Where should your FI sit on the processing spectrum?

Payments processing is not a choice between two fixed models. It is a spectrum.

At one end, financial institutions (FIs) can outsource most of their payments environment, reducing their operational responsibility but potentially limiting their flexibility. At the other, they can retain greater control and freedom while taking on more of the complexity of operating the platform. Between these two ends sit different combinations of control, choice, changeability and responsibility.

There is no single right place on this spectrum.

Good technology can give FIs substantially greater control, choice and changeability without requiring a proportional increase in operational responsibility. The goal, therefore, is not maximum flexibility. It is the right flexibility in the right places.

Managing infrastructure, for example, may offer little competitive advantage. The ability to configure products, change rules, integrate new partners or enter new markets, however, can directly influence an FI’s ability to compete.

Choosing a processing model is therefore about more than deciding how much of the payments environment to outsource. FIs need to understand where they require freedom, where they are comfortable relying on their processor and how that balance could affect their strategy over time.

Ultimately, every FI should ask one fundamental question:

Will your processor give you the freedom to execute your payments strategy, or will your payments strategy eventually have to conform to your processor?

Explore the processing spectrum and learn how to identify the right level of flexibility for your organisation in our eBook, The processor conundrum: How much flexibility do you really need?