The time is now for banks to move from technology followers to technology leaders
Blog published on LinkedIn: Justin Ashworth, Chief Technology Strategist
I am just back from the Toronto Sibos show and if there is one theme that came through loud and clear, it’s that banks are embracing technology like never before to stay relevant as fintechs challenge the establishment. Through use of APIs, event-driven notifications, holistic monitoring and business intelligence, as well as real-time payments, the more progressive banks are now realizing that they can be in a position to enhance their offerings in a way that competes with the threat from the more nimble fintech offerings.
APIs and Self-Service
Banks have traditionally made it very difficult for fintech innovators to access customer data, requiring the sharing of sensitive credentials and screen scraping to add value to a customer’s banking experience. Banks are now working with fintechs to supply open APIs to enable authorized third party service providers secure access to a customer’s information. I have personally seen how the Dovetail Payments Platform is being used by many banks in Europe as part of their overall third party service provider infrastructure and PSD2 directive compliance. Beyond third party service providers, the Dovetail Payments Platform is also being used to enable the digital transformation of internal systems by exposing real-time microservice APIs for payment initiation and payment lifecycle control (search, cancel, return, etc). Services exposed to channel applications enable transparency in payment submission via validation API that tells a user the selected clearing system, value date, indicative or pre-agreed FX rate, and applicable charges before the payment is submitted.
Today’s consumers and corporates demand real-time notification of payment status and exceptions. The Dovetail Payments Platform has a real-time Payment Event Notification capability which can be configured to push an event based on 150+ optional criteria (e.g. “notify when I receive a credit > 1Mln EUR” or “notify if my payment will not make my expected value date”). Events may be sent to customer e-mail addresses, mobile phones via app push or SMS, or to any other system within the bank. Event notifications are used by users of the Dovetail Payments Platform to provide transparency into the payment processing lifecycle.
Monitoring and Business Intelligence
A payments platform is just one piece of an overall ecosystem of money movement within a bank. As such, it must be designed with interoperability in mind. The Dovetail Payments Platform leverages standards to expose processing metrics, both operational and technical, via JMX for consumption by third party BAM and BI tools. Most users of the Dovetail Payments Platform utilize a third party tool such as Splunk or AppDynamics to aggregate such timely information across the payments lifecycle. But information alone is not enough; the Dovetail APIs enable actions to be taken either automatically by the tool or manually by IT to mitigate any potential issues.
Instant / Real-time
The Dovetail Payments Platform is also central to many banks’ strategies on real-time payments, with live deployments on real-time schemes worldwide. In Europe, SEPA Instant Credit Transfers is just about to launch (with a Dovetail user being the first bank on the new scheme), and in the US the recent launch of Zelle and next year’s launch of The Clearing House Real-Time Payments initiative will bring true consumer end-to-end irrefutable payments to the masses in a way that puts banks at the forefront of the digital payments revolution.
Banks face mounting pressure from fintechs to innovate, but they can control their own destiny. It has become increasingly clear to me that banks which do not innovate will be left behind not only by the fintechs, but by the forward-looking competition. The Dovetail Payments Platform provides a key component of the digital transformation program that’s needed by banks of all sizes worldwide to innovate at the pace expected by modern customers. What’s more, through the recent acquisition by Fiserv, Dovetail is now part of a larger ecosystem of banking software which can meet the bank’s end-to-end payment processing needs, offering complementary solution sets and the opportunity to deploy on a hosted and/or cloud platform.