Putting service levels at the heart of payments hubs

Most would agree that a bank can benefit from a centralised payments hub that is scalable and offers rich functionality. But while reducing the number of hubs brings a higher level of consolidation, what banks need is a more service-focused approach to payments.

As discussed in my previous blog, service level payments means offering a differentiated, scalable and unified customer experience across the globe, while taking into account local variations. Service level payments allow banks to put in place specified service levels for various customer segments and for different payment types, such as domestic; cross-border; high volume or high value. This new way of dealing with payments meets client requirements and processes payments more efficiently.

Reaping the benefits

With customer service at its core, a payments hub helps banks maintain loyalty and increase market share.  In November, the EU will introduce new SEPA direct debit payments instruments – to ensure a single standard for payments messages across Europe. But for corporates this means that responsibility for setting up and managing direct debit mandates now falls to them, rather than the banks. For example, a firm with a large numbers of retail customers across Europe – such as a utility company – is likely to have millions of direct debit mandates. In order to set-up and manage each one of these will be a vast operational challenge. However, a bank with a service level payments hub can help corporates address the new phase of SEPA by providing mandate management as a value-add service. And those will be the banks that will grab the biggest share of the business.

By consolidating disparate payments systems into a centralised hub, banks also lower their cost of asset ownership and reduce maintenance costs and risk.  This can also increase transparency over operations and shows the bank where its liquidity is – allowing for better cash management. The flexibility of the hub means that banks can quickly bring new products to market, such as high priority international payments, and move into new territories. This is how they will best respond to regulatory and market changes.

A transformation journey

Modernising payments infrastructure is an important transformation journey for banks. It is not only about making sure that their technology decisions are aligned with their long-term business plan but also taking into consideration integration challenges and their ROI objectives. A service level payments hub should be a business solution supported by the expertise and experience that’s necessary to deliver a world class payments service.