As we come to week 2 of my blog series, I want to look more closely at payment hubs. I suspect that they are one of the greatest areas of let down in the transaction banking world. Too many have been sold based on ‘PowerPoint promises’, with expectations beyond their capability: “This hub can merge all your payments together.” “This hub will enable you to have total flexibility.” “This hub can help with world peace, and will make you coffee in the morning.” My point is that too few hubs can actually do what the bank needs or what they have promised.
Using our cycle race analogy, if the teams only saw the bicycle tyres in a PowerPoint, or planned the route in Visio, it would never lead to success. They get tyres tested for the particular road surface ahead of time and they walk the route to make sure nothing can blindside their race. In short, something on paper might look great, but you need to see, feel and touch everything to be sure.
So what does a bank need for true success to achieve its payment hub strategy? Many of you might want to cover your ears or divert your eyes, but in a word, it’s legacy. The English dictionary even refers to it as software often difficult to replace. But it’s not just difficult to replace because the technology might be old; it’s normally difficult to replace because it simply does so much and cannot be easily replicated. A better definition of legacy might be a more traditional one, “the foundation of what success has been built on today.”
And that’s the point. Too many payment hubs have tried to replace the legacy and have come up short. A true hub needs to embrace the legacy. Start by front-ending it and protecting it from the latest technology. Let the hub be the integration layer; don’t build point-to-point interfaces. Then you can start to gradually bring the legacy payments capability into the new and doing less and less in the old structure.
True greatness comes from understanding and using all the tools available. Embrace the old and utilise the new.
Hubs are back in the conversation (some will argue they never went away), but now that SEPA is moving along (honestly), banks can look at their next vision for payment hubs. SEPA wasn’t the catalyst that many promised. So now it’s time to step back and focus on the reality of what can be done to move you along to the greatness you deserve.