Peter Theunis, Senior Vice President of Sales and MD for Europe at BPC
Are "digital transformation" the two most overused words in financial services right now?
Probably.
But there's a reason to keep the conversation going.
When done right, digital transformation has been a game changer for banks, driving commercial success, improving client support, and boosting customer retention. Yet, achieving this transformation is far from simple—it demands a strategic overhaul of the entire tech stack, from customer-facing applications to backend processing systems.
In the cut-throat EU market, where competition is fierce and the pace of fintech innovation is relentless, banks must adopt modern solutions to stay relevant. With the rise of new fintechs, scalable and flexible card management platforms have become essential. Legacy payment solutions are proving inadequate in supporting the fast-paced, digital-first strategies banks now need to thrive.
Rise of Modern Card Issuing and Processing
Modern card issuing and processing systems offer more than just agility—they deliver scalability, faster time to market, and the ability to handle evolving customer demands. EU banks are particularly aware of this, as they must handle an enormous volume of payments—over 55 billion cashless transactions were processed in the EU in 2022 alone, with 94% of all internet users making online purchases. Consumers are gravitating toward real-time payments and digital wallets, which means banks need to provide seamless digital experiences.
Fintechs are springing up to help traditional banks stay ahead of this transformation, but true success lies in partnering with global experts who understand the nuances of payment processing and regulatory compliance. Many are turning to SaaS-based Card Management as a Service (CMaaS) platforms, which provide more control over operations, enhanced security, and flexible scaling as payment volumes grow. According to recent data, SaaS solutions in payments can reduce costs by up to 30% while improving overall operational efficiency by 50%, making it an attractive option for forward-thinking banks.
In a world where payment preferences are constantly shifting, digital transformation is no longer an option—it's a necessity.
Beyond the Surface: A Comprehensive Approach
Digital transformation in banking is often misunderstood as something that requires adopting customer-facing technologies like mobile apps and chatbots. While these innovations are crucial, they are only the visible tip of a much larger iceberg. True digital transformation requires a comprehensive overhaul of the entire technology stack, from core banking systems to backend processing platforms.
Neglecting the backend infrastructure can lead to fragmented systems that fail to deliver the seamless and efficient user experience customers expect. Imagine a sleek mobile app that falters because the underlying systems can't handle transactions swiftly or securely. To avoid such pitfalls, banks must prioritise a top-to-bottom modernisation, ensuring that every layer of their technology stack is agile, scalable, and robust.
Efficiency and Security: Non-Negotiables
Prioritising digital transformation across the tech stack significantly enhances operational efficiency. Outdated legacy systems, often riddled with manual processes and siloed data, need to be replaced with integrated platforms that automate workflows and provide real-time data access. This shift not only accelerates transaction processing but also slashes operational costs and reduces the likelihood of errors.
Security is another critical facet. In an era where cyber threats are ever-present, modernising the tech stack allows banks to implement advanced security measures like real-time threat detection, encryption, and multi-factor authentication. These technologies are essential for protecting sensitive customer data and maintaining regulatory compliance, both of which are fundamental to sustaining customer trust.
Card Issuing and Processing: A Case in Point
The realm of card issuing and processing vividly illustrates the necessity of a comprehensive digital transformation. Traditional card issuing processes, bogged down by manual steps and outdated systems, are ripe for disruption. Digital transformation in this area means automating the entire lifecycle of card management—from application and approval to issuance and transaction processing.
Modern card management platforms handle vast data volumes, offer real-time analytics, and integrate seamlessly with other banking systems. This not only expedites the issuance process but also enables banks to offer personalised services, like instant issuance of virtual cards and customised spending controls. Enhanced processing systems translate to faster payments and immediate account updates for customers, alongside superior fraud detection powered by AI and machine learning.
The rise of Card Management as a Service (CMaaS) and white-labelled solutions offers institutions greater control and flexibility. White-label CMaaS platforms allow banks and fintechs to brand their services while benefiting from robust, scalable infrastructure without the need for in-house development. These solutions empower organisations to manage the entire card lifecycle, from issuance to compliance, with minimal operational overhead. By adopting such platforms, institutions can deliver tailored card solutions, improve customer experiences, and scale effortlessly, all while maintaining a secure and compliant environment. The move to CMaaS also reduces dependency on legacy systems, providing a modernised, future-proof approach to card management.
The Imperative of Strategic Investment
For banks, the time to invest in digital transformation is now, and it has to start with a thorough assessment of current systems, identifying critical pain points, and developing a clear transformation roadmap. Key focus areas should include:
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Core Banking Systems: Upgrading to modern, cloud-based platforms that provide flexibility, scalability, and real-time capabilities.
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Data Management: Implementing advanced solutions for seamless data integration, real-time analytics, and regulatory compliance.
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Security Infrastructure: Enhancing cybersecurity to protect against evolving threats and ensure data protection.
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Card Issuing and Processing: Investing in cutting-edge card management platforms that streamline and automate the entire card lifecycle.
The Risk of Inaction
Banks that delay their digital transformation efforts do so at their peril. Fintech companies, unburdened by legacy systems, are quickly capturing market share by putting the customer at the centre of their digital strategies. These innovators are not just offering new services but redefining customer expectations in the financial sector.
To remain competitive, banks must embrace digital transformation across their entire tech stack, ensuring that they can offer the seamless, efficient, and secure services that today’s customers demand.
The stakes are high, and the time to act is now. By prioritising digital transformation, banks can secure their market position and continue to thrive in a digital-first world.
