Finextra’s latest webinar – ‘Conducting the payments orchestra: Why IT will drive future transaction banking
models’ – hosted in association with Bottomline, discussed practical use cases of SaaS adoption, and how it helps banks build effective transaction banking models that not only address current trends, but future-proof the business.
Hosted by Finextra’s Gary Wright, the panel consisted of Sadiq Javeri, head of platform product management at Bottomline; Amrita Ghanekar, head of client analytics in the client insights & innovation team of treasury services
at BNY; and Christopher Gardner, programme & change executive director of ISO 20022 at Deutsche Bank.
The webinar set out to answer the following questions:
- The investment in SaaS is a business opportunity to create modern transaction banking models. How can financial institutions look to develop the appropriate use cases to exploit it?
- Embedded banking is a functionality that is integrated into a SaaS platform to allow the host institution to white label services provided by others and drive new sources of revenue, or uplift existing income. What strategies drive this and how do you deliver
them?
- How do financial institutions reap the adoption benefits of the ISO 20022 standard and what are they? What next for ISO as it moves beyond a demanding technology compliance project to a commercialised opportunity?
The role of SaaS and data in driving growth
Sadiq Javeri kicked off the conversation, discussing the confluence of mega trends in the payments and technology industries, including real-time payments, message standardisation with ISO 20022, and the rise of SaaS, Data API, and AI. Javeri highlighted
the ambitious regulatory mandates, such as the upcoming Pan-European rule book, and the need for foundational IT capabilities to drive growth in transaction banking.
Christopher Gardner explained the strategic infrastructure decisions for supporting new data models and expanding client offerings, emphasising the benefits of SaaS models including cost reduction, data consolidation, and the ability to make data-driven
decisions for better liquidity forecasting and payment optimisation. Noting that SaaS orchestrators can be embedded within existing infrastructure to provide interlinking processes and improve operational efficiency.
The discussion touched on the importance of simplifying complex architectures and achieving standardisation across regions to realise benefits quickly. Amrita Ghanekar emphasised the transformative role of SaaS investments in creating modern transaction
banking models, highlighting the importance of data tools for better decision-making.
For institutions, it appeared that managing payments for risk is the top priority at the moment, with legacy upgrades and compliance closely behind, as revealed by Finextra’s poll to the webinar audience:
Which of the following is the top priority on your product roadmap over the next 12 months?
- Managing payments for risk - 30%
- Replacing legacy infrastructure to improve operational efficiency - 25%
- Hitting the compliance demands - 25%
- Updating cross border payment strategy - 15%
- Adopting new payment rails, such as real time payments - 5%
- Improving cash Forecasting and liquidity management - 0%
Commenting on the poll results, Gardner noted surprise that votes for regulatory priorities weren’t higher, given strict timelines across Europe. However, he acknowledged that the results likely reflect the global distribution of respondents: “The ISO timelines
coming to a frame at the end of coexistence, at the end of this year, is something that people have been working on for quite some time. They are probably well advanced with that now. The payment fraud risk is something that's quite high up there, if not the
top one, and that doesn't surprise me, because that's the key thing that concerns consumers at the moment.”
The second poll question focused on readiness to take advantage of ISO 20022, with a significant number of respondents already working on use cases:
As we approach major implementation deadlines for ISO 20022, what would best describe your readiness to take advantage of the standard?
- Multiple use cases, leveraging ISO 20022 already underway - 57%
- One or two use cases identified are being planned for - 7%
- Use cases have been identified but resourcing not yet applied - 7%
- Not thought about it yet - 14%
- Awaiting the end of the coexistence period - 14%
“It’s a pleasant surprise to me to see that people are already working on the use cases in advance of the actual completion of the coexistence period. They may not already be fully invested and live with ISO 20022 solely, so I’m pleasantly surprised. I'm
looking forward to what we see come out of this,” Sadiq commented on the second poll.
Embedded banking and data utilisation
The conversation then turned to data access, and how data can be truly deployed in a commercial way within an organisation. Given Ghanekar’s dedicated responsibility to this at BNY, she commented on the bank’s unique position to serve the market without
conflict, providing standardised, scalable solutions to smaller banks.
Ghanekar discussed the role of ISO 20022 in capturing and harmonising data, emphasising its importance for analytics and creating new value propositions. Noting how larger banks are also exploring the commercial potential of data through pattern recognition
and contextual intelligence. The focus should be on secure environments to create network effects, enabling collaboration with partners, banks, and networks like Swift, creating ubiquitous models where you can create a ‘model of a model’ that can service the
industry at large.
Gardner highlighted the ongoing work to harmonise ISO standards across market infrastructures and the benefits of standardised messages for faster and cheaper payments, as well as the integration of APIs with TMS and ERP systems to provide automated responses
and improve operational efficiency for corporate treasurers.
Javeri highlighted another example of what the future could hold, drawing on existing foundations of open and embedded banking, and their potential for a disaggregation of banking services. “There are different extremes of this. I the most extreme would
for example be how the mortgage market works in most of Western Europe and in America. Very few people go to their bank and arrange a mortgage. They do it via a broker instead, and banks compete almost entirely on price. There is very little relationship value
in that. Embedded banking could, in that model, lead to a complete disaggregation of the bank from its customer, and the bank becomes a utility provider.”
The way SaaS has shifted the focus from data hoarding to data orchestration, enabling collaborative innovation, was emphasised by Ghanekar: “The whole of what SaaS has brought to the data world is the strategic shift from data hoarding to data orchestration.
What SaaS also gives you, and we don't talk about it a lot, is it enables collaborative innovation. FinTech’s have done it for years, and now banks are in a unique position to flip that same script, by being able to integrate and provide points of integration
of data from their ecosystem out to the market.”
Key drivers of future banking models
The discussion concluded by focusing on the importance of connectivity, data hygiene, and the ability to orchestrate payments and data to drive future transaction banking models. Summarising the day’s webinar, Javeri reiterated the two key IT capabilities
to orchestrating data and payments.
The first part is “your ability to connect third parties —be they the market, intelligent routing of payments, Swift, or new instant payment rails — to your own systems via API. Building this muscle of being able to connect and disconnect quickly is key.
The second part is data hygiene and all these connections. Bringing in and taking out data, being able to see that data in a standardised format to then build data capabilities of it — be they analytics, machine learning, or one day AI. Those are the two key
IT tenants and capabilities which will ultimately enable you to drive your transaction banking model going forward.”
Learn more by watching the full webinar, ‘Conducting the payments
orchestra: Why IT will drive future transaction banking models’, hosted in association with Bottomline.