Competitive pressures have never been higher in the banking world. As the new era of digital payments continues, flexibility and scalability are becoming increasingly important requirements for core banking systems, yet they are virtually impossible to achieve without a cloud-native approach.

The future of payments belongs in the cloud. Electronic Payments spoke to Diebold Nixdorf’s Mike Gillpatrick, Product Manager of Vynamic™ Payments, to find out why.

What competitive advantages can financial institutions (FIs) gain from utilising a cloud-native payments platform?

The paradigm shift from a legacy to cloud-based environment is a significant one. Simply put, the cloud allows companies to use someone else’s computing services to store files and other resources over the internet, and then easily access those resources whenever they want. This approach offers many benefits – from reduced IT costs and greater agility to less downtime and improved data security.

Cloud-native, microservices platforms also have the added benefit of using a comprehensive set of low-cost tooling to aid the development and operation of the platform, as well as incorporating proven open-source modules to speed time to market and support scale, security and advanced operational capabilities.

Those with the most agile, secure, and reusable platform will be rewarded with a strong competitive edge and improved margins from being able to control when, how deeply and how long to take part in any new payments venture.

How important is the cloud when it comes to an FI’s digital transformation?

As the financial industry continues to move toward the cloud, it inherits the benefits of its maturity. Early adopters and tech-savvy FIs are already deep into the process of adopting a cloud-native strategy. Non-core services and applications in customer relationship management (CRM), travel booking, human resources (HR), marketing and procurement have become common cloud entry points for the industry. FIs’ experiences with these cloud-based, software-as-a-service tools provide an insightful baseline for expanding to the banking operation.

An FI’s operational infrastructure is a core element of a cloud-based model, and aging, legacy infrastructure is an obstacle. Cloud-based technology can help leapfrog legacy infrastructure, bringing together existing technology with future-ready options. This approach allows FIs to begin to take advantage of cloud-based capabilities, while modernising critical operational components in parallel to quickly advance their technology roadmap and become more agile.

How is cloud technology facilitating innovative, modern payments services?

Geared for the new age of payments, cloud-native solutions facilitate lower provisioning, lower infrastructure costs, elastic deployment of content, faster updates, and global scaling.

Comprising a set of reusable services, these modern payments platforms have the capacity to not only consolidate many current payment schemes onto a single platform, but future-proof their business by facilitating the easy adoption of new payment types. They offer this by reusing existing services and reducing the amount of new development required to support a new business venture.

Built with a cloud-native, microservices architecture, API connectivity, and development resources, these platforms enable banks to offer modern schemes, types, and channels, reduce their time to market, circumvent dependence on multiple vendors, rationalise operational costs, and even achieve a more centralised view of authentication, authorisation, exposure, and risk.

Why does a cloud-native delivery model bring benefits in security and data integrity?

Data in the cloud in some cases is even more secure than an on-premises model. And multiple cloud options—private, public and hybrid—can help FIs balance risk by enabling organisations to mix and match, deciding where their data lives based on their specific needs and/or local regulation. Large enterprises are beginning to lean into the hybrid option, bringing in private infrastructure as the base and scaling to public, as needed.

How can FIs achieve cost savings through embracing cloud-native technology?

Leveraging cloud delivery models allows developers to build, host and launch applications quickly without having to worry about setting up and managing their own server. As a result, new services or applications can be brought to market faster.

Cloud-native platforms can provide considerable cost benefits by supporting the consolidation of systems. Not only does this consolidation of in-house silos bypass institutions’ dependence on multiple vendors, but it also provides the ability to reuse certain components or services such as validation, authentication, authorisation, fraud/risk and routing – ideally orchestrated via a smart adaptable workflow that provides a single platform that easily performs multiple payments services and supports multiple payment schemes. It’s truly a ‘build once but use often’ design that will reduce operational costs and increase speed to market for current alternative payment methods, and any to come.

Other perks of a cloud-native architecture include the shrinking of compliance timelines – a resource-heavy and costly enterprise for financial players of all kinds. Dynamic resource utilisation ensures the FI is only paying for the system resources needed at that moment as the system elastically ramps up and down the quantity of each reusable service needed to accommodate the volume of traffic as it occurs.

Why is a cloud-agnostic platform like Diebold Nixdorf’s Vynamic™ Payments the right choice for an FI?

Cloud-native Diebold Nixdorf products are built to run at scale in modern, dynamic environments, such as public, private, and hybrid clouds. And cloud-agnostic ensures DN’s product IP isn’t locked to a specific cloud provider and their technology solutions, meaning DN’s product can be hosted on-premises or on a different cloud provider.

Vynamic™ Payments is designed from the foundation up to support anything from a single-tenant payment switch to a global network switching platform. Supporting traditional card-present transactions, as well as transactions that are not card-based such as tokenised person-to-person and wallet-based tokenised transactions, Vynamic Payments can process any transaction regardless of funding source, destination, or authentication method. The platform facilitates alternative funding models such as buy-now-pay-later (BNPL), crypto and loyalty programme points, changing the steps of transaction funding, clearing and settlement. Additionally, its microservices architecture allows new services to be added in days versus months.

Leveraging our legacy of sustainable innovation, we are empowering financial institutions to leapfrog to the next generation in payments processing. Through Vynamic Payments, we are powering one of the world’s top ten banks, as well as others, to transform their payments platform transformation, combining all transaction activity across multiple banking channels, including millions of debit cards serviced, thousands of branches and tens of thousands of ATMs into a common payment processing platform.