How Elastic can help banks compete in the booming payments industry


The payments industry has evolved dramatically over the past decade. Traditional payment vehicles still make up the majority of transaction flows, but new apps and startups continue to grow in popularity, and billions of dollars move through their systems.

According to a recent JPMorgan study, of the $240 trillion in global payments in 2020, ~$54 trillion can be attributed to emerging mega-themes; that is, trends that are reshaping the way money changes hands. These themes include super apps, e-commerce, digital wallets, wearables, BNPL (buy now, pay later), connected cars, and other payment vehicles. This environment has generated a rush of excitement for customers. However, it has also created a significant level of complexity that the financial community and regulators are grappling with.

To a great extent, fintech providers have proven to be the leaders of innovation in this space, jumping on emerging market needs and creating digital applications to meet customers where they are. Thus, while it is true that long gone are the days of banks being a one-stop shop for payments, banks still have a reason to try to remain competitive and innovative.

According to EY, payments generate between 20% and 30% of the typical bank's profit directly or indirectly. It's therefore essential for banks to assert their expertise and history in this space. Possibly even more critical, transactions create key data points that enable banks to personalize other purchase experiences. With BCG finding that only 30% of customers think their bank is personalizing their service—there is a significant opportunity for expansion in this area.

Banks should create an environment that enables them to be the perfect source or partner for transactions. Here are a few things banks can do to support a winning payments experience.

Complete, Real-time search

Enabling a real-time search experience across accounts and solutions types is still a struggle for many providers. Particularly in the institutional space, it can be difficult with multiple payment types (Wires, ACH, Same Day ACH, RTP) running on legacy systems and rails to deliver this holistic picture back to the client. This situation often feels frustrating for clients as they need to access multiple screens or run several reports across modules. This can also create downstream issues with servicing customers. According to Capgemini, having a successful omnichannel experience is the most crucial component for banking customers. That starts with empowering employees with complete datasets and enabling them to respond to customer inquiries quickly. For banks that are still struggling with this challenge, it is worth exploring tools to drive searchability and break down data silos to unlock a better experience.

Create a tech foundation for innovation

The world of payments will continue to evolve. New foundational changes with the introduction of 5G coupled with advances in artificial intelligence (AI) algorithms, quantum computing, and blockchain will give life to advances in the payments space, according to JPM. It's therefore crucial that banks offer their developers the means to innovate. Faster application development can be achieved via unified visibility across time series data and with tools that have built-in machine learning. Exploring new ways to streamline IT (e.g., mainframe offloading, application consolidation) helps reduce costs and enables banks to reinvest in digital transformation.

Harness data to lead the way in fraud detection

Banks have a clear advantage over fintech and niche payment providers when it comes to their potential to address fraud proactively. Traditional banks sit on a wealth of real-time information about customers, enabling them to paint a more holistic picture of their profiles. Understanding customer habits to accurately detect potential fraud events & protect their assets. While also not creating roadblocks for legitimate transactions. Search platforms can empower Fraud teams with unified data sets, enabling quick decisioning for the end customer & merchants. By deploying machine learning and alerting features, fraud teams can proactively detect and stamp out financial fraud before it impacts accounts.

Even as the payments space becomes more fragmented, there is still an opportunity for banks to be the trusted partner for clients to get their most important answers. Elastic is the leading platform for search-powered solutions, delivering powerful insights across financial services. We help organizations search, solve, and succeed—no matter the mission.

Read more stories about how our financial services customers use Elastic here.