The global move towards instant payments is thrilling for us who have been in the payments business a long time.
Importantly, it is shifting the global industry towards a digital future and will enable all of us to better serve the needs of our customers, both consumers and corporates.
The real impact of Instant Payments
It’s not just about receiving a payment within 10 seconds, which is the norm for most instant payment systems, but also the 24/7/365, always-on availability. The new schemes are usually cheaper, more efficient and definitely more convenient – this is a game-changer for huge swathes of the world.
Global adoption and regulatory frameworks
Over the past few years, more than 70 countries have begun modernising their payment rails, including Brazil, Canada, India, Nigeria, the US and the UK. Alongside this systemic overhaul has come new regulatory frameworks, which payment service providers – including banks – need to comply with.
For example, the EU Instant Payments Regulation passed earlier this year will allow individuals to transfer money within 10 seconds 24/7, not only within the same country but also to another EU member state and in EEA countries. While it will take a few years for the regulation to be fully implemented, the direction of travel is clear.
Challenges for banks with legacy systems
While these are exciting times for the industry as a whole, this also creates major challenges for many banks sitting on legacy technology stacks that may be 30 plus years old. These systems are archaic, clunky, complex and inflexible, which makes it difficult for banks to respond quickly to changing customer demands and regulatory requirements.
In the context of instant payments, for example, many legacy accounting systems can’t provide real-time balance control on individual accounts within the required timeframe. Yet the ability to control and approve funds in real time is crucial for reducing risk, as well as maintaining seamless operations and customer experiences.
The necessity of real-time functionality
To be part of the real-time wave, banks must have the ability to check that there are sufficient funds in an account, as well as investigate the payment’s validity and ratify the receiver, within the strict timings of an instant payment. But many of the batch-based legacy demand deposit account or accounting environments just can’t do that.
Many banks today are struggling with this fundamental functionality that is a necessity in an instant world.
Tietoevry’s Funds Approval Solution
Our Funds Approval Solution, which is part of Tietoevry’s All-in-One Cash Management platform, aims to help solve this problem. It is a sophisticated control engine that integrates with various transaction and payment systems within a bank to instantly perform balance checks and funds approval.
Applications update the Funds Approval Solution via APIs, providing real-time data on account creation, funds control rules, overdraft facilities, and more. This ensures an up-to-date, comprehensive view of available funds at any moment.
Approved transactions and reservations are streamed in real time to a bank’s IT infrastructure, ensuring accuracy and efficiency in its accounting systems.
Protecting legacy infrastructure, unlocking real-time potential
The Funds Approval Solution holds real-time balances and allows bank’s payment system to check fund availability against these balances. Our solution sits alongside the physical accounting solution and is called upon by the payments infrastructure for funds approval based on predefined rules, whether for physical or virtual accounts.
Importantly, this solution may ease banks’ legacy constraints so that they won’t have to consider major heart surgery to their accounting system, a project that can be both risky and expensive. The Funds Approval Solution protects the bank’s legacy infrastructure, while eliminating its limitations.
The key benefits of the solution include:
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consistent, high-performance infrastructure, with 24x7 service availability |
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real-time updated balances from a single source at any time |
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real-time data streaming, facilitating efficient and accurate updates |
A real-time future awaits
The whole world is moving to real-time payments, and according to a report from Juniper Research, instant payment transactions will surge by 160% over the next four years, to surpass US$58 trillion globally in 2028*. It is the wave of the future – don’t get left behind.