70% of Card Payment Services Will Be Running in the Cloud within Two Years
The statement in the title might sound ambitious and perhaps even provocative, but it is based on the responses of more than 100 industry professionals answering a poll question at a recent webinar, Quick Payment Innovations in the Cloud: Strategies and Technologies hosted by OpenWay. I had the privilege of moderating a conversation between two industry experts: Dmitry Yatskaer, the Chief Technology Officer of OpenWay, and Rik de Deyn, Senior Director of Financial Services Industry Strategy at Oracle. Thank you to OpenWay for inviting me to take part in the webinar and for allowing me to share the poll results in this blog! I encourage you to listen to the webinar recording; Dmitry and Rik do know what they are talking about!
Our research shows that the cloud is becoming an increasingly important component of the banks’ technology infrastructure, and payments is no exception. While cost used to be the main argument for migrating to cloud, we increasingly see banks looking how cloud can help improve customer experience, agility, and IT resiliency.
But back to the poll question. Only 28% of respondents said they had no long term plans to run their card payment services in the cloud. Seven percent were already fully in the cloud, while another 14% said that part of their payments infrastructure was in the cloud. The largest group was those that were planning to migrate card payments into the cloud within two years (42%), with another 9% already actively migrating.
Of course, the devil is in the detail, and not everybody in the industry is going to move at the same speed. A fintech looking to launch a payments proposition is more likely to consider cloud than a large bank quite happy with its home-grown system. It is also helpful to consider partnering with a software firm that is ready and proven to be deployed in the cloud. Similarly, as another poll question confirms, areas such as digital wallet solutions and payment processing are moving to the cloud faster than card acquiring or issuing, which are subject to additional stringent requirements, such as compliance with PCI-CP (Card Production and Provisioning) or 3DS standards.
Also, there is a degree of “self-selection bias” here – after all, these responses are from individuals that joined the webinar on payments in the cloud – so arguably the 70% headline figure is not quite representative of the whole industry. But the direction is clear; the payments industry has been working hard to address barriers for cloud migration specific to retail payments, such as developing approaches to offer payment HSMs in the cloud, a topic we investigated in a recent report. Visa also recently announced its new Visa Cloud Connect platform, which “provides a secure cloud-based connection to VisaNet, including a unified certification and testing framework, Visa-hosted security services such as transaction encryption and PIN key management, and simplified settlement in local markets”. The platform is currently in pilot phase with TransferWise and is slated for global availability for other clients in August 2021.
If you are in payments, what are your views regarding cloud adoption? Are you among those 42% that plan to move within two years, or even among the 28% of “sceptics”? If so, talk to us – perhaps we can help address your concerns. And if you already had success with payments in the cloud, we’d love to hear your story!