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The world of payments is changing dramatically. Today, stores such as Amazon Go and Jack & Jones require no checkout process because intelligent systems automatically detect the customer and the items carried out of the store. Payments occur in a frictionless and invisible manner. To learn more, we talked with Rakesh Kumar, head of banking and financial services at Tata Consultancy Services (TCS) and Amit Sharma CIO of Western Union.
Q. How are customer expectations changing regarding payments?
Kumar:Digital payments are here to stay. The payments ecosystem is accelerating quickly toward a cashless society, where transactions are fast, invisible, and frictionless. To succeed, companies need to become part of this ecosystem.
The future of money itself will be digital and cashless. National banks and carrier networks will play a central role, and the internet of things will be a key enabling technology.
Q. What are the imperatives for success as organizations transform their business capabilities and infrastructures to address the challenges around invisible, frictionless payments?
Kumar:Purpose-led growth is going to be the key and the ecosystem is king. If a customer is on vacation at a resort, every aspect of their experience will need to be considered holistically, and payments must take place in the background.
In truth, payment companies are becoming tech companies that are increasingly focused on investing in next-generation technologies. It’s important to pay attention to tech startups and financial technologies that are disrupting the larger, more established payment companies by being nimble and innovating rapidly. For successful customer journeys, a number of companies will need to come together.
To prepare, first build the digital core. You’ll need a scalable infrastructure that makes it easy to make use of microservices and cloud. Second, innovate the business model so that it conforms to this new ecosystem and follows the customer journey. Finally, transform and grow.
Q. What role does TCS play in the digital transformation of the payments industry?
Kumar:TCS is the leader in the payments industry. We work with a broad range of payments ecosystem players covering the entire value chain on both the consumer and enterprise sides of payments. That includes working with fintechs and setting up and running regional payments infrastructure. The payments industry is fast becoming a technology play, and we are the largest technology provider in this area. We offer TCS product and platform solutions, advisory services, IT and operations services, and third-party product integrations with a continued focus on payment innovations.
TCS plays a major role in the digital payments landscape in North America, Europe, Asia, and Australia. We partner with leading payment ecosystem providers to transform digital payment experiences and define standards along with services such as BIAN, IFX, and payment task forces. TCS has built and continues to run some of the largest and most complex payment systems for global banks and country payment infrastructures. For example, more than 90% of India’s payment transactions pass through systems built and managed by TCS.
Q. How do you envision the future of payments will evolve in the coming years?
Sharma:Digital-only financial services that have been popular with millennials are being increasingly adopted by all segments of society. Also, after communications, money is the next easiest thing to digitize. While new products and services in payments are trending towards digital, as a company we continue to provide choices to our customers to use both digital and cash options.
The biggest challenge is to create a truly interoperable payments system across ecosystem partners that is reliable, secure, real-time in nature, and can be operated at a reasonable price point across a wide range of participants. The challenges include industry-specific obstacles, the economics and profitability of payments, trust, security, compliance, and payment integrity.
A truly interoperable, standards-based, sustainable network ecosystem of money and value transfer will evolve over time. While standards like ISO 20022 are evolving and increasingly being adopted, closed versus open ecosystem challenges, country-level data specifications, legislation, consent — and ultimately digital identity and trust — will take center stage in the future of payment transaction processing, enabled by technologies such as cloud, mobile, and AI.
Q. How does cloud fit into Western Union’s plans?
Sharma:Western Union is embracing and adopting cloud platform capabilities to cater to key strategic business demands, such as greater business agility, intelligence, automated data capabilities, and better customer/user experiences. We never have to worry about purchasing, deploying, and managing infrastructure-related services, so our people can focus all their time on innovation, developing new products and services for our customers.
Another benefit is resilience. Before the cloud, we had to overprovision our infrastructure in the data center to be redundant, which creates a tremendous upfront capital expenditure. With the cloud, we spin workloads up and down on demand, and easily build applications with very high availability.
Finally, although cloud was initially criticized for appearing to be weak on security, that situation has changed dramatically. The big hyperscalers have invested a lot of money and resources into securing their infrastructures. Also, capabilities such as authentication and encryption are readily available to customers as services. I don’t have to buy and deploy a lot of security point solutions in my own facility.
Q. What considerations did Western Union take into account when choosing a partner to help with its payments transformation?
Sharma:We had several considerations when we started our cloud journey. We wanted to make sure our partner had a proven track record in digital transformation — at a large scale in financial services, with expertise in legacy modernization and cloud. Also, we had to know their leadership was committed to our success with a must-win mindset.
TCS has managed our legacy environment for several years and has a good grasp on our applications. We have direct access to their executive team, who are also committed to our success. We are partnering with TCS to drive holistic transformation, and they continue to demonstrate that they are a great partner.