WIT Summit Europe Q&A: digital transformation in the payments space

During the upcoming Women in IT Europe summit, taking place on the 14th September 2021 from 10:00am CET, Susana Delgado, digital strategy director at PagoNxt, will be participating in a fireside chat on the topic of ‘Transformation of Legacy Businesses vs Digital Natives’. This session will explore how organisations should go about continuing to invest in digital transformation post-pandemic, as well as how European legacy businesses can play catch-up, and how to digitise while creating growth and profitability. To register for this virtual event, please click here.

In the lead-up to the event, Delgado spoke to Information Age about how payments organisations can overcome the challenge of legacy infrastructure and continue innovating post-pandemic, as well as her journey into tech, and the importance of promoting DEI in the workplace.

What are the key aspects to consider when it comes to establishing a digital transformation strategy within financial services?

There’s no single recipe towards becoming a digital company. One aspect that we’ve seen within retail banking for many years is the transformation of products, processes and culture. Creating digital-native solutions in-house, so that they can be built organically, is also very important. This can be achieved by leveraging internal industry expertise and taking advantage of state-of-the-art technologies. It’s also worth considering looking partnering with or acquiring Fintech players. This is a good option, as some of the more niche services offered by financial organisations are often better served by specialised firms, as opposed to trying to build everything in-house.

For all of these options, I feel there are three things to consider: firstly, you need to cope with customer expectations. Consumers are used to services such as Amazon, Netflix and Uber being integrated into their daily life. These services are simple, fast and cheap, and customers now expect all services to be this way within financial services.

Secondly, there is the technology itself to take into account. Incumbents in the banking industry have been transforming for decades, and the downside of this is they can end up with lots of legacy technologies, which adds complexity. Organisations may find that building completely new solutions with the latest technology is the way forward, as opposed to complete transformation, but ultimately finding the right balance between transforming and building from scratch is key.

Lastly, there is the talent. It’s very important for financial institutions to keep a balance between financial expertise, which has been there for years, and incoming tech talent. Getting the best of both worlds, that combines industry knowledge with the agility of tech companies, is vital.

What would you say is the biggest challenge that payments companies face when establishing digital transformation initiatives, and how can they overcome this?

When I worked in the software industry years ago, product development was smoother, and time-to-market was faster than in the payments industry today. Innovating in the payments space is more difficult, as Fintechs operate in a highly regulated environment, so there is more than just the technology to consider unlike within software. You need to have the right licence fees, implement a risk framework, and maintain operational oversight, among other compliance duties. The need to keep users safe also makes operations more complex, and lengthens time-to-market.

To overcome this, and make the development process smoother, organisations can use banking-as-a-service platforms, so that there isn’t a need for everything to be built in-house. Financial institutions can also leverage fraud-as-a-service and compliance-as-a-service tools, which help them to stay compliant. In addition, prioritising protection from cyber crime, and data leak protection programmes, is key to helping Fintechs keep the masses of big data, generated by millions of transactions, safe.

What digital transformation trends do you see emerging over the next few years, within the payments space?

There are four particular trends that I consider quite relevant: firstly, we’ll see a continued rise in cross-border payments. The pandemic has shifted behaviours towards digital infrastructure, and when it comes to international money transfers and remittances, it’s clear that customers value the ability to send money quickly for low fees.

The second would be ‘buy now, pay later’: deferred payments have gained popularity over the past few years, and we expect this trend to continue rising, especially when it comes to merchant adoption for some services within platforms, to meet customer demands. Gen Z consumers in particular value being able to defer payments.

Thirdly, there is open banking. This has mandated financial institutions to share data via APIs with third parties, which has opened the market up to new players and enabled innovation. It also encourages collaboration within the financial services ecosystem, particularly between banks and Fintechs. This is something we’ll see even more in the coming years.

Finally, thanks to those APIs and open finance, embedded finance will become more prominent in the payments space. Banks and Fintechs can share data, and features can be embedded into other industry platforms. This is all about opening up and offering financial services more widely, an example credit schemes through retail outlets. This reduces friction by allowing customers to use financial services without having to leave outlet platforms, as well as increasing personalisation.

As a female leader in tech, could you please talk me through your journey into the tech industry, and what encouraged you to enter the sector?

I would say that out of my nearly 20 years of overall career experience, I have spent around a decade in tech. This started with a strategic role in the software-as-a-service (SaaS) industry, at a company that was looking to transition to the cloud by moving from installed software to SaaS, and driving this change was a very exciting experience for me.

I then moved into the Amazon Marketplace, where I got to understand the complexity of building a tech platform that would become a giant. Here, I looked to deliver value to consumers and third-party sellers, and working for a fast-growing digital-native company brought a different perspective.

Then a couple of years ago, I moved into Fintech by joining PagoNxt, a subsidiary of the wider Santander banking group. All in all, getting into the tech industry came by chance, but once I started working in that space, I was sure I would stay in tech for the rest of my career. I think that no matter what industry you’re in, and whether or not your career path started in tech, there will be a need for tech expertise and digitisation.

Why are events such as the Women in IT series so important to driving DEI in the workplace?

Events such as the Women in IT series are key to raising awareness of the need for DEI. More specifically, when we look at the financial services industry, we are still behind in this respect, and in my view, companies need to be as diverse as the communities that they serve, in order to deliver the right products to customers.

Ensuring the right levels of DEI and promoting this also helps to attract talent, and the more diverse this talent pool is, the higher your company will perform.

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Aaron Hurst

Aaron Hurst is Information Age's senior reporter, providing news and features around the hottest trends across the tech industry.