 2.7 trillion transactions worth $48 trillion is forecast to move from cash to cards and e-payments and contactless by 2030. The results of a survey aimed at mid-tier banks and credit unions in the U.S. with assets between $2.5B and $25B show that real-time payments connections are expected to triple within the year2, and that cloud Payments-as-a-Service (PaaS) is a growing industry priority.

Forming a dedicated Persistent Payments Business Unit with Software Corporation International’s (SCI) deep Payments expertise:

SCI brings 30+ years of deep experience across the Payments ecosystem. They not only bring the ability to implement core payment platforms, but the expertise to create a modernization roadmap and the experience to deliver it. Combining that with Persistent has 30+ years of digital engineering experience working with Financial Services clients around the globe on their digital transformation journeys. Additionally, Persistent’s deep experience in AI/ML, API Integration, and the ability to work with micro-services-based architecture along with SCI’s deep Payments knowledge create a serious new player to the Payments ecosystem.

The Persistent Payments business unit offers the following capabilities to institutions of all sizes:
  1. Modernize existing payment rails
  2. Implement new Payment rails, including Real Time Payments (RTP)
  3. Create and operate new Payment Hubs
  4. Payments-as-a-Service solutions that deliver richer payment experiences
  5. Consult and create roadmaps for new data rich initiatives like ISO20022

There is significant value to be unlocked by organizations that take a holistic, coordinated, and strategic approach to modernizing their payments architecture. Additionally, there will continue to be expediential growth across all industries that rely on the exchange of funds as they strive to own and streamline the end-to-end customer experience. Persistent’s deep digital engineering expertise, combined with SCI’s extensive Payments brings unique capabilities to our clients to rapidly deliver innovation Payments solutions for banks, as well as other industries.

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Authors

Bipin Sahni,
Head of BFSI and Strategy,
Persistent

D. Keith Sides,
President & CEO,
SCI