Payments trends may come and go but reliability and scalability underpin any potential success for payments companies.
The payments industry is always advancing but the current rate of technical change has reached new heights. With innovations at every turn, it can be impossible for companies to keep up — unless they have a dedicated technology strategy. Yet payments companies must commit the necessary resources to modernize their infrastructure. This is not just about having flashy features; it’s about serving customers in the digital format they now prefer.
Modernization is no longer an option. Even in older age groups, digital banking mediums are growing in popularity; a recent study by Finastra and Microsoft found that 70% of Boomers (Gen X) report mobile banking as their primary way of interacting with their finances. Beyond mobile, today’s consumers are also demanding that they have easy yet secure access to their financial data as well as smoother, more efficient customer journeys.
Digital transformation can seem like a daunting challenge to undertake, particularly if the organization hasn’t upgraded its technology in a while. Resisting modernization only leads to poor outcomes — the reason being that technical debt compounds just like financial debt. While the initial investment may be substantial, this will ultimately prove much more cost-effective than paying to run legacy technology.
The critical part is understanding where to focus this digital modernization. Two key areas that should not be overlooked — are reliability and scalability.
The Driving Forces Behind Modernization
Companies with legacy technology often find their two biggest problems are unreliable performance and an inability to scale. Both of these features are crucial to a successful payments platform. This is because customers require the ability to access their finances whenever and wherever they are — and they wouldn’t want to wait around to access new services.
Financial institutions should be focused on technology that can help them provide superior and consistent customer experiences. Consumer behavior is shifting at such a rapid pace that investing in software that promotes safe data sharing and seamless integration will be useful for long-term success.
We’ve seen this play out during the pandemic. Contactless payments, remote work, and installment payments all existed before COVID-19; however, it was the pandemic that catapulted their popularity. Organizations with the right technology in place to support these trends and technologies were well-positioned to capitalize on their enormous popularity.
How to Fund the Technical Future
Funding new solutions can be a challenge. Rather than commit to a full-scale technological overhaul, most financial institutions may choose to focus on temporary fixes that will see them through the next few months — while their legacy system grows more obsolete. However, this is a very risky strategy.
Technical debt is dangerous because it only compounds over time. Older systems require more maintenance and manpower to run, which eats into company resources. To add to that, finding employees to manage these systems can be quite a task.
Why Reliability & Scalability Are Key
It is impossible to know exactly what consumers will want in the future. That said, payments companies can be certain that their customers will always value reliability from their financial providers. Ensuring that your platform is always functional and fast will do wonders for keeping customers happy and loyal, no matter what services they are using. A system failure, on the other hand, puts revenue and reputation at risk.
Reliability depends on having a technical ecosystem that can support spikes in traffic as well as new API integrations. Leveraging cloud networks or greater server storage can help improve bandwidth, while other companies might opt for utilizing software partnerships to strengthen their performance. As long as the investment goes towards long-term performance and not just for the needs of today’s platform — payments companies will be on the right track.
The ability to scale is another key consideration. Given the rapid acceleration of changes in the payments space and constantly evolving customer expectations, the ability to easily adapt to market demands and increased workloads is critical. Alternatively, lacking the ability to scale can alienate customers and inhibit growth. Having the right technical infrastructure in place is integral to scalability.
Just like reliability, scalability is not about adding new features but about providing greater internal support. By investing in the foundations of the business, companies can protect their operations while freeing up resources for innovative thinking. With the right architecture in place, organizations can quickly execute on innovation and remain competitive in a crowded market.