Published in Electronic Payments International, November 2010
Tuesday, November 16, 2010
“Why not wake up and have an ambitious goal?” is the question electronic payments software provider ACI poses in its bid to garner support for a collaborative effort within the financial services industry to create common definitions of payment processes. Upon noticing payment processes are, according to ACI, a “silo-based mess”, it teamed up with consultancy firm Aite Group to develop The Payments Maturity Model (PMM).
Increased merger and acquisition activity has been the result of the global economic crisis and with that comes increased consolidation. Aite claims banks are migrating towards ‘payment hubs’ to achieve overall cost savings, improve margins, better manage risk, speed time to market with new products/services, and support true “markets of one”.
At present however, ACI believes the software that supports these processes are fractured due to banks buying different solutions from various vendors in different geographies.
“If you were to ask five large financial institutions what processes comprise payments, you would probably get five different answers,” said Louis Blatt, chief product officer of ACI Worldwide.
The PMM was unveiled at the SIBOS conference in Amsterdam last week. Both ACI and Aite Group delivered a call to action for banks and vendors to help define payment processes and benchmarks to determine how ‘mature’ an organisation is.
“This is where the hard work starts, it is going to take a long time to populate the model and figure out where individual companies are on the road to maturity,” said Blatt.
Defined business services of the life cycle of payments for the PMM are split into four parts: initiating, managing, securing and operating. The areas of focus in the model include: systems, information, organisations and processes.
According to the PMM report by Aite there are five stages of the PMM: reliable, scalable, efficient, responsive and agile. It claims by evolving from one stage to the next a bank achieves a number of benefits including: lower costs, less risk, more targeted marketing, better product/service development, and the opportunity to leverage capacity and liquidity for quicker processing and better service.
Blatt admits the vision of a collaborative effort is ambitious and realises the challenges ahead in enticing competing industry players to get involved.
“Our customers say that doing payments today is just too difficult,” Blatt told EPI.
“Even if we are only 20% successful in this effort it will bring huge economic benefits. I don’t think software companies are going to hold hands over this and even competitive banks may have reluctance to share best practices on how to participate but I think we can get to a complimentary set of participants that can really define the next generation of payments.”
Blatt said ACI has the baseline model built and will look to populate the collaborative website over the next 30 days.
“It is very possible we won’t reach 100 percent but if we could get to 100 banks it would be a tremendous tool for the industry,” he said.