Real-Time Payments for Digital Transformation and Differentiation in Transaction Banking

Challenge

Real-time payments are about more than just payment flows — they are the catalyst to bringing the whole bank into the digital, real-time world. Banks must deliver a better experience for corporates if they want to retain customers, but disparate, legacy systems and limited budgets restrict the realization of real-time.

Considerations

1. How to orchestrate new information across all systems in real time, without adding load to overworked legacy systems? Payments cannot fail, so additional information must respect existing engines and processes.

2. How to make better use of the data available through real time standards and message formats? Data needs to be made available in real-time to customers and other systems within the bank.

3. How to achieve this through incremental improvements, not rip and replace? Business must continue as usual alongside an accelerated path to new value-added services based on real-time payments and information.

Solution

1. Implementing an intelligent middleware layer built specifically for payments and mission-critical systems enables the orchestration, translation and transformation of payment messages (both financial and non-financial), to onboard or offboard data within a message flow without impacting existing processes and payment flows within the bank.

Banks need to be able to accept messages in any format and translate them to meet their internal needs while returning messages back to the external ecosystem in the modern global standards. With a two-sided canonical model, banks can accept a data-rich message, extract and convert the salient information for their various internal systems, orchestrate those new simple messages out to internal systems, accept the return messages and convert them back to a data-rich format, or translate them into another simple message for another internal system.

Eg. ISO20022 (data rich) >> 8583 or other (simple) << ISO20022 (data rich)

These internal systems may include connections to back-end systems that are not yet digital, but the process must happen as a seamless, multi-track workflow.

2. Leveraging an orchestration layer built for Open APIs ensures the ‘always-on’ nature of the real-time ecosystem. This layer creates real-time visibility and availability of payments information, both for current and predicted-future status.

The shift from batch to real-time must be realized across all data within the bank, not just payment messages. Open APIs can expose data to customer-facing systems for real-time consumption by other applications, such as treasury management tools in online customer portals, allowing banks to create value from real-time payments information. Not only will customers be able to see where their payments are, they will be able to make business decisions based on the predicted clearing and settlement of the payment.

3. Reducing hard coding and continual maintenance allows banks to speed time to market and accelerate innovation. Solutions based on configuration of an endpoint creation toolkit will allow for sustainable evolution of payment services.

The orchestration layer must include isolation capabilities to enable innovation that doesn’t impact your core. This intelligent wrapper will bring together disparate systems and eventually evolve to a real-time transaction hub focused on reusable capabilities, enabling banks to move away from monolithic products for individual payment types. This reflects the convergence of payment types and customer needs that we see in the market. The real-time transaction hub is the way to bring together the old corporate banking and retail payments silos to serve their customers at a more personalized level.

CX optimization

Banks must orchestrate across more than payments to create a connected, smart bank. The real-time transaction hub leverages Open APIs that connect to all bank-owned systems to create an automated intelligence layer for client-centric visibility. Banks can then begin to focus on what clients need rather than their own limitations of business silos or technology.

A true real-time bank is always-on and flexible, meaning these capabilities can be reapplied to augment services based on customer need. In the corporate world, this means mapping real-time payments information against new Big Data analytics technologies, such as machine learning and AI, to mine data across disparate systems and transactions.

New real-time liquidity insight means banks will also have better visibility. They can offer tailored services, such as ‘micro business loans’, that match information on incoming and outgoing payments, and potential charges for corporate customers. They can also proactively address liquidity gaps through bridging loans, giving customers better control over banking costs and improving the customer experience.

Owing to real-time payments, improved liquidity management services will flag available funds that can be paired with investment advice based on analysis of similar businesses’ history, segmented by vertical, industry, time period, etc. Banks can support corporates to make more effective decisions with their money, achieving competitive advantage, generating more profit for reinvestment and maintaining regulatory compliance in an ever-changing environment.