Exclusive Interview with MD, International Payments Group, Fiserv

Fiserv is a global provider of financial services technology. The Company serves approximately 16,000 clients globally, including banks, thrifts, credit unions, investment management firms, leasing and finance companies, retailers, merchants and government agencies. It provides account processing systems, electronic payments processing products and services, such as electronic bill payment and presentment, card-based transaction processing and network services, automated clearing house (ACH) transaction processing, account-to-account transfer products and person-to-person payments; Internet and mobile banking systems, and related services, including document and payment card production and distribution, check processing and imaging, source capture systems, and lending and risk management products.

Let’s Talk Payments had an exclusive interview with the Sunil Sachdev, Managing Director, International Payments Group and India Business Development to cover the developments at Fiserv and about trends in global payments market.

Q.1) What are the current developments at Fiserv?

Fiserv has been helping financial institutions around the world for the last 30 years. We recently launched the NOW network in the US which is the first real time payments network in the market. At Fiserv, we are focused on helping our customers drive the digitisation of payments by enabling robust money movement ecosystems. We recently launched Agiliti, a banking and payments service targeted at mid-market and challenger banks in the UK.

Q.2) What do you think are the key technology trends driving the global payments market and how is Fiserv leveraging these trends through its products and services?

We divide the world into developed and emerging economies in terms of understanding different payments trends. In developed economies, we work to enhance and integrate legacy infrastructure, and facilitate further digitisation to deliver frictionless payments. The primary trends to watch for are the growth in account to account transactions across person to person, small business and corporate disbursements. We are also closely tracking the rise of new business models representative of the ‘sharing economy’ to understand how they are impacting payment trends.

In emerging economies, there is little legacy infrastructure and payments are mostly in cash. We work with financial institutions to enable digital payments by focusing on demand based use cases like bill payments. By supporting bill payments through a number of banking channels we help bank customers grow the share of payments that are managed through transactional accounts. We also share best practices across a variety of financial inclusion activities to help banks drive greater transition of unbanked to banked.

Q.3) It would be right to say that there is high level of competition in the financial services market? How is Fiserv trying to portray itself as a differentiator in this market?

Currently there are many players providing an array of solutions, from start-ups to traditional financial services providers. Fiserv leverages our 30 years of experience and insight to understand our partners’ individual needs and to deliver impactful solutions which support their business models. We differentiate ourselves from start-ups by positioning and enabling new technology in the context of the existing technology framework a legacy bank operates in, including their account and payment processing platforms. With regard to other financial service providers, we believe we have the best-in-class technology solutions to help banks from getting disintermediated by their non-bank rivals.

Q.4) Fiserv is trying to maintain a global footprint in the financial services domain. What are key differences that you witness in different geographies with respect to adoption, customization of services, etc.?

Geographical differences arise in how digitisation of payments is taking hold in a particular market. For example, in China, Alibaba made sales worth $9.3 billion in a single day, the majority of these transactions via the mobile channel. Additionally, in India, e-commerce players like Flipkart are showing high volume trends. Both India and China are looking at mobile as the dominant adoption channel. In developing markets we also have the opportunity to bring access to financial services through the same mobile channels, transforming people’s lives.

In more developed economies there are credit cards, debit cards and numerous other payment methods. The ability to deliver a personalised and frictionless consumer experience is a major factor. It’s all about delivering customized experiences like those offered by Uber or Airbnb. Apple Pay is also a good example of delivering a frictionless experience by leveraging tokenization and NFC.

Q.5) What are the key domain areas within the payments market that would witness a radical growth rate compared to other payment services? What do you think would be the major factors contributing to this growth?

The areas where we are seeing and everyone is expecting radical growth is mobile payments and development of real time payment platforms. The major factors contributing to mobile payments growth are:

1. More people in the world have mobile phones than bank accounts which makes the channel the obvious choice to drive greater distribution of banking services.
2. We are seeing the miniaturization of processing capabilities allowing for the creation of much smarter products enabling a variety of ecosystems controlled through the mobile.
3. The development and cost of indigenous smart phones that are driving down the cost of smart mobile phones globally, this puts greater access and processing power in the hands of a larger population segment.

