Payment Modernization for Resource Optimization

Are you a financial institution looking to improve customer experience, offer new products, and save costs?

Today’s consumers, millennials and Gen-Z, want speed, convenience, and instant gratification in everything and payments are no exception. The unprecedented growth and popularity of alternative payment systems such as Venmo, Zelle, and G-pay, is a testimony to this fact. Today 55% of millennials prefer to perform a banking activity using Fintech instead of a banking transaction.

Financial institutions (FIs) and banks have to act quickly and adopt modern payment methods to fight the competition coming from all these Fintechs fueling the alternate payment systems. On average, the current banking system takes 30 systems to complete one payment transaction. Banks and FIs are under pressure to review their existing legacy systems and embark on payment modernization. 

These legacy, mainframe systems were useful earlier but today they are creating hindrances to innovation and payment application modernization. This sluggish behavior and hindrance causes

1. Difficulty onboarding new innovative systems
2. Potential Loss of revenue for banks and FIs 
3. Degraded consumer experience
4. High development cost 
5. Compliance-related issues

With all these hindrances, how can banks and FIs rebuild or modernize their existing systems to address current challenges while keeping security in mind?

MuleSoft Payment Application Network

MuleSoft offers a Payment Application Network, an apt solution to the payment modernization technology that Financial Institutions are looking for. Using this API-led network, FIs can transition from legacy monolithic payment models to the Payments-as-a-Service model.

MuleSoft Application Network is a graph of endpoints or a plug-and-play architecture that helps FIs to be agile and deliver modern payment methods quickly. Just as you can reorganize a lego block shaped like a car into an airplane, you can utilize MuleSoft Payment APIs to transform your legacy payment systems into Payment as a Service (PaaS).

API-led connectivity model promotes reusable APIs. You can build, publish, and recycle the APIs for a new project, drastically reducing the development time for the new systems. You can build reliable, efficient, scalable, and secure components to modernize your payment applications.

MuleSoft also offers pre-built connectors from various technology partners that allow organizations to integrate with external systems faster.

Benefits of Payment Modernization

1. Eliminate development bottlenecks with reusable assets
2. Reduce time-to-market for new products
3. Design a flexible architecture
4. Remove complexity and point-to-point connectivity
5. Integrate applications faster using the pre-built connector from partners
6. Move toward a core-agnostic business model

Incepta Solutions can help you tap into these benefits by working with our MuleSoft experts to design a scalable solution for your payment modernization needs. Payment application modernization begins with three best practices–

1. Decompose legacy systems to expose the data
2. Implement reusable solutions to speed up automation
3. Embrace innovation to design new products and services

Steps for Payment System Modernization

As Financial Institutions move towards automation and open banking they need to take these key steps to implement end-to-end payment modernization.

#1) Align IT and Business Objectives

Keeping the business leaders and IT teams on the same page is essential while digitizing processes, payments, and lending. Leadership might be driven by the business benefits but may not understand the technology and resource requirements. 

All the stakeholders must be clear about the business objectives, current and future technology stack, and budget allocated. This is where experts from Incepta Solutions can assess your current systems. Based on the assessment, we provide a clear snapshot of automation readiness and the future desired state along with a step-by-step roadmap to the target state. 

#2) Unlock Siloed Data and Systems

Decomposing rigid legacy systems and processes is the next step toward automation. This can be a 3-part strategy that exposes the data residing in the core systems and automates the workflow with security and compliance built into it.

First, you need to access the legacy systems using modern, flexible, and scalable solutions like an API-led integration. Banks and FIs can adopt a three-tiered architecture to decompose legacy systems into fine-grained, reusable services. These system APIs provide controlled access to legacy systems and protect them from excessive traffic.

In the second phase, the transactional data from the monolithic systems are exposed via Process APIs. The process APIs allow other systems to access and use this data to weave automated business logic. 

The third part, Experience APIs, encapsulates the business logic, manages authentication and authorization, and enables the traffic coming from the web, app, and mobile channels to consume this data. End users can use the data and application to perform various payments and banking transactions.

#3) Maximize Reuse and Minimize Complexity

Banks and FIs need to streamline complex processes and break them into standardized, reusable blocks like APIs. Instead of writing custom codes, expose the data using APIs to build new products and services. Simplifying complex processes and encouraging reuse creates efficient, flexible, and robust systems that lead to improved customer experience. 

Conclusion

Financial Institutions are under pressure to modernize their payment systems as customers are demanding better experiences that are robust, efficient, and fast. Banks and financial institutions need to adopt API-led architecture and maximize reuse to unlock payment application modernization.

Incepta Solutions can help you modernize your payment infrastructure 3X faster using reusable MuleSoft Payment APIs. Contact us today!

Suggested read =>> MuleSoft Platform Assessment for Financial Institution