The payments landscape within banks is often-times complicated due to the many intertwined fragments such as payment type, currency, clearing mechanism etc. which comes as a part of the age old legacy systems. In most cases, banks have to deal with multiple different currencies and instruments since they operate in geographies spread worldwide or are constantly acquiring other banks having their own CSM (Clearing and Settlement Mechanism) and payment infrastructure. Quite evidently then, such an amalgamation of architectures is rightly referred to as the spaghetti architecture!
Common problems of the spaghetti architecture
Of late, banks have been facing the complications that come up with the legacy system and are now increasingly shifting their gaze towards adopting an integrated payments hub. The problems frequently faced by banks are:
✓ Multiple layered payment processes and systems
✓ Dealing with way too many file formats
✓ Less transparency of payments and payment processes
✓ Recurring payment related issues, such as technical breakdowns.
✓ Legacy systems with obsolete enhancements carried on since years.
✓ That all generate dealing with different payment formats generated by ERP, TMS and in-house systems and connecting to banks in a multitude of ways.
✓ Slow payment system implementations and long integration time frames
Overcoming the above prevalent shortcomings and optimizing the existing process, invites the need of an integrated payments hub.
What is an Integrated Payments hub?
An integrated payments hub is a flexible platform that enables banks to develop their own payments services that can integrate with multiple systems and channels, essentially breaking down the silos present in legacy structures.
Over the last few years, the concept of integrated payment hubs has been promoted by technology vendors and industry analysts as the leading approach to modernizing banks’ payment infrastructures.
Benefits of Implementing Payment Hubs
- The banks can consolidate all channels such as internet banking, mobile banking, corporate portals, social media, etc. through a single integration layer.
- New Services can be realized and implemented swiftly across front-end channels.
- Data from multiple internal systems can be aggregated at the back end. This data can be routed to appropriate payment networks such as Automated Clearing House (ACH) and Real-time Gross Settlement Systems (RTGS). This aggregated data can also be used for analytics.
- The payment hub solutions can replace the existing legacy platform thereby completely transforming the existing payment processing system.
- The integration standards of the payment hub create a scalable, flexible and agile integration layer which provides the best efficiency.
- Increased operational efficiency.
- Reduction in the bank’s operating expenses (through the reduction in point-to-point connections.)
- Reduction in the customer’s expenses (through the ability to determine or create the lowest cost payment methods, such as transaction aggregation for batch settlement and real time payment solutions.)
- Improved payments visibility.
- Quick payment system implementations and shorter integration time frames
- Capability to handle the ever-growing volumes of payments.
Mindgate’s integrated payment hub provides the capability of processing any payment on a single platform, irrespective of instrument type, currency, the value of the payment, customer, channel, or transaction type. Its modern architecture delivers core payment processing functionality for each of those scenarios. Payment hubs promote banks into modernized system architecture to make them better positioned for new business demands.