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The race to digital: why banks must rationalise their card platforms

By rationalising their card platforms, banks can reduce costs and control revenue fluctuations from card issuing as all activity passes through one platform.

Hans Sjölund / August 25, 2021

With leading consultants predicting that as many as a quarter of today’s high-street banks could disappear by 2030, TietoEVRY’s Hans Sjölund advocates using Software as a Service (SaaS) models to modernise payment card platforms and deliver flexible, efficient card services that will improve customer service and enhance competitiveness.

In our new white paper, we argue that retail banking is undergoing one of the greatest changes seen in its 800-year history. The shift to digital banking, including biometric security, faster payments and mobile commerce, has led to a huge rise in customer expectations when it comes to outstanding service and the instant delivery of innovative, digital-first services.

At the same time, leading sources such as the UK’s Financial Times report that the profitability of card programmes is declining as issuers grapple with complex legacy technologies and rising costs in several areas. Despite the rise in digital wallets and account-to-account payments, cards are going to continue to play a central role in payments – and issuers should be taking decisive steps to ensure their card platforms are fit for tomorrow’s competitive environment.

Survival of the fittest

Banks need to revisit the way they manage their card programmes not just to reduce cost, but also to improve efficiency, deliver a better customer experience and ensure they can adapt to increasing regulatory burdens our industry will face as it attempts to tackle recent massive rises in fraud – particularly online.

Given the huge numbers of cards out there, it’s no surprise there’s a plethora of different card management software platforms, each serving different systems, business units or geographies. Leaving aside the improvements in terms of costs and efficiency when rationalising card platforms, the presence of too many card platforms increases operational risk as each requires individual attention to maintain regulatory compliance and interoperability. The risk of system failure also grows as these platforms become older and more vulnerable.

By rationalising their card platforms, banks can reduce the cost of issuing cards and control fluctuations in revenue from card issuing as all activity passes through one platform. They can also cut costs associated with maintaining regulatory compliance across multiple platforms and introducing new technologies such as mobile devices. Products are delivered to market more rapidly, compliance is simplified and the up-front investment in developing a new card platform is reduced.

While almost all banks now recognise the need to digitise, to date this has taken far too long and has been undertaken piecemeal. Rationalising card platforms makes sense as part of the wider change to banking delivered in a fully digital environment; what’s more, it helps free up capital and resources for innovation in other areas. As banks rush headlong to “go digital”, they should not ignore the fundamental changes needed in their existing business.

Our new white paper shows that the optimal means of rationalising card platforms is to embed a proven solution modified to suit a bank’s individual needs using Software as a Service (SaaS) as the delivery model. By taking the SaaS option, banks can improve their speed to market and adapt rapidly to changing regulatory demands.

A piecemeal approach to digitisation is not a winning strategy for retail banks currently facing significant competitive threats. The new wave of “digital-only” banks are predicted to treble in size by 2030: given such intense competition, banks should not be spending time laboriously updating legacy card platforms and worrying about compliance requirements. These tasks can and should be left to a trusted third-party partner, leaving the bank free to create and deliver innovative products that enhance their customers’ experience and improve loyalty.

To download a copy of “The race to digital: why banks must rationalise card platforms”, click HERE.

Hans Sjölund
Head of Sales, Cards
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