Payment Services Hubs Revisited: Lessons Learned

by Gareth Lodge, September 10, 2014
Global, EMEA

Abstract

Payment services hubs have come of age. When Celent wrote its series of reports in late 2010 and early 2011, a number of projects were live, but hubs themselves were seen as rather mysterious.

There are now nearly three times more live payment services hubs globally. The nine vendors reported growth from 46 live systems in 2010 to an estimated 119 at the end of 2013. Furthermore, there are a significant number under way, with many of the major vendors reporting that they have the strongest pipelines ever.

There have been a number of entrants into the market, and a few mergers and acquisitions as well. These are signs that the payment services hub market is reaching a degree of maturity, and is no longer a question of convincing people of the merits of a hub.

But there are still large misunderstandings. The report reflects the conversations that Celent has had in helping banks understand what payment hubs mean to them and the best approach for them. Increasingly, this is likely to include a payment framework and a payment services hub; a single hub is rarely going to be the solution.

“We often get banks who approach us with a shortlist of vendors, and are asked who they should choose,” says Gareth Lodge, Senior Analyst with Celent’s Banking Group and author of the report. “Yet often they’ve started with the assumption that they need a hub, rather than really understanding what they’re trying to achieve. In reality each implementation will be unique to that bank, as it will be dependent on where they start, where they want to go, and the constraints they have. Indeed, the answer might not even be a hub in the first instance.”

The report addresses a number of the most common issues that conversations have highlighted, including the growing take-up of an oft overlooked payment framework technology.

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 operating unit 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

1

Introduction

3

 

Not Just Definitions: Drivers Can Confuse as Well

3

Back to the Future or Back to Basics?

5

Payment Services Hubs Are Becoming Mainstream

7

Start at the Beginning: What Do I Need?

9

Of Hubs and Frameworks

12

Drivers for a Framework-Centric Approach

15

The Path Forward

17

Leveraging Celent’s Expertise

19

 

Support for Financial Institutions

19

 

Support for Vendors

19

Related Celent Research

20

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