Nadish Lad, Global Head of Payments Product describes how Volante is using Cloud-based payments technology to help banks monetise new opportunities arising from regulatory change
Volante is the brainchild of a team of financial messaging experts who in 2001, realised that simplifying and automating the integration of financial messages and data to and from the back-office systems of financial institutions and trading platforms, would reduce workload and costs while improving speed and efficiency.
The idea worked, and the company gradually expanded to serving more than 90 financial institutions in more than 35 countries. In 2015, it launched the VolPay ecosystem of payments business services to promote digital payments transformation. RTP/instant payments is a fundamental component of payments modernisation, and Volante is keen to encourage its uptake by offering free RTP/instant payments processing as a service in the Cloud.
We spoke to Volante’s global head of payments product, Nadish Lad as Volante prepares for London Sibos.
The Fintech Magazine: What do you see as the biggest challenge in payments at the moment?
The Fintech Magazine: The biggest challenge in payments is getting someone to pay for them! Why would anyone pay a bank to make a payment? It is expected to be a part of the bank’s job.
On top of that, a raft of mandatory regulations continue to come in which are typically not revenue generating, yet must be complied with. These consume banks’ budgets, causing distractions and resulting in long implementation periods. So, with these two challenges in mind, how can banks make money out of payments? Through innovation and the creation and servicing of new business models and propositions. This is where Volante helps by providing innovative solutions.
TFM: But there are opportunities in regulation, surely?
NL: There are, albeit indirectly, in the case of Europe’s revised Payment Services Directive (PSD2), for example. Open banking is an approach that enables compliance with PSD2 but also offers additional opportunities. There are many other ongoing market initiatives that are regulatory in nature that have proposed deadlines. These include initiatives such as SWIFT gpi, ISO 20022 migration, real-time payments and confirmation of payee among others. Then there is a technical wave, e.g. the use of an application programming interface (API) -–just another method of initiating a payment.
It is important, however, to not consider these initiatives in isolation. If you look at the bigger picture, the ‘dots should be joined’ to create an overall joined-up payments experience with tailored propositions for a given segment, or for a particular industry and only then, do you begin to see a business model and user experience that works in new and attractive ways. This is what payments modernisation is about – the re-defining of the complete payments lifecycle from the perspective of the end user experience. These new experiences will be the reason why someone would pay the bank to process a payment.
If I am paying £10 to a colleague, it isn’t important that the payment reaches him in seven seconds or within the day – neither of us are likely to pay for it to be faster. But if I’m paying Deliveroo for a food delivery and the money reaches Deliveroo’s account in seven seconds and the notification is instantly received by Deliveroo, the company may very well not mind paying a fee for this real-time transaction because it has saved them having to pay a credit card transaction fee and, in turn, they also benefit from instant liquidity and cash flow. By the same token, if a bank was to target a company like Deliveroo or Uber with a holistic payments package or experience, using confirmation of payee, open banking and real-time payments – while each of these initiatives, on its own, doesn’t offer you revenue generation, when combined they add up to a strong value proposition and generate revenue for the bank.
TFM: What happens when you try to scale that up across hundreds of thousands of transactions?
NL: Scaling to huge volumes does have its challenges. But firstly, it’s about time to market and revenue. As a bank,if I develop a brilliant payments flow proposition using open banking, confirmation of payee and real-time payments for a taxi, a food delivery service or an online merchant, how long is it going to take me to implement? How quickly can I be first to market? And when successful, how do I deal with the scaling of transaction volumes?
This is where Cloud is critical when it comes to handling volumes; it’s one of the dots that you have to join up with the other dots to make the overall value proposition work. Volante started as a Cloud-native payments solution; from the outset we focussed specifically on business services for agility and knew that we had to enable it to handle huge volumes as well as have resilience. We’ve always worked with the very latest and agile technologies because Volante has always been about simplifying
and automating processes. With VolPay we have created an ecosystem of fully interoperable business services, where banks and other financial institutions can easily pick and choose the services they need to create particular innovative workflows that they want to offer to their end customers. With our ecosystem technology and Cloud services, banks can move to an OPEX rather than CAPEX-based business model, simply flicking a switch to increase the scale of volume handling or enable additional functionality.
We talk about joining the dots because banks need to be able to offer services to their corporate customers who in turn, serve their customers, which could be end consumers (B2C) or corporates (B2B). By taking this ‘Lego’ building block approach, with interoperable business services in the Cloud, institutions can move very quickly, in terms of time to revenue and by launching attractive, convenient, resilient and scalable payment processing innovations, while remaining compliant with regulations. This approach is now accessible and open to all sizes of enterprises, financial or otherwise.
TFM: So why should banks come you?
NL: Our vision was always to simplify complex processes and automate as much as possible through the use of smart software solutions; employing a ‘zero coding’ approach to configuration. That’s our culture. We believe in smart software, with minimal involvement of people to implement. That’s why we have naturally evolved towards creating an ecosystem of Cloud-native, microservices-based interoperable business services. You can swap and change, and move them around to deliver the desired proposition with ease.
Because of the Cloud-native technology we use, the architecture of our solutions and our focus on reducing complexity and building in automation, we are able to help our clients to rapidly adapt to new regulations and compete by offering new services. Over the years, we have gained a solid reputation of delivering in record time, be it on Cloud, on premise or as a service.
TFM: How do you work around the culture regarding Cloud, particularly in some of the bigger organisations?
NL: A shift in mindset is already happening within banks. The Microsofts, Amazons and Googles of the world – are backing this new model and banks have concluded that in order to modernise the whole financial industry, they need to look at the options in the market, too. There are geographies and segments where adoption is slower but, gradually, it is changing. And it’s not because of one single entity, it is the industry as a whole working together, driving this forward.
I remember at Sibos two years ago in Toronto, asking a delegate what they thought about the Cloud, to which they replied somewhat tongue in cheek: “I think it’s excellent. I’ve got it in my basement, in my equipment room.” His point was that he trusted only his own security, without considering that the budgets companies like Amazon Web Services and Microsoft Azure spend on security are colossal, for the simple fact that their business models utterly depend on the strongest security measures possible. “How does your budget for security compare to theirs?” When I made this point, you could see the mind shift happening there and then. Things have evolved culturally as well as mechanically.
TFM: What will you be saying to the folks at Sibos this year?
NL: We, at Volante are not just focussing on our customer; we are also focussing on our customer’s customer. Let’s talk about what your end customers want, what their desires are, what their needs and wants are. And let’s look at the technology to help you put those things in place quickly. We want to encourage the market to accelerate adoption – indeed, as an example, we are offering free RTP processing on the Cloud, as a service. We believe that no bank should be disadvantaged because of their size and should still benefit from innovations in payments as a service (PaaS).