As the global face of financial technology changes beyond all recognition, the need for the right kinds of payments solutions to be in place has never been greater. Built to cater for a predominantly card-based society, the payments systems of old are now in danger of potentially missing a trick when it comes to keeping up with the latest innovations.
Life beyond legacy: assessing digital payments in the Middle East
2020 has undoubtedly seen the acceleration of digital payments globally and, alongside this, the need to ensure that your payments system can handle not only this shift, but also the unknown, has become even more relevant – writes Alexey Osipov, EVP & Managing Director, MEA at Compass Plus.
With trends dictating shortened retail product life-cycle, it is more critical than ever for faster time to market for any new deployments. However, the IT infrastructure in place has to be carefully considered to ensure maximum flexibility, integration and fault-tolerant capabilities.
This year alone, the Middle East has seen huge shift in consumer behaviour. For example, while the e-commerce market in the region was already strong, many consumers were still using cash on delivery to pay for their goods at the beginning of the year – for obvious reasons, this has now changed.
The region was already starting to incorporate more of the newer technologies we have already seen emerge in other parts of the world, however, no-one could have predicted the speed at which the shape of the payments landscape in the Middle East has changed.
With consumers becoming more comfortable with being cashless and the concept of ‘contact-free’ payments, the next phase is likely to see the region stretch further into the territory of mobile payments, and the additional security mechanisms they bring, such as tokenisation.
The challenge that today’s FIs have come across in recent months is predominantly a question of readiness. Although many of FIs in the Middle East are built around traditional legacy platforms, it is not just the age of the infrastructure that needs to be considered, but the specific ideology and business strategy of each individual financial institution.
A question each will be asking itself is: how does this new technology fit with our business model and existing IT infrastructure?
Typically, multiple platforms have been used in the Middle East for each application – such as CMS, ATM management and switch – however, what is becoming clear is that to keep pace with the very latest demands, a single step approach is something that should now be considered.
For example, to roll out account-based mobile payments, several different elements will need to be in place within the IT landscape. These will include various services, ranging from accounting, core banking, mobile channels and apps, to processing and clearing engines, among others. Once established, the adoption of more advanced account-based digital payments systems, such as Arabi MobiCash in Jordan or an initiative like the Faster Payment System we see in Russia, will be possible.
It is clear that an integrated platform that already carries the seamless support of these features may be deployed much more simply, and in a much faster way. Future success will be somewhat dependent on taking on an integrated platform approach, to provide support and the simplification of deployments of new services with the ability to update core modules as needed.
Only when new technologies can be fully supported by modern payments infrastructures will the true benefits become clear. To get to where they need to be, FIs have two options: to either support and develop the legacy systems they have, knowing that they have their own limitations; or to take a different route, pushing past some of the constraints often experienced, and migrate their systems to new platforms that are built with the future in mind.
With many legacy systems entering their fourth decade, not only do they not necessarily have the capacity to support the trends of today and tomorrow without requiring ‘add ons’, they are getting increasingly more difficult and expensive to maintain and support.
Additionally, in unprecedented times such as the one we are experiencing globally at the moment, legacy systems may find significant architecture restrictions in respect of system remote management and maintenance, making the operation process difficult.
This may be another reason to consider system migration, particularly if such restrictions continue. In this scenario, when perhaps a faster time to market becomes essential, a greater architectural and functional capacity will be essential to be able to adapt and provide for any unpredicted future requirements.
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