Blog article
See all stories ยป

PowerPoint is stopping true greatness: Blog series week 2

Nothing annoys me more than failed promises. And of course I'm not alone. At one end of the spectrum, it might be just the electrician not turning up on time, but in our world of IT, failed promises start to cost people their jobs.

As we come to week 2 of my blog series, I want to look more closely at payment hubs. I suspect that they are one of the greatest areas of let down in the transaction banking world. Too many have been sold based on 'PowerPoint promises', with expectations beyond their capability: "This hub can merge all your payments together." "This hub will enable you to have total flexibility." "This hub can help with world peace, and will make you coffee in the morning." My point is that too few hubs can actually do what the bank needs or what they have promised.

Using our cycle race analogy, if the teams only saw the bicycle tyres in a PowerPoint, or planned the route in Visio, it would never lead to success. They get tyres tested for the particular road surface ahead of time and they walk the route to make sure nothing can blindside their race. In short, something on paper might look great, but you need to see, feel and touch everything to be sure.

So what does a bank need for true success to achieve its payment hub strategy? Many of you might want to cover your ears or divert your eyes, but in a word, it's legacy. The English dictionary even refers to it as software often difficult to replace. But it's not just difficult to replace because the technology might be old; it's normally difficult to replace because it simply does so much and cannot be easily replicated. A better definition of legacy might be a more traditional one, "the foundation of what success has been built on today."

And that's the point. Too many payment hubs have tried to replace the legacy and have come up short. A true hub needs to embrace the legacy. Start by front-ending it and protecting it from the latest technology. Let the hub be the integration layer; don't build point-to-point interfaces. Then you can start to gradually bring the legacy payments capability into the new and doing less and less in the old structure.

True greatness comes from understanding and using all the tools available. Embrace the old and utilise the new.

Hubs are back in the conversation (some will argue they never went away), but now that SEPA is moving along (honestly), banks can look at their next vision for payment hubs. SEPA wasn't the catalyst that many promised. So now it's time to step back and focus on the reality of what can be done to move you along to the greatness you deserve. 


Comments: (2)

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 19 March, 2014, 15:38Be the first to give this comment the thumbs up 0 likes

I think it was in 2009 or so that a leading analyst drew an analogy between central payment hubs and Godot, as in Samuel Beckett's play "Waiting for Godot". Legacy aversion - and PowerPoint! - preserve the validity of the analogy five years later. Besides, as I'd highlighted in my comment here, different payment types are owned by different SBUs and have different SLAs, thus making their consolidation into a single payment hub infeasible. Furtheremore, banks could be anxious about losing revenues by processing all payments via a single hub: Regulators who are increasingly forcing banks to link fees to costs might clamp down on high (say) CHAPS fees saying, "Since your cost of processing CHAPS and FPS payments is the same, you can't charge more fees for CHAPS".

Craig Ramsey
Craig Ramsey - ACI Worldwide - Watford 19 March, 2014, 20:21Be the first to give this comment the thumbs up 0 likes

Thanks for your comment.  And that's the point, replacing the legacy might not always be possible.  But it is still possible to provide new services to both the bank and the customer without having to rip and replace everything. There is another way.

Now hiring