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For retail bankers, the song remains the same ...
But with so many external forces at work — from regulators, networks, technology providers and consumers — the words take on a new meaning.
March 16, 2015 by Richard Buckle — Founder and CEO, Pyalla Technologies, LLC
How often have you sat patiently waiting for a keynote presentation to start and found yourself tuning in to the music being piped through the auditorium? This time it was early morning, first day, at the BAI Payments Connect 2015 event, and I was somewhat bemused by the selection of songs — a high-energy blast from U2's "Vertigo," followed by "Hungry Like the Wolf" by Duran Duran, and as the panelists took the stage, a loud rendition of Foreigner's "Juke Box Hero." Each with a few lines that, upon reflection, were pertinent to the material that followed.
"I'm at a place called Vertigo; it's everything I wish I didn't know!"
It struck me that many in the audience would be leave this dizzy with so many ideas about payments gyrating in their brains. Navigation! Evolution! Transformation! Diversification! And my all-time personal favorite: Disruption! The full gamut of catchwords including one that particularly stood out for me, and perhaps I didn't want to know. Switches? Yes, but hubs? In particular, payments services hubs?
A by-chance meeting with HP master technologist Justin Simonds led to a discussion about what a payments services hub is exactly; its origin, it seems, was Gartner reports from around 2008 or 2009.
"I believe the hub is different from a switch based on the extensive use of rules to determine where the payment transaction will need to go on the backend," said Simonds. "The payment transaction may end up in a number of backend banking systems based on channel and content so I believe a Hub requires more intelligence."
OmniPyaments Inc. CEO Yash Kapadia seconded Simonds' remarks:
We see the development of the hub inevitable and we have launched our own OmniHub as a first-strike product in this marketplace.
OmniPayments developed its first payments services hub for Banco Popular Puerto Rico in 2004. Since then we have seen several new payment methods such as PayPal and Apple Pay and we have enhanced the OmniPayments services hub to improve the customer experience.
The OmniPayments services hub offering is called OmniCloudX and includes switching transactions plus real time fraud checks, loyalty and the customer experience. OmniCloudX is deployed on a backbone of HP NonStop X servers to offer the highest availability and yet OmniPayments provides this at a very affordable price.
Hubs may be real, they may be in clouds, but addressing a multitude of differing content routing options the move to more intelligent payment services hubs is a move we fully embrace as a payments solutions vendor.
According to Neil Coleman, CTO of development company InfraSoft:
Any discussion of hubs cannot ignore the platforms now coming to market— even those that many are familiar with, like HP NonStop systems.
A compromise between rules and "heavy" programming is to use something that can have a short "develop-test-implement-enhance" lifecycle, is powerful with respect to what you can do, and has many adherents. JavaScript meets that bill and, with Node.js on NonStop X systems, it's going to open the systems of many FIs where NonStop has a presence.
With respect to actually integrating JavaScript logic that makes the required decisions based on content, origin, time of day, etc,. let's not forget that the InfraSoft bomBora platform for NonStop will allow script invocation in multiple ways.
"Straddle the line in discord and rhyme; I'm on the hunt — I'm after you."
As much focus as there was at Payments Connect on the impact of recent smartphone introductions — and not forgetting Apple Pay and it's mobile wallet — underlying infrastructure might be leveraged but it's going to get a lot more complex and need a lot more intelligence to accommodate. Just think security. And as one panelist reminded us all "[it's not] no, but rather, know!"
In an email exchange that followed the BAI event, Ascert chief Rich Greene went into a little more detail on the topic:
Get ready for this. It is estimated that 60 percent of the merchants will not be ready for the liability shift to the merchants if the transaction occurs via non-EMV enabled card, which happens October 2015. We have lots of experience with the U.K. and Canadian implementations and we have a very robust database of testing algorithms for businesses to use … but as for the banks, they are really just gambling that any fraud that occurs is something that they can absorb."
Just how much fraud will have to be "hunted down" come October?
"Heard the roar of the crowd, he could picture the scene; he put his ear to the wall, then like a distant scream … "
BAI Chief Marketing Officer Holly Hughes made perhaps the best comment of the morning in her opening remarks: "Kudos on the mix."
Yes, "ear to the wall," "straddle the line in discord," "everything I didn't want to know" seemed a perfect introduction for the session, "Mobile Fraud: Is this the party to whom I am speaking?"
But what of the distant scream? That came a little later, as presenters talked about projected revenue shortfalls resulting from regulatory changes, not to mention changing consumer banking practices.
This was highlighted in a book review forwarded to me by comForte CTO, Thomas Burg. In the review, "Becoming a Smarter Bank" author Ron Shevlin was asked why he believes the banking business model is broken, and offered this blunt reply:
How's that working out for our banks? Regulatory changes have limited overdraft revenue opportunities and reduced interchange fees. ... Demographic changes have produced consumers more aware of and concerned with overdraft fees, which has impacted revenue generation. And the idea that the checking account was the "core" product, which provided a basis for relationship expansion and helped create the popularity of free checking, is no longer viable.
"Like a distant scream ... " The BAI playlist might have been chosen for no reason other than an energizing beat. But who could have guessed the meaning it communicated?
photo courtesy colleen lane | flickr
About Richard Buckle
Richard Buckle is the founder and CEO of Pyalla Technologies, LLC. He has enjoyed a long association with the Information Technology (IT) industry as a user, vendor, and more recently, as an industry commentator, thought leader, columnist and blogger. Richard participates in the HPE VIP Community where he is part of their influencer team.
