Introducing real-time payments (RTP) is not solely a technology challenge, it is also a new way of working. Moreover, it is not only about meeting deadlines and regulatory requirements, it offers opportunities to transform client services.
As such, there is the need to bring together business, operations and payment experts, working in partnership. Volante has been a partner for RTP projects for banks since 2017, when it collaborated with BNY Mellon to provide the core technology to enable the first real-time payments in the US.
Since then, it has worked with banks across the globe. As well as Volante’s microservices and cloud-native VolPay Real-time Payments, the company constitutes a true partner, with deep domain expertise. That combination was recognised with the PayTech Best Real-Time Payments Solution award.
24×7 payments changes the way a financial institution works. This includes adopting real-time reconciliations, liquidity management and position management. Traditional batch processing allows for bulk payments and provides time to forecast liquidity and positions. When there are one-to-one payments, there is no forecasting, and payments can be released at any time, so processes have to be automated.
It also unlocks opportunities in the form of value-added services. These include electronic real-time reconciliations, which can significantly reduce manual work; data aggregation services; and resources to better understand the business. In part, this stems from the ability to add information to the ISO 20022 messages.
Request to pay is the evolution of real-time payments and brings the potential to offer clients a secure and authenticated alternative to credit card payments and their associated multiple interchange fees. The relationship is between the bank and the merchant, removing the intermediaries, each of which takes a cut of the payment amount.
RTP and the associated value-added services are a key area of competitive advantage. Banks are faced with an uncertain landscape of regulations, technologies and business processes. They are also competing to better serve a new breed of digital-native companies that place increased importance on providing cross-border payment solutions to unlock speed and efficiency.
Digital native companies, including e-commerce businesses and fintechs, have strikingly different business models from the large corporations of the past and therefore require tailored treasury services. To quickly expand into new markets, these digital native companies handle payments and receivables in local currencies and domestic schemes. These are processed using both traditional bulk schemes (ACH and RTGS), and domestic instant payment schemes of which there are now more than 40 around the world
While RTP is a key enabler for unlocking digital payments for banks and their customers, this is all against the backdrop of complexity and rapid change. The current reality is fragmented, with banks having to choose between multiple infrastructure providers while also dealing with regulatory issues such as the second Payment Services Directive (PSD2). More generally, many banks are struggling to balance the need for innovation with the need to continue running a profitable business.
The broad nature of the challenge is reflected in how Volante approaches RTP projects. One workstream will focus on deadlines and tactical short-term wins. VolPay Real-time Payments can be implemented without the need to replace legacy systems or completely redesign a bank on real-time principles, which means accelerated time to market and lower project costs.
In parallel, Volante seeks to create a global team within the financial institution to design and implement the new operational modes, and involve all stakeholders, starting with the business, so that everyone is on board. It facilitates quicker implementation cycles, adoption of proven best practice approaches, easier development of value-added services, and API-based innovation on top of real-time processing rails.
This approach is essentially to help the bank maximise its investment and benefit from innovation. In this way, Volante delivers a clear roadmap to a real-time payments infrastructure that overlays the existing legacy systems and creates successful and high-impact business outcomes.