Customer expectations and competition in the banking industry are getting tougher all the time.
Traditional banks may find themselves struggling with these developments. Serving a large existing customer base may seem daunting. Trying to meet increasing customer expectations and compliance requirements, and launching new digital products and features is not an easy task.
Established players can sustain and even increase their fair share of the digital payments market. The table is set for the next generation of payments, and it’ll bring major benefits to issuers, processors, as well as end-users.
Denise Johansson, an Enfuce Co-Founder, knows what it’s like to work with banks – and in a bank. She understands their pain points. In this article, she lends her helping hand to support you in modernising your card processing platform.
By reading this article, you will learn:
- How traditional banks can respond to the challenges they face in the changing payments landscape
- What can established players achieve with modern cloud-based platforms – from a business point of view
- How to transform legacy to meet the needs of the future
- How Enfuce Card as a Service may help you reach your objectives.
What kind of challenges are the established banking players facing?
The payments business is changing and becoming more and more competitive. Booming e-commerce, the trend favouring cashless payment, and new consumer behaviours are all driving growth for digital payments. Keeping up with these developments has posed challenges for traditional banks.
Newcomers like fintechs and other emerging players have entered the payments market. Established issuers may miss out on the growth of new cashless payments and changing consumer behaviour. As a result, they risk losing some of their market share to the emerging players. The challengers have also pushed the issuing industry to launch new digital payment products, services, and features.
Back in the day, it was quite common for many generations of a family to be customers of a single bank. Today, Millennials and Gen Z don’t always have a lifelong customer relationship in mind when they first become a bank’s customer. Instead, they are looking for advanced digital services.
How can traditional banks compete against fintechs and other emerging players?
Fintechs are leading the way, providing an exceptional customer experience with new service innovations. They’re challenging the rest of the industry with their API-driven platforms. This way, they not only meet the customer requirements but also create completely new ones.
However, it is not only fintechs who benefit from this development. Established issuers can also defend their slice of the digital payments cake. Established issuers can claim their share of the growth, and take on challengers like neobanks and paytech companies. But that requires boldly investing for the long term and making fundamental changes to one’s processing architecture.
Many of us at Enfuce come from a banking background and have vast experience in working with banks. We understand the pain of established players with the changing competitive landscape. Because of our strong experience, we can help you overcome these challenges.
Why modernise your card processing system?
Modernising your card processing system is one way to respond to the increasing competition and higher customer expectations. A cloud-based architecture supports scalable business models and adapts to changing needs. There are five key benefits you and your customers can achieve on a modern cloud-based platform.
Better services to meet customer needs and increase loyalty
A modern processing system grants you access to customer analytics. With these insights, you can create personalised offerings for your customers. This allows you to gain relevance in niche customer segments, like SMEs or certain age groups.
As a result, you can deliver better payment services that satisfy underserved segments. Another benefit is boosting loyalty among existing ones. Launching more relevant products and features also helps build a strong business case for a bigger processing system renewal, better suited to a mobile-first world.
Service desks are part of the exceptional customer experience. The younger generation doesn’t typically enjoy calling a bank’s customer service for help nor do they enjoy receiving those calls. With a modern user interface, they can manage their service themselves and solve all of their problems. All that’s needed is just one click.
Launch new products and features
Launching new card products is a proven way to boost retention and onboard new customers. It provides important touchpoints for your customers and helps grow engagement among end-users.
Modern platforms enable you to launch digital payments products cost-effectively. With a modular architecture, you can offer compatibility to relevant products. This helps pave the way for better payment innovation and larger volumes. You can achieve this by working with a payment service provider born out of the cloud, like Enfuce.
Optimise operating expenses
With a modern processing system, it has become easier than ever to cut service delivery and maintenance costs. The reason is simple: cloud-based card payments provide inherent cost-based benefits and better economies of scale.
Modern platforms also enable the development of new, more flexible fee structures. You can then launch more versatile card products with better profitability. You can also cut costs related to PIN management, service desks, and peak loads.
Future-proof your banking and ensure scalability
Modernising your card processing systems enables you to keep pace with industry developments. As a result, you can design a card solution that stays relevant in the face of ever-changing consumer needs.
With a cloud-based platform, you can leverage well-developed and efficient processing infrastructures. This way your business can scale both in terms of processing capacity and geographic reach. You won’t need any big in-house efforts.
Overcome regulatory and compliance challenges
Compliance is essential to your business, but the ever-increasing regulatory requirements might consume your development resources. Especially so, if your architecture consists of various legacy modules where data is spread across systems. This is a challenge that many established issuers face.
To overcome this challenge, you don’t need to commit to costly in-house development or acquisitions. Working with the right type of partner allows you to monetise your large user base, avoid development bottlenecks, and reach new markets. All this, without compromising on compliance.
Choose the most suitable migration model for your needs
Once you’ve decided to modernise your card system, the important considerations don’t end there. The next thing is choosing the most suitable migration approach for your needs. And if you don’t have the in-house resources, you can find a partner to help you out.
There are many ways to execute a migration. The suitability of a specific approach for your business depends both on your operational needs and technological limitations. These include your ability to extract cardholder data from various sources.
Coordinating heavy migrations
You can plan for an “as-is migration” of an existing system. This means migrating the existing customer experience into a new environment, and improved efficiency. Another option could be going for a more holistic overhaul of your entire card business and introducing new, improved, state-of-the-art experiences.
Card base migrations are big coordination efforts. You need to consider stakeholder management, fulfilling technical requirements, executing an integration, and so on. The countless things to keep track of can become dizzying. This complexity requires you to plan your approach carefully, regardless of whether you choose to migrate in-house or rely on specialist partners.
Data migrations can be stressful, to say the least. Hundreds of things have to go right between design and launch. If they don’t, your payments business could suffer the consequences. For established banks serving millions of customers, downtime can cause severe interruptions in their usual services. You can avoid these migration problems by making use of technology, teamwork, and tireless testing.
Starting small and scaling up – one payment product at a time
Heavy migration is not the only option. You don’t need to renew your entire card management platform at once. Instead, you can start up small and scale up by launching new products for new markets or segments one by one. You can also avoid downtime and service interruptions by pacing all new launches.
With Enfuce, you can launch a new product for a new segment in months. If you find this approach working for your business, you can expand the usage of our platform little by little. Our modular approach lets you choose the best choice for your business and your customers.
Modernise your card processing system with Enfuce
Enfuce was the first certified processor in the cloud and we’ve built industry-shaping features ever since. We can help you run a globally scalable, high-performance payment solution more cost-efficiently than any other provider.
Because of our own background in banking, we understand your needs and challenges. We’ll craft out the most suitable solutions for you. You’ll always have top industry experts within your reach to guide you towards your goal – every step of the way, all the way. You can then focus on your core business and user experience.
Does this tick every box? Then we encourage you to learn more about Enfuce Card as a Service (CaaS). Enfuce CaaS is a turnkey card issuing service for banks and financial institutions that enables you to issue feature-rich payment cards cheaper and more cost-efficiently.
When it comes to the practicalities of system migrations, you can check out our webinar, “Modernising your payment card business and how to do it“, for more information. You can view the webinar recording here.
And if you still have any questions, please do not hesitate to contact us.