It’s time for a new card platform? Wouldn't it be great if it were that simple. Edgars Bremze explores the best scenarios on how to best approach this.
If you are going to replace your legacy systems – which, at some point, you are going to, if you want to remain competitive – then it’s time to think about new payment instruments that focus on the customer experience. In our experience, a modern, innovative payment system will allow you to explore new revenue streams, provide flexible payment methods for card and account holders, and ensure merchants receive payments quickly.
Old systems are for older times
Let’s face it, old systems were built for another payment environment. Product lifecycle lasted for years and card lifecycle management was key back then. Now you can issue single purpose payment product with lifecycle length of single transaction.
Now it’s much about cloudification. About strong customer authentication, like 3DS v2 is now the de facto authentication standard for card e-comm transactions. The plastic card is being superseded by tokens that offer greater security as transactions are made from wallets and in apps. Despite the fact that many new payment methods are still built upon card rails, we see the increased development also for account based payment products. Not surprisingly, legacy systems are simply not designed to handle these. And this is the situation we found ourselves in today, technology is moving forward rapidly.
The future is open
We are seeing how AI and machine learning are changing the landscape and opening up new exciting avenues that should be leveraged. Your system should be capable of integrating this. Previously, everything was kept physically in the bank – nowadays, new customers and service applications come from mobile and third parties. Open banking is becoming the norm, and your system needs to be flexible enough to adjust to this.
Change is inevitable
Change, of course, must start from within. ‘Cards’ can no longer be the sole responsibility of a cards department. At many of our customers we see that it has now become an interdisciplinary function, spread across departments including credit products, client service, payments, regulatory compliance, fraud management. Even further – end user product or service are built up based on your product, add on with some fintech features and card schemas services.
Fast and API based product and compliance requirements won’t perform efficiently on a monolith system. You need gather flexibility with cloud ready and microservices based approach. To compete with Neo-banks and fintechs you need to stay with them on same starting line and on same shape -without huge legacy portfolio on your back.
To do’s for success
So, let’s take a look at some of the to do’s for success. Based on our experience you shouldn’t simply replace a card platform with a card platform. But you should change the thinking, by that we mean evaluate what needs to be in the new system from your product portfolio and more importantly your customers’ needs. Choose a proven partner that will take a collaborative approach and help you drive business development. Migrate to a modern system step by step. Don’t change everything at once, keep the old products on the old system, but build the new platform for a new product pipeline. And finally, capture ‘low hanging fruit opportunities’ in the first months of development by releasing minimal viable products that appeal to customers.