Cloud Solutions Level Payments for Regional/Small Banks

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fintech banker on laptop competing with the big city banks

Large banks invested in modernizing payment infrastructures providing customers with seamless, secure payment capabilities – now, a Hexaware/Finastra partnership enables smaller and mid-sized banks to accelerate their ability to provide payments while controlling risk

by Swati Dublish, Hexaware Practice Director – Banking and Chinmoy Banerjee, Hexaware Corporate Vice President & Global Head – Banking & Business Process Services

Game changing payments platform

By going to a cloud-based payments platform, regional and smaller (Tier III to Tier VI) banks can effectively compete for payments with their much larger competitors.

The larger banks have already invested in modernizing their payment infrastructures to provide their consumer and business customers with seamless payment capabilities that provide modernized, secure payment capabilities.

Many smaller banks didn’t necessarily follow the same path due to the cost and complexity that would put too much of a strain on their resources. So, they have relied on, and paid fees to, larger banks and payments processors in order to offer this service to customers.

But now, through a Hexaware/Finastra partnership, smaller and mid-sized banks can use a new cloud-based solution that eliminates many of those costs and complexities, enabling them to accelerate their ability to provide payments while controlling risk.

Flexibility with options

Banks can design their own payments footprint, enabling them to design a solution that works for both their consumer and business customers, while retaining their payments business and being able to offer modern, competitive payments products and services to non-customers.

This is critical for banks that want to remain relevant in the payments space. According to McKinsey, “players electing not to adopt their strategies – whether by choice, inaction or lack of investment capacity – are likely to endure below-average peer growth and risk being displaced.”

Competitive edge

A cloud-based payments system offers several advantages over previous payment systems:

●                    Fast implementation: With technology accelerators and managed services offerings that reduce pressure on internal resources, a cloud-based payments system can be implemented in as little as four months.

●                    Regulatory compliance: Regulation is going to come fast and it’s going to hit hard. Today, regulation is linked to economies of scale.  Regulators are looking at global standards to lift up the entire payments industry and make it more transparent. A cloud-based payment system accomplishes that with an evergreen platform that stays updated with regulatory requirements.

●                    Better retention: A payment related service provides banks with another product to endear the customer to the bank. The more products and services a customer has with a financial institution, the less likely he or she is to leave for another financial services provider. The customer with three or more products or services with a bank is much less likely to take his or her business elsewhere.

●                    Reduced costs: With a cloud-based platform, you eliminate the reconciliation costs for the banks and reduce the costs for customers as well. While a person can easily transfer funds from anywhere in the U.S. to anywhere else in the country at little or no cost, cross-border payments are much more complicated and expensive. These international transfers come with charges imposed by the bank transferring the funds, by the correspondent bank and the beneficiary’s bank – meaning three levels of charges for the customer. A cloud-based platform can accelerate implementation of global standards that will eliminate those multiple charges, saving the customer money, a primary factor in his or her choice of financial institution.

●                    Seamless integration with existing systems: There is no need to reinvent the wheel. The packaged solution uses open APIs to work seamlessly with a bank’s existing payments system, while providing capabilities that legacy systems typically can’t.

●                    Fast onboarding: New customers can be added to the system in as little as 30 seconds, meeting the customer demand for simple, easy access to new or updated products and services.

●                    Scalability: With the unlimited resources of the cloud, the payments solution can grow as banks’ needs expand.

Most importantly, the cloud-based payments solution is proven.  A mid-tier Bank in the US moved to a cloud-based payments hub and reduced its total cost of ownership by $3.34 million over five years. Wire costs were reduced by 30% each and Straight Through Processing (STP) increased by 70%.

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