Why would a large retail bank with access to the largest, most sophisticated systems integrators and fintech firms in the world opt, instead, for a relatively small boutique service provider to build one of its most important systems? This \u201cDavid vs. Goliath\u201d story caught my attention as it illustrates one of the most exciting trends of 2017 in the digital services world. I think the outcome of this story is rather amazing, given that winning in the payment space is among the highest priorities for a retail bank, and this project was highly visible to customers. \u00a0\nThe project was to build the back-end payment system supporting digital wallet transactions. The bank initially made several attempts at building the digital payments system internally and released a digital payment system to a couple of retailers, but the system was not powerful enough. Then it tried working with systems integrators (SIs) in several attempts. But a legacy SI approach didn\u2019t deliver the necessary innovation and best thinking. So, Quisitive, a small, boutique firm stepped in to compete for the work.\u00a0\nAs Quisitive\u2019s chief customer officer Paul Bresnahan explained to me, the bank was the first financial institution to join a retail consortium of some of the largest U.S. retailers. Together they were fighting credit card companies increasingly escalating transaction fees. They also wanted to prevent digital wallet service providers from stealing the retailers\u2019 customer relationships. Longer term, value-added services was a very strategic driver for the bank\u2019s digital payment system. It was interested in the concept of rewarding customer loyalty. And having the functionality of geofencing so the bank could know where customers were and provide greater on-the-spot information back to retail stores would create competitive advantages for the bank.\nThe consortium worked with different system integrators and attempted three times to build its own payment platform. But the legacy SI approach often just started with existing platforms and attempted to rebuild them.\nBresnahan advised the consortium to go down the path of digital transformation. \u201cThis is not just about building a platform. You ought to build it in an architecture with a build model and an organization and team that truly is digital transformation.\u201d\nWhy the Quisitive-built system was more powerful than earlier attempts\nThere are a number of concrete reasons Quisitive\u2019s digital payment system now made sense:\n1. It was built in the cloud\nBresnahan says the bank wanted to accelerate the system development to get to market quickly, and the bank\u2019s leaders were \u201cintrigued\u201d with Quisitive\u2019s pace of development by building the product in the cloud. Not only did they accomplish the solution from idea to delivery to retail customers in just nine short months, but it was also able to scale very quickly. The bank had previously spent almost two years trying to get to a point where it could bring the first retailers into a digital payments environment.\u00a0\n2. The impact of the collapsed stack\nQuisitive built the architecture using Microsoft\u2019s Azure cloud and its Platform-as-a-Service (PaaS) tools. The heavy degree of automation and integration in the software-defined environment of a cloud stack collapsed the bank\u2019s technology stack (the multi-layered stack of technology such as servers, operating system, middleware, enterprise application layer, security layer). PaaS, for instance, integrates databases and middleware software into an infrastructure layer.\nThe collapsed IT stack enabled adding new functionality very quickly, which was a huge attraction to the bank. At the time of developing the system, the bank was unclear on the future direction of digital wallet technology and what sort of capabilities the market would want. The bank recognized it needed to get to market very quickly. Quisitive advised that the architecture and platform would accomplish both objectives.\nBresnahan explains that the previous system the bank developed not only took a long time to deliver to the marketplace but caused difficulties when trying to adapt to a changing marketplace. The bank recognized it could easily add new functionality or add new retailers and bring them on board quickly with the digital platform and architecture Quisitive built.\n3. Addressing dynamic customer demands\nA significant benefit of the bank and Quisitive collaborating with the retail consortium to build a digital wallet platform was the retailer\u2019s deep knowledge of differences in Point-of-Sale (POS) systems.\n\u201cThe retailers shared a lot of learning and experience as to the sort of information they would need to see, how they would run transactions, and what would make the most sense for them to be able to integrate with this system,\u201d says Bresnahan. Every retailer has its own customized POS version, and there were big differences \u2013 such as between retail store systems and gas station pay-at-pump systems. There was a lot of consideration about how those different types of environments would need to be integrated into the bank\u2019s payment system. \u201cIt\u2019s not as simple as swiping a credit card,\u201d Bresnahan continues. \u201cThe transaction information is presented in a QR code to a POS, and the system\u2019s ability to read that QR code, recognize and validate it, and make a bank payment transaction requires a lot of consideration and integration.\u201d\nThe Quisitive team demonstrated that it could achieve the security and compliance standards that the consortium needed and convinced the consortium to use Azure because of its Platform-as-a-Service (PaaS) capabilities. Within just nine months, they went from idea to release with a major retailer on Black Friday.\nBresnahan says the bank was so impressed with the service and architecture that Quisitive built that the bank approached the retailers in the consortium and effectively bought out the platform itself and brought it into the retail bank organization as its platform for building its digital payment system.\u00a0\nLeadership decisions\nDigital transformation projects require substantial investment. From my observation in working with other companies, I believe it must been a very hard decision for the retail bank to write off the investment it had already made in prior attempts to build a system and get it to market. I\u2019m sure the bank\u2019s leaders gave a lot of consideration to this dilemma.\nBut the prior investments resulted in inferior functionality and inability to adapt to an ever-changing environment. To their credit, the bank\u2019s leaders took a broader, longer-term view of its digital transformation journey. They realized the bank\u2019s ability to move at pace with business demands by using the platform Quisitive built far outweighed the cost of the investment in a discarded system.\nSo how successful is the new system? Bresnahan says the bank\u2019s business leaders now come up with ideas to add to the ecommerce capability for retailers\u2019 digital wallets. \u201cWithin three weeks of a request, we can take that from idea to user story, through development, through automated testing and release it into production.\u201d\nThe bank now has a simple yet powerful digital model that will take the bank in the direction it wants to go for the future. And in a world where financial institutions are in the process of reducing the number of service providers in their legacy portfolio, and system integrators are losing market share, Quisitive\u2019s business is flourishing because it understands the digital model.