IoT and Mobile Payments Succeed Best with Emerging Technology

Apr 24, 2019

Mobile and IoT payments are happening now and will continue to grow, so that means banks need to embrace emerging technologies to handle them.

Banks need back-end infrastructures that are flexible enough to handle payments enabled by mobile devices, wearables, and whatever smart technology gets thrown at them next.

Banks may be stressing out about moving away from legacy technology, but the only way they will separate themselves from competitors and build up revenue is to leverage open banking and account personalization services. And they must do this because consumers demand all of the options, and they expect banks to evolve to make them possible.

What Banks Need to Do

Financial institutions must take tokenization seriously. It secures transactions initiated from mobile devices. If tokenization isn’t used, payment and account data won’t be protected. If a bank’s end does support payment-enabled connected devices, like wearables or smart refrigerators, something being offered may be considered unnecessary once IoT payments become a part of everyday life.

Virtual cards and the existing card infrastructure need these services, however, older technology prevents issuers from responding promptly to the evolving landscape. Many banks will need to upgrade their payment infrastructures in the next few years to keep up with the latest and greatest digital changes.

Building a Card, Mobile, and IoT Payments Infrastructure

Developing a card, mobile, and internet-of-things payments infrastructure is a major project that should not be taken lightly. The following should be considered when a bank begins developing its future payments infrastructure:

1.    In-house or outsourcing – what’s best: Banks need to figure out whether their current existing consumer management systems support the growing and evolving mobile and IoT payments ecosystem. This is when a dedicated IT professional or team comes in handy. A bank needs a team of developers that is big enough and seasoned enough to create its own infrastructure and implement it with minimal disruption to end users. Then, banks need to weigh the costs, and ask themselves how long it will take to recoup the cost of a major capital expenditure. If an organization does not think it has the people in-house have the technical ability and capacity to create a cutting-edge system that enables scalable, value-added financial services that can be accessed via any connected device, then it’s best to outsource.

2.    Outsourcing works best – do we choose software only or full-service provider: Banks that want to launch new product quickly to speed up new revenue sources and would benefit from customized technical support in the creation of new sources, then a full-service provider is the best option. A full-service provider also is the best choice for banks that want to ensure customers have a highly-available, stable infrastructure. Also, banks that are moving toward fixed-cost setups would benefit from the full-service option.

3.    A Full-service CMS provider is the choice – what do we need to consider: The provider must have migration experience, and the solution must have enough flexibility to adapt to future consumer demands and new financial products. The provider should also be able to deliver a smooth onboarding process that causes little disruption to customers. Also, banks should inquire about product migration. Risks may be minimized if products are done one at a time instead of all at once. Another great option is if the solution it provides has the ability to expand to cover value-added services beyond consumer management services.

The Final Say

The payment landscape will continue to change; IoT and mobile payments are just the beginning. With this in mind, banks need to think about their current infrastructure, and whether they need to tweak it or overhaul it to keep up with cutting edge payments.

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