The notion of Enterprise Payment Hubs is nothing new, in fact they have been in existence for more than 20 years. In the earlier stages of deployment, they had large upfront CapEx costs and were a major IT infrastructure project, typically undertaken by the larger financial institutions. With payments generating over $1tn in revenue and transaction volumes set to double over the next decade, banks need to reconsider their approach to capitalize on this growth.

The new payment hub is in town, and it is here to stay. To meet today’s customer demands and regulatory mandates, financial institutions need to modernise their payments infrastructures and partner with innovative payment providers, co-creating a digital payments ecosystem based on newer hub models. When doing so, they should look for platforms that are cloud-native and cloud-ready, microservices-based, and API-enabled. Continuous real-time operation and 24×7 availability are essential components.

Another key factor in the equation is the need to embed ISO 20022 messaging into every step of the payment lifecycle. The motivation for banks is in part the recognition of a need for more advanced, flexible platforms that can improve innovation and meet client demands, using digital scale for better fraud protection and client intelligence, all with minimal effort.

Now that the era of faster payments and open banking solutions is upon us, financial institutions of all sizes are reconsidering the use of hubs as a realistic option, and they are revisiting project opportunities that align with the need for the digital transformation required to compete in today’s market.

FI’s, much like consumers, want something different: they want their banking experiences to match the seamless, tailored real-time experiences they are accustomed to, and the new world of technology brings just that with greater speed and access to real-time services and data.

But what are the table stakes for the new payments hub?

• Support open banking interaction through API’s.
• Real-time infrastructure that supports both consumer and corporate payment requests 24×7.
• Cloud-readiness for operating in public, private, or hybrid cloud models.
• Omnichannel to accommodate “anywhere, any way I want” client service requirements.
• Standards-based with ISO 20022 as the default messaging choice for real-time systems, globally.
• Creation of a business services environment where every function can be accessed as a service or microservice.

So why change? Banks benefit in multiple ways, including new services, brand extension, greater revenues, lower costs, and better insight into their customers’ behaviour. Corporations gain benefits from improved bank delivery processes through better liquidity/cash management, better experiences for their employees, reduced process costs, and generally happier customers. Ultimately, institutions must gain the freedom to evolve away from the spaghetti and silos of legacy architectures, so they can bring new capabilities and services to market with minimal effort.