Real-Time Transactions and Regulations Continue to Shape Payments

When it comes to payments innovations, banks and payment companies have held up their end of the deal.

Instant payments, pay-by-bank, digital wallets, artificial intelligence and tokenization all have been pushed forward from the supply side. Now it’s up to the consumer.

Seth Perlman, global head of product at i2c, said there are several drivers pushing consumers, as well as enterprises and banks, toward seamless and instant payments. The drivers, including shifting consumer preferences and regulations, have underpinned “the relentless march of technology innovation.”

“When consumers get an opportunity to use these payment innovations, they tend to like them a lot, and they adopt them really quickly,” he told PYMNTS.

Perlman’s observations came as part of the continuing series “What’s Next in Payments,” focused on modernization. Payments firms serving all verticals are striving to meet consumers’ desires for simplified products and services, as well as friction-free end-user experiences and speed, he said.

“For those of us in the industry, we understand the long road it’s taken to build and drive financial institution adoption of real-time [payments], money movement, open banking and other new technology standards,” he said. “The consumer doesn’t really understand how any of that works, but they love instant [peer-to-peer (P2P)] payments.”

Consumers are also embracing real-time disbursements as they turn to gig work to help supplement their incomes and add bank accounts to their digital day-to-day lives without having to go through the age-old multiday micro-deposit process.

Adopting “new technologies to streamline all of those processes [has] really become a must-have for banks and credit unions, and for FinTechs across the country and around the world,” Perlman said.

Mobile payments, the Internet of Things, tokenization and credentials would not be possible without collaboration between payments networks, financial institutions, FinTechs and other stakeholders, he said.

The Need for New Technology

As providers examine their back-end tech stacks and grapple with faster payments and faster fraud, they’re investing in AI, machine learning and ever-more-robust fraud-fighting defenses, Perlman said.

“There’s been more integration of advanced biometrics,” too, he said. Biometrics (such as facial recognition and fingerprints) and even voice-print authentication in contact centers have done much to streamline authentication with the phone as the key point of contact with the consumer.

Regulation is driving change and new opportunities for forward-thinking companies, he said.

“We’ve seen trends toward new regulations for data protection and consumer privacy,” he said, adding that “we’ve seen a worldwide push to drive financial inclusion, and we’ve seen a number of standards in place from regulators driving banking, data sharing, authentication standards and other consumer protections.”

Advanced analytics in the service of fraud prevention help companies stay “one step” ahead of bad actors while uncovering anomalous online behaviors that may point the way toward new attack vectors, he said.

Support Scale and Growth

The twin engines of consumer demand and regulatory mandates mean that companies — i2c among them — have had to upgrade their systems to support scale and rapid growth without downtime. Real-time payments and increased user loads have incentivized the financial payments industry to move technology to cloud-based and distributed networking environments and APIs, and to partner with platforms such as i2c’s to help support growth efforts in credit, debit and core banking activities, including payments processing, he said.

“We have a fundamental tenet that everything we build that is consumer-facing comes from a mobile-first design point of view,” he said.

The platform model makes the data exchange and integration into the user interface simpler without the lift of building an entirely new batch process.

“You select your technologies and your platforms to make sure you’re ready for that next wave of innovation and the next changes in the industry,” he said.

The goal of innovation and payments modernization, he said, “is to help the consumer get to their money — and use it — more efficiently and quickly.”

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