IBM RegTech Innovations

Succeeding in the future of payments

Share this post:

Embracing the future in the age of instant gratification

The payments industry is at an inflection point. Customers increasingly demand new payment options like real-time payments and P2P payments, underpinned by security and trust. The costs of running payments operations, complying with a myriad of regulations and enforcing payments standards are increasing. Exposure to operational risks, data breaches and fraud losses can rise as a consequence of adopting new payment types and channels.

The future of payments will increasingly be shaped by fintechs who are quick to respond to market needs with new payment services that offer exceptional value and customer experience. API adoption and Open Banking will provide further fuel to the growth of new payment types like real-time payments. Banks ought to recognize that moving forward they will not be serving a new class of digital and mobile native consumers, but rather will be serving a new mindset – one which puts immediacy, trust and innovation first, over feature and functionality.

Progressive approach to payments modernization

In their conquest to capture this mindset can incumbent banks fend off competition, especially from agile fintech startups and big techs? The answer is yes. Payments decision makers at banks have to part with current piecemeal approaches and embrace a payments modernization effort that entails simplifying orchestration of real-time payments along with other payments – SWIFT, ACH, Check – and enabling Open Banking.

Banks need to take a progressive approach to payments modernization by upgrading legacy infrastructure, adopting new payment rails such as TCH RTP and Zelle, and shifting to a payments hub strategy for the long haul. To this end IBM offers a payments solution suite built on top of secure and reliable systems infrastructure that guarantees 24/7/365 availability.  Through a common interface banks can leverage value-added services such as AML, KYC, liquidity management and fraud prevention.

With immediate payments and new business models going mainstream, payments fraud defenses will be stretched. Here is where technologies like artificial intelligence and ensemble analytical modeling (synthesizing results from multiple learning algorithms to deliver better predictive results) provide new ammunition to prevent fraud and maintain high detection rates.

Applying technologies to modernize payments

Today, there are quick and innovative ways for banks to improve processing consistency, reduce complexity and cut total cost of operations. One method is to invest in the right technological capabilities like that of IBM Financial Transaction Manager (FTM).  Featuring a service oriented architecture (SOA) with an integrated payment services layer, the FTM platform converges payments processing and standardizes operations, while reusing existing capabilities.

IBM Safer Payments brings unique AI and machine learning capabilities to fraud prevention, offered on an open source data science platform. The IBM payments fraud management solution applies AI to augment human expertise to fight real-time fraud. No one machine learning or artificial intelligence technique can detect all types of fraud. Yet through the model factory concept on IBM Safer Payments data science platform, users can customize and optimize the mix of techniques best suited to minimize their fraud risk.

IBM through the years has been offering technological capabilities and expertise to help payments businesses stay in the vanguard of customer service and drive business outcomes. The future should be no different. Our payments experts understand that the industry is evolving and shifting towards a customer centric paradigm more so than ever. “Succeeding in the future of payments” comes down to consistently making the right decisions today and tomorrow. IBM’s team of payments experts are building the next generation of payments technologies and are advancing winning approaches, and most importantly are helping payments leaders like you make the right decisions time and again.

WW Sales Leader, IBM Safer Payments, Watson Financial Services

Guto Almeida

WW Sales Head, Watson Financial Services, Payments Solutions

More IBM RegTech Innovations stories

Embracing the future of fraud prevention in the multi-(cloud) verse

Riddle me this? What do a large Australian bank, a leading U.S. financial payment solutions provider, and a major New Zealand bank all have in common? They all have recently deployed or will soon be deploying the IBM Safer Payments fraud prevention solution on their preferred cloud infrastructure – IBM Cloud, Amazon Web Services (AWS) […]

Continue reading

Stemming the AML crisis and seeing immediate value with AI

When it comes to AML compliance, or the lack thereof, the financial industry is having rough year. A number of money laundering schemes have come to light, including the $8.8 billion Troika Laundromat, which have exposed or implicated a large swathe of the industry. Despite wide talk of deregulation, penalties from Office of Foreign Assets […]

Continue reading

Model governance comes to fraud detection

Payment fraud detection has always had a bit more latitude than its counterparts in anti-money laundering, customer due diligence and even trade surveillance compliance. Unlike the latter areas, fraud prevention is an area not as heavily governed by regulations or specific rules of what a financial institution should or should not allow. It is obviously […]

Continue reading