By: Abe Smith, CEO, Paymentology
Although the banking sector has seen significant innovation across the customer front-office, issuer-side payment processing remains largely beholden to legacy processes. Any steps taken to digitise payment processing have been hampered by the underlying legacy systems they are built on top of, which traditional banks have relied upon for years.
Despite this, payment processors play an increasingly important role in enabling efficient and smart customer service. In fact, the right payment processor can actually equip banks with the enriched data sets to provide not only enhanced customer services but give them the opportunity to build new revenue streams.
Abe Smith, CEO, Paymentology
Payment processors that are driven by artificial intelligence are by far the ideal candidates to deliver on this objective of bringing banks and customers closer together. Sitting within the data flow between the card system and the bank, processors hold the keys to more intelligent functions and advanced applications at the consumer level.
When AI is combined with processing services delivered through the cloud, payment processors can arm banks with invaluable information to deliver supreme customer services. The benefits of cloud technology and AI need no explanation, but there are three core areas worth mentioning when it comes to their potential for payment processors.
Scalability
In an increasingly globalised economy, payment ecosystems are in turn becoming more complex and interwoven. At the same time, customers are witnessing the technological revolution and demanding the same level of speed and efficiency in payments across borders as at a domestic level.
Payment processors that are cloud native are ideally equipped to support scalable payments across multiple borders, at high speed.
Cloud-based payment processors can also enable businesses to avoid many of the common fees associated with international payments. In addition, it can enable banks to break into new markets across multiple geographies, unhindered by the physical barriers present across many payment infrastructures.
Speed to market and enhancement is made infinitely easier when done in the cloud and is made possible within days. Most importantly, the customer experience remains seamless throughout.
Security
Banks can significantly ramp up their fraud prevention controls through embedded analytics at the payment processor level. Advanced rules engines can let banks spot suspicious transactions at the point at which customers use their cards.
Again, cloud-native payment processors provide a robust support on this front.
Historically it has proven difficult for legacy systems to perform super-fast, intra-spend, full transaction history analytics. Such analytics are a vital component in the detection of fraud patterns.
With a technology-first approach, banks can detect unusual behaviours that fall outside of expected customer spend profiles and build an effective fraud firewall. The most advanced payment processors can even stream the analytics to issuing banks, in the middle of spend, delivering real-time updates on suspicious behaviour. Cloud-based payment processors allow all this to take place quietly behind the scenes without interrupting the customer spend journey.
Speed, storage and analysis
Perhaps the most important benefit that can be realised from an alliance of cloud-based and AI-driven payment processing, at least when it comes to nurturing the bank-customer relationship, is the analytics-derived, enriched data.
Here, banks can really mine valuable data sets at their disposal, unlocked through the right payment processor, to offer personalised services to their customers. Cloud-led payment processors are ideally suited to deliver these enriched data sets.
Information collected and stored with a cloud-based payment processor is much more readily available than with traditional data collection, which is inhibited by a number of factors, namely storage capacity on local servers.
When combined with AI-led processing, the readily available data has the potential to offer banks a granular, real-time view of customer spend. Certain payment processors can actually offer advanced adaptive learning rules engines and the ability to update/fine tune rules on a per customer basis at point of spend. These rules can extend from actions based on settlement activities – for example, applying a card fee is multiple ATM usage occurs; to rules with actions to alert cardholders of certain spend activities.
A 2021 study from Cornerstone Advisors the shows that cloud computing was the most opted for technology in financial institutions’ efforts to digitise and, according to the Economist Intelligence Unit 2020, 84% of banking business executives believe that cloud technology will play a transformative role in banking. Clearly, the banking industry recognises the pivotal role cloud computing can play in aiding digital transformation. No area of the banking and payments ecosystem is riper to reap the benefits of new technologies than at the issuer processor level. All banks need to do is choose the right one.
Wanda Rich has been the Editor-in-Chief of Global Banking & Finance Review since 2011, playing a pivotal role in shaping the publication’s content and direction. Under her leadership, the magazine has expanded its global reach and established itself as a trusted source of information and analysis across various financial sectors. She is known for conducting exclusive interviews with industry leaders and oversees the Global Banking & Finance Awards, which recognize innovation and leadership in finance. In addition to Global Banking & Finance Review, Wanda also serves as editor for numerous other platforms, including Asset Digest, Biz Dispatch, Blockchain Tribune, Business Express, Brands Journal, Companies Digest, Economy Standard, Entrepreneur Tribune, Finance Digest, Fintech Herald, Global Islamic Finance Magazine, International Releases, Online World News, Luxury Adviser, Palmbay Herald, Startup Observer, Technology Dispatch, Trading Herald, and Wealth Tribune.