Learn why cloud-based platform architecture is the new normal for payments and how payments organizations can realize the benefits of the cloud with sufficient planning and executive sponsorship.
Payments have undergone a global drive toward modernization over the past several years. That push went into hyperdrive in the wake of the pandemic as digital payments spiked, forcing payments companies to adapt in real-time to new business and consumer habits. Organizations that had already begun the digital transformation journey quickly realized that cloud technology made the transition to digital delivery much easier, even with legacy core systems. Others, however, faced a starker realization that, without cloud technology, they are not equipped for a digital, 24/7 payments world.
Consumer behavior around payments was quickly evolving before the pandemic, but the shift to touchless, immediate, real-time payments because of COVID-19 has captured the attention of payments organizations. These firms are tasked with creating the most feature-rich, secure, and innovative payment applications that can deliver super-fast transaction processing — feats hardly possible with monolithic legacy systems.
What’s more, on-premise data centers, in-house software, and legacy infrastructure are difficult and expensive to maintain. This dated infrastructure is difficult to scale in real-time and creates lags for consumers and businesses that expect payments to occur in real-time. The new path forward for payments is a cloud-native, modular model that can scale quickly and adapt in real-time to the digital demands of 2021 and beyond.
Not only does cloud-native technology help payments companies become more agile and efficient in how they deliver services, but it also slashes costs and improves the overall customer experience. Leveraging an API-based Payments-as-a-Service (PaaS) model
Technology continues to enable new and optimized business models, especially for payments. Leveraging a cloud-based platform architecture supports growth in payments in several different ways.
The agility afforded by cloud technology enables payments firms to enhance security while reducing maintenance costs. Cloud technology also automatically reduces the risks associated with redundancy, resilience, and capacity. Sophisticated data storage and encryption mean breaches, hacks, and other threats are better prevented as are vulnerabilities that might result from disasters.
Cloud solutions are less expensive than traditional IT infrastructure, especially considering the ongoing expenditures of maintaining servers and other on-premise data storage costs. Instead, the cloud affords payments organizations to be more accurate and efficient in managing computing capacity as customer demand grows. There is also an inherent cost-benefit associated with risk reduction and innovation that the cloud enables.
As a result of the cost savings from cloud infrastructure, resources can be reallocated to faster delivery of innovative new products and services to market. Centralized data management and faster processing enhance both productivity and efficiency for payments organizations, shifting attention away from resolving IT issues and toward innovation and the core business.
Payments modernization is not instantaneous, nor is it a “set-it-and-forget-it” task. Rather, it requires a clear understanding of steps forward as well as education on what a successful transformation looks like. While the path ahead may be daunting, the reality is that payments firms have little wiggle room when it comes to getting up to speed. Competitors and fintechs are already leveraging cloud technology to get a leg up and support strategic initiatives.
Organizational preparedness is paramount in migrating to the cloud. In addition to a culture shift, modernization will also call for a cloud migration roadmap and a strategy around talent. The roadmap will serve to prioritize steps and assign accountability to remain efficient and effective. It will document considerations like redundancy planning and backups, workflows, processes, and security.
A culture shift will accompany any modernization or digital transformation project, including strategic thinking around talent attraction and retention. Many payments organizations will want to build development teams with highly-specialized talent, and this endeavor will require forethought.
Between sapped momentum or team members who view modernization as a secondary project, the cultural changes around modernization and digital transformation must be addressed from the start. Top-down executive sponsorship paired with effective communication is best to keep all stakeholders and team members apprised of what is happening — and why it’s important.
Big data continues to drive payments companies into the future, making efficient, secure data management critical. Using the cloud along with artificial intelligence and machine learning will result in streamlined payments and fraud prevention. Not only does this contribute to reduced costs, but it will dramatically enhance end-user satisfaction as processes shift away from resolving technical issues and hone in on providing customer-centric services.
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