Instant Payments Are the Key to Unlock Innovation

Money is always in the process of moving. Transactions that used to take days now take seconds, thanks to new technology in Oracle Flexcube that has ushered in a real-time payments revolution that is radically altering the way people work and live their lives.

The requirement to be able to transmit money at any time is forcing businesses to abandon their traditional 9-to-5 workdays. Consumers and businesses throughout the globe are becoming more tech-savvy, and they want their bill payments, online shopping, and cross-border transactions to be handled quickly, affordably, and in large quantities.

This is already feasible or will soon be allowed in more than 50 countries throughout the globe, including the United Arab Emirates.

The time to act has arrived.

When it comes to the benefits of updating their payment systems, several financial institutions have expressed skepticism in the past. They believed that the demand for quick payments among consumers was insufficient to justify the expenditure of setting up the system like Oracle Flexcube universal banking. Moreover, they regarded the expenditure to be exorbitant since it would need the overhaul of their whole legacy system in order to comply with the new requirements. As a consequence, banks in specific locations have taken a wait-and-see attitude to real-time payments, waiting to see whether the deployment by others proves to be worthwhile.

Now that the environment has changed, both consumers and authorities anticipate that payments systems will be upgraded in the near future. In their respective regions, the banks that move first will have the best opportunity of unlocking new income streams, attracting the finest personnel, and producing an enormous amount of data, which can then be utilized to improve customer experiences and increase brand loyalty.

Additionally, early adopters will be among the first to cut costs and increase fraud detection while staying one step ahead of the inevitable new rules that will change rapid payments from a preference today into a mandate tomorrow.

Turning a challenge into an opportunity

While there is little doubt about the power and promise of real-time payments, the transition to immediate transactions at high speeds and scale is not without its challenges. It takes time and money to modernize outdated information technology systems. As a result of non-bank technology businesses entering the field, the battle for clients and talent will intensify in the near term.

The Middle East is falling behind leaders such as China, Singapore, and Europe when it comes to the use of digital solutions. Despite the extensive use of mobile technologies in the area, the usage of cash remains high.

Some of the challenges that banks in the region face in modernizing their systems include updating infrastructure and technology to support real-time payments through instant validation and confirmations as well as banking, Oracle Flexcube 14.x, meeting international standards such as ISO 20022; providing 24/7 processing and support; and ensuring that their systems can scale sustainably.

However, the advantages of the change now outweigh the difficulties of the transition. Real-time payments open the door to a variety of possibilities, including:

Transaction fees, cross-selling, and data monetization all result in higher income.
Modernization of information systems that makes it easier to make good use of data while also increasing efficiency;
Cost reductions are achieved via the decrease of cash and check transactions as well as in-branch activities, as well as through the automation of exception management.
Ancillary advantages include increased responsiveness to client demands (which will boost customer loyalty) and the possibility to construct propositions around transactions.

The advantages of speed

It is possible to witness the benefits of moving early to Singapore, which is a global leader when it comes to quick payments. Rapid and Secure Transfers were introduced in 2014; a second platform called PayNow was introduced in 2017, allowing customers to transfer payments using their mobile phone number as a means of identification.

Individual registrations for PayNow increased by 1.6 million in 2020, while business registrations more than doubled to 240,000, indicating that 80 percent of the country’s residents and businesses are now using real-time payments to buy groceries, pay salaries, purchase insurance, and conduct a variety of other transactions, which is expected to grow as more services are added to the digital ecosystem in the coming years.

Because of the fast expansion of cross-border e-commerce and business-to-business payments, Singapore has linked its real-time payments system to comparable systems in countries such as Thailand and India, therefore opening the door to even more transactions, users, and possibilities.

The path ahead

Real-time payments system transformation demands meticulous preparation, as well as a clear strategy with clearly stated goals. This is no small task. On the other hand, banks should not put off embarking on this journey for long. The following are some actions to take in order to build a real-time payments strategy:

Recognize the characteristics of real-time / quicker payments: Current market developments and the influence of real-time payments both locally and worldwide should be evaluated.
Determine the probable consequences and opportunities: Consider how different business lines will be impacted, find possibilities to alleviate consumer pain points, and identify places where reusable assets may be exploited to increase efficiency.
Create business cases for each of the opportunities: Assess risks to the present company and the financial consequences of new service offers. Identify possibilities for new service offerings.
Create and follow a road plan for implementation that includes the following steps: Create a transition strategy that contains a road map for quick deployment with essential milestones and benchmarks, as well as critical milestones and benchmarks.

Conclusion:

There is a movement in financial services that is forcing companies to rethink their processes, while new technological such as Oracle Flexcube universal banking use cases are correcting payment value chain discrepancies. To guarantee a smooth and effective transition, companies need to be aware of this open and immediate ecosystem, which is on the verge of being internationally accepted, for improved customer experience, frictionless payments, and leaner cash management.