The world of payments is changing dramatically. Today, stores like Amazon Go and Jack & Jones do not require any checkout process because intelligent systems automatically detect the customer and the items taken out of the store. Payments are made invisibly and without friction. For more information, we spoke with Rakesh Kumar, Head of Banking and Financial Services at Tata Consultancy Services (TCS) and Amit Sharma CIO at Western Union.
Q. How are customer expectations for payments changing?
Kumar: Digital payments are here to stay. The payments ecosystem is rapidly accelerating towards a cashless society, where transactions are fast, invisible, and frictionless. To be successful, companies must be part of this ecosystem.
The future of money itself will be digital and cashless. National banks and operator networks will play a central role, and the Internet of Things will be a key enabling technology.
Q. What are the imperatives for success as organizations transform their business capabilities and infrastructures to address the challenges around invisible and frictionless payments?
Kumar: Purpose-driven growth will be the key and the ecosystem is king. If a customer is vacationing at a resort, all aspects of their experience will need to be considered holistically and payments should be made in the background.
In reality, payment companies are becoming technology companies that are increasingly focused on investing in next-generation technologies. It’s important to pay attention to tech startups and financial technologies that are disrupting larger, more established payment companies by being agile and innovating quickly. For customer journeys to be successful, multiple companies need to come together.
To prepare, first create the digital core. You will need a scalable infrastructure that makes it easy to use microservices and the cloud. Second, innovate the business model to fit this new ecosystem and follow the customer journey. Finally, transform yourself and grow.
Q. What role does TCS play in the digital transformation of the payments industry?
Kumar: TCS is a leader in the payments industry. We work with a wide range of players in the payments ecosystem that cover the entire value chain, both from the consumer and the business side of payments. That includes working with fintechs and establishing and running a regional payments infrastructure. The payments industry is fast becoming a tech game, and we are the largest technology provider in this area. We offer TCS products and platform solutions, advisory services, IT and operations services, and third-party product integrations with an ongoing focus on payment innovations.
TCS plays an important role in the digital payments landscape in North America, Europe, Asia, and Australia. We partner with leading payment ecosystem providers to transform digital payment experiences and define standards alongside services like BIAN, IFX, and payment task forces. TCS has built and continues to run some of the largest and most complex payment systems for global banks and countries’ payment infrastructures. For example, more than 90% of payment transactions in India go through systems built and managed by TCS.
Q. How do you imagine the future of payments will evolve in the next few years?
Sharma: Digital-only financial services that have been popular with millennials are increasingly being adopted by all segments of society. Also, after communications, money is the easiest to digitize. While new products and services in payments have a trend towards digital, as a business, we continue to provide options for our customers to use digital and cash options.
The biggest challenge is creating a truly interoperable payments system among ecosystem partners that is reliable, secure, real-time in nature, and can be operated at a reasonable price across a wide range of participants. Challenges include industry-specific obstacles, the economics and profitability of payments, trust, security, compliance, and payment integrity.
A sustainable network ecosystem, truly interoperable and based on money and value transfer standards will evolve over time. While standards like ISO 20022 are evolving and increasingly being adopted, the challenges of closed vs. open ecosystems, country-level data specifications, legislation, consent, and ultimately digital identity and trust will be at the center of the future of payment transaction processing, enabled by technologies such as cloud, mobile and AI.
Q. How does the cloud fit into Western Union’s plans?
Sharma: Western Union is embracing and embracing cloud platform capabilities to meet key strategic business demands such as increased business agility, intelligence, automated data capabilities, and better customer / user experiences. We never have to worry about purchasing, implementing, and managing infrastructure-related services, so our people can focus all their time on innovation, developing new products and services for our customers.
Another benefit is resilience. Before the cloud, we had to over-provision our infrastructure in the data center to be redundant, resulting in a huge upfront capital expense. With the cloud, we scale up and down workloads on demand, and we easily build applications with very high availability.
Finally, although the cloud was initially criticized for appearing weak on security, that situation has changed dramatically. Large hyperscalers have invested a lot of money and resources to protect their infrastructures. Additionally, capabilities such as authentication and encryption are readily available to clients as services. I don’t have to buy and implement a lot of security point solutions on my own premises.
Q. What considerations did Western Union take into account when choosing a partner to help with your payment transformation?
Sharma: We had several considerations when we began our journey to the cloud. We wanted to ensure that our partner had a proven track record in digital transformation, large scale in financial services, with experience in legacy modernization and in the cloud. Also, we had to know that their leadership was committed to our success with a win-win mindset.
TCS has managed our legacy environment for several years and has a good understanding of our applications. We have direct access to your executive team, who are also committed to our success. We are partnering with TCS to drive a comprehensive transformation and they continue to prove they are a great partner.
For more information on TCS banking solutions and services, visit https://www.tcs.com/banking-financial-services.
Western Union solutions and services, visit www.westernunion.com.
Amit Sharma, Chief Information Officer, Western Union
Rakesh Kumar, Vice President and Head of Business Unit, Banking,
Financial and Insurance Services, Tata Consultancy Services
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