Living in a digital world where technology and connectivity have become integral to every aspect of our personal and business lives, the ability to keep pace and adapt can be a real challenge.

There has been a seismic shift in the way and speed that consumers and companies access information, interact and transact. For businesses and financial institutions wanting to provide a choice of payment options, this is a bit like shaking hands with an octopus because the choices have become so vast that it’s difficult to figure out which ones make the most sense. Factor in regulatory complexities and the big question becomes how easily and cost-effectively can organizations connect to and manage the multitude of payment channels?

In such a dynamic environment, being agile enough to take advantage of this payment evolution without negatively impacting profitability, growth potential and reputation is a fine balancing act. Much like an octopus creates quicksand in which to burrow and hide, it would be tempting for banks and financial institutions to want to do the same. It’s far more powerful, however, to view this challenge as a tremendous opportunity. As in any competitive environment, only the fittest and the fastest will survive, so only those that position themselves to rapidly connect to and absorb new payment schemes without adding unnecessary complexity and significant costs in the process will be seen as innovative leaders.

To illustrate this, it’s worth considering the way in which banks and financial institutions typically access the different payment services and networks. Generally, each scheme or network is accessed and managed separately, which means that there is a point at which taking on new services challenges capacity, resources and profitability. With the advent of cloud-based technology, however, it’s possible to consolidate these one-to-one relationships into a one-to-many approach via a single interface that enables new services to be adopted easily whilst maintaining a streamlined infrastructure. Being able to aggregate in this way means banks can provide their customers with access to new services, gateways and payment ecosystems. In turn, banks can innovate more rapidly, remain competitive and be attractive to new customers.

Like the octopus – a voracious poacher that can adopt a number of creative strategies for hunting its prey – banks want nimble ways to innovate ahead of the competition. Using aggregated cloud technology, they can be more responsive to market trends and demands. Speed and differentiation, driven by simplified connectivity, can help banks be first to market and attract new customers to improve market share.

It’s no surprise that cloud-based technologies offer more flexibility, better insulation to change, are lighter on skilled resources, easier to manage and more cost-effective. It is therefore also easy to expect that an aggregated model should provide added value – as standard – to help reduce operational risk.

Specifically, there are two areas that are grabbing the interest of financial institutions as it relates to aggregation. The first is in minimising the potential for errors, fraud and reputational damage through sanction screening and real-time transaction and behaviour monitoring. The other is around automated reconciliation for both internal and external data sources, giving banks and financial institutions a consolidated, real-time view of positions on all accounts with extensive exception and escalation capabilities.

Ultimately, shaking hands with an octopus can be significantly easier with the use of multi-connectivity and cloud technology. And much like the octopus can alter its shape, squeeze through small gaps and use their arms to anchor, manipulate and move, so payment aggregators offer banks the same flexibility when it comes to embracing change.
If the future is all about constant transformation and perpetual improvement, then multi-connectivity technology is the perfect springboard to help financial institutions stay relevant, drive innovation and remain competitive.

Posted by Daniel Bardini

As Managing Director of Financial Messaging for Bottomline Technologies, Daniel offers extensive experience in the finance industry developing and implementing business payment strategies.