The major factors contributing to the growth of the enablement of real-time payments around the world include:

1. Regulators’ and governments’ acknowledgement that efficient domestic payment networks are critical to sustain the growth of the domestic economy and decrease the size of the grey market.
2. The cost of technology to enable efficient delivery of data and money movement has come down considerably over the last decade.
3. A government seeing a growth in tax revenue and the ability to enhance social programmes without greater leakage also helps provide for greater social well-being for its residents.

Q.6) Considering Fiserv’s wide portfolio of payments related services, what are the key challenges that Fiserv has faced in the past in developing these services?

1. Technology – When we work with financial institutions, we see the ‘shiny new penny’ scenario where the technology becomes the focal point as banks try to compete directly with the technology start-ups fearing disintermediation. Our team works with banks to help them understand that it is the entire value proposition and not just the technology that will drive greater adoption of a new product or service. It is about the effective use of technology in serving customers.
2. Regulatory Environment – it is at different stages in different markets. Business models have to become more focused. It is difficult to create products and services that can operate across a number of markets if the regulations for different payment use cases are not aligned.

Q.7) With the new payment start-ups bringing in new payment technologies and other companies trying to switch to new payment systems, do you think Fiserv would look forward to continue supporting legacy payments services or omit some of them and make transitions?

Our core competency has been to bridge the gap for financial institutions between their legacy technology/business models to the latest breed of best in class products - while keeping their TCO low. We strive to drive greater distribution and consumption of their banking products and services. For start-ups, the challenge is to achieve scale by creating value propositions that go beyond individual use cases or a single market segment.

Q.8) With mobility playing a major role in upcoming financial services, what are the key initiatives that Fiserv is taking in customizing its services to better suit the future needs of customers?

We have deep domain and product expertise in the mobile and online banking space. We have solutions that have been sold to Tier 1 banks around the world and have won multiple awards based on the experience those solutions promote at their respective banks. We recently launched a new product for the mid-market segment call DigitalAccess. This product promotes an omni-channel approach for banks who cannot afford to differentiate between their online and mobile experiences. With all of our mobile and online banking solutions, we work to embedded use cases like bill payment and P2P to drive greater relevancy and adoption.

Q.9) What do you feel would be the major factors that would drive the transition to cashless services especially in the emerging economies?

The factors would be:

1. A regulatory environment that makes participating in the formal economy easier. In a variety of emerging economies, regulators have created different methods of getting people into the formal economy. Popular strategies include designing universal identification strategies that allows governments to finally identify all its residents. This then allows for easier KYC policies that enable bill payment and domestic remittance transactions without having formal bank accounts. The creation of basic financial inclusion accounts also introduces the concept of saving to large segments of the population who usually don’t meet the minimum requirements to open a bank account.
2. Creation of real-time payments infrastructure - this is critical to ensure efficient money movement within a market. It also help drives greater adoption as it provides similar real-time access to funds with the additional benefits of sending it securely and at a lower cost to handling cash.
3. Having effective distribution channels is probably the most important of all the factors. Given that most emerging markets have a very light footprint of banks in the country, residents who want to avail themselves of different banking products and services never have the opportunity to do so.

Q.10) How does the future roadmap of Fiserv look like? Any major developments or new launches coming up?

We recently launched the NOW network for real-time payments. In July this year, we had launched the Agiliti platform which is a software as a service (SaaS) retail bank technology solution. A couple of announcements around payments are in the pipeline.

Sunil Sachdev is delivering a conference at Mobile Money & Digital Payments Global entitled Enabling behavioural change to encourage the move from cash to mobile money.

Mobile Money & Digital Payments Global takes place 18 – 20 November in Istanbul, Turkey.