Payment Services Hubs: The Bank's Perspective

by Zilvinas Bareisis, March 7, 2011
Industry Trends
Global, Asia-Pacific, EMEA, Latin America, North America

Abstract

Currently, over 40% of payment services hub projects are at large financial institutions with assets exceeding $100 billion, and nearly 56% are in Western and Northern Europe, based on data provided by nine leading PSH vendors. However, banks of all sizes and from all geographies are starting to consider how to adopt PSH concepts in their payments businesses.

In this report, Payment Services Hubs: The Bank's Perspective, Celent reviews the state of payment services hub (PSH) market adoption, discusses the drivers for building a PSH, and explains the key decisions a bank needs to make when embarking on a PSH project.

“To understand why banks start payment services hub projects, it is helpful to distinguish between the true reasons and how the banks justify them,” says Zilvinas Bareisis, Senior Analyst with Celent's Banking group and author of the report. “The fundamental drivers include the presence of a ‘burning platform’ or a large related programme, while the benefits case is usually built around cost reduction, revenue retention and enhancement, risk and liquidity management improvement, and increased agility.”

This is the third and final report in a series on payment services hubs, which takes the bank's perspective. It starts by exploring the drivers behind PSH projects—the Why? question. The report then focuses on the How? question—the key decisions a bank needs to make in defining a PSH strategy and provides tips on how to ensure success of the programme. The report concludes with the Who? question by reviewing the macrotrends in payment services hub adoption and describing several examples of how banks have used PSH concepts to further their ambitions in payments.

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned subsidiary of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
mpace@celent.com
Tel: +1 212 345 1366

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81 3 3500 3023

Table of Contents

Executive Summary

3

Introduction

5

Why Do Banks Start Payment Services Hub Projects?

7

 

Fundamental Drivers for PSH Projects

7

 

Developing a Benefits Framework

8

How Do Banks Approach Payment Services Hub Projects?

16

 

Developing a Payment Services Hub Strategy

16

 

Assembling the Team

21

 

Implementing the Project

26

Views on Market Adoption–Who Is Implementing PSH Solutions?  

28

 

Market Overview

28

 

Selected Case Studies

30

Leveraging Celent’s Expertise

35

 

Analyst Access

35

 

Support for Financial Institutions

35

 

Support for Vendors

35

Related Celent Research

37

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