What Financial Services Can Learn From Manufacturing, Part 1
Wednesday, October 06, 2010
Posted by Louis Blatt
Throughout its life, the manufacturing industry has gone through many changes that have each revolutionized the way products are made. Consider the principle of using uniform and interchangeable parts, rather than every element being unique. By being able to easily replace and reuse parts, manufacturers could make their processes more efficient, with less waste and faster time to market. And then Henry Ford’s advocacy and widespread use of the assembly line made mass production a reality; slashed the time needed to make a Model T Ford; and significantly cut the cost to the customer.
Looking at the payments industry, it is clear how these two theories can also be applied to software development, and have the potential to deliver notable benefits. The electronic payment systems in use in many banks today often ignore customers’ needs; are too complex and difficult to deploy, configure and use; and do not support basic economic principles such as transparency and liquidity. The process of developing and managing payment systems at a bank resembles an old fashioned automobile factory: handmade by artisans and customized for each individual customer.
If the payment industry was to learn from manufacturing and adopt uniform and interchangeable parts in its system development processes, financial institutions would find it much easier to migrate to newer systems and reduce unnecessary waste in developing, deploying, and operating redundant and overlapping systems. In manufacturing, success of interchangeable parts is based upon understanding precisely what a machine is intended to do and automating that process with a standard set of parts. To create re-usable parts we have to know what we are producing. In the case of payment solutions there is enough experience that a set of best practices can dictate the reusable business services that are required. The reusable parts must be service components that can be snapped together to create the end product.
The concept of mass production and the assembly line is based on automation, and establishing standard processes and measuring time to completion and cost of each step in the process is fundamental. This is a lesson that must be learned by payment system vendors, who often have not measured the time to completion and cost required to automate payment services in the past, and therefore haven’t always focused on reducing the time to completion and the cost of implementation and operation.
As you can probably tell, this is a topic I am passionate about and in my next blog post, I will continue to look at some of the changes that the manufacturing industry has gone through, and how they can be applied to the payments industry.
Chief product officer
Related blog posts
Thriving in Mobile — What Merchants Need to Consider
Mobile is currently the priority for many businesses, which is not surprising given that nothing else today is driving more commerce growth. Although principles gleaned from traditional eCommerce extend to mobile commerce, merchants must adapt the customer experience and operating model in order to thrive. And that includes adapting their approach to payments.
eCommerce Payments Optimization as a Merchant Growth Strategy
In the majority of developed markets, store-based retail sales are shrinking while eCommerce and mCommerce grow at 10- 20% annually. Consequently, merchants are focused on digital commerce growth opportunities more than ever before.
Can payments really be simple Depends on whom you ask
According to the experts from Merriam-Webster, the definition of “simple” is fairly, well, simple to understand:
Consumers want access Merchants want simple global and secure opportunities How to achieve both
While riding the local commuter rail on my last leg home from NYC, I sat next to a woman who was on her smartphone shopping on what looked like a Chinese website. I smiled to myself after just having spent the day talking about the massive opportunities presented in the borderless world of eCommerce. The scenario was very timely as the day’s discussion centered on providing consumers with access to goods and services and the merchants’ opportunity to serve them anytime, anywhere with the payment options they desire.
There is no one size fits all approach when it comes to crossborder eCommerce strategy
Every business has its own strengths – and weaknesses – that need to be taken into account when formulating a cross-border eCommerce strategy. What has worked for one merchant is no guarantee of success for another, and the same applies to payment providers supporting merchants with global ambitions. But being able to successfully support merchants expanding internationally opens up new revenue streams and business opportunities. As CEO & Founder of PAY.ON, and ACI’s SVP Product Line Manager for Merchant Solutions, Markus Rinderer is no stranger to both the challenges and opportunities of cross-border eCommerce.
Payments Are Changing Merchants
Merchants are in the eye of the storm. They have reacted quickly to the consumers and new technology.
EMV in the US The picture six months on Part 2
EMV implementation – the side effects
EMV in the US The picture six months on Part 1
It has been six months since the EMV liability shift occurred in the US on October 1, 2015 – and it’s time to assess our progress, challenges and outlook.
A Cashless Society is Coming to the US
The “Cashless Society” is stuff of FinTech lore, a utopia that can be discussed, but one that many believe is impossible to reach. Impossible that is until we witnessed historically low interest rates globally, not to mention the negative rates in Sweden that have resulted in the paper stuff evaporating before our eyes. So with Hasbro’s major announcement that their top selling classic board game would be going “cashless,” the email deluge began, and thus, I present to you the next installment of Rantings avec Ranta.
What Super Bowl Sunday has in common with Black Friday and Tax Season payments
With the Super Bowl—aka Pizza Sunday—behind us, we took the opportunity to catch up with the leadership team in Data Center Operations at ACI Worldwide, to find out how that organization (which oversees ACI’s hosted payments solutions) supports retail customers like Domino’s during the peak shopping (or eating) days of the year.