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Enterprise Payments Architectures Are Gaining Ground at Banks

Building an enterprise payments architecture is a huge undertaking, but one that may be necessary to remain competitive in the payments business. Banks are starting to turn their dreams of a holistic payments system into a reality -- improving efficiency, oversight and service in the process.

What Solutions Are Out There?

Once a bank has developed a road map for its enterprise payments architecture project, it's time to start looking at the technology solutions on the market. TowerGroup's Kerr says many industry vendors are partnering to deliver payments capabilities along with strong integration.

TowerGroup has divided enterprise payments architecture solutions into two categories: enterprise payments applications and enterprise payments frameworks. The application providers are pure payments application providers that now are attempting to leverage their solutions to fit into an enterprise payments strategy, Kerr explains. Examples of these vendors include ACI Worldwide (Omaha), CheckFree (Atlanta), Clear2Pay (Mechelen, Belgium), Dovetail (Fairfield, N.J.), Fundtech (Jersey City, N.J.) and SAP (Walldorf, Germany). "These vendors have been around for some time, and they have to reinvent themselves," Kerr says.

The framework providers are developing interfaces with integration capabilities, Kerr continues. "Most vendors in this category produce enterprise application integration [EAI] ... technologies," wrote Kerr in a September 2007 report, "Are Two Heads Better Than One? The Trend Toward Alliances Between Enterprise Payments Vendors." Vendors in the enterprise payments framework area include IBM (Armonk, N.Y.), LogicaCMG (London), Microsoft (Redmond, Wash.), Sterling Commerce and Unisys (Blue Bell, Pa.), according to TowerGroup.

SunTrust's Nygren says the bank toyed with several build-versus-buy models, ultimately deciding on a mostly buy model. "We want to purchase as much as we can," he relates. "We will probably find a vendor that meets a lot of [our needs]." The bank currently is in negotiations with vendors for the first stage of the project, Nygren says, but he declines to name the contenders.

According to Fifth Third's Tiemeyer, her bank is not quite as far along in the process. "We are evaluating what's in the market," she relates. Vendors that are taking an umbrella view of payments in aggregate with risk and fraud prevention are high are her list, Tiemeyer adds.

She notes that Fifth Third's payments architecture initiative will be a generational process that will include environmental as well as technological changes. "What's available, how do we tie it together and what do we want it to experience" are among the factors the bank is using to judge its options, she explains, adding that the bank is building its systems with an eye on shared services and an integrated experience. "The advantage Fifth Third has in looking at enterprise payment channels is that we have invested in technology that is easily integrated into the enterprise," Tiemeyer says.

What Results Can Banks Expect?

While building an enterprise payments architecture is a formidable challenge, the payoff can be huge, according to most experts. Goldleaf's Geisel says an enterprise payments architecture is the "gift that keeps on giving." Banks that have pursued the strategy are realizing they can "offer services at such a low price because of STP that their competition can't get there," he contends.

In addition to efficiency, an enterprise payments architecture also delivers agility, SunTrust's Nygren says. Through SOA, SunTrust's enterprise payments architecture will give the payments group the ability to offer a richer set of services back to the bank, he claims.

According to IBM, the benefits of enterprise payments architectures include reduction in costs through enabling efficiencies and decreasing duplication, improved customer satisfaction, faster market response times, and enhanced liquidity management through better monitoring and control. Despite the promise, however, most observers agree that it will be some time before institutions see the full benefits that enterprise payments architectures can produce.

"The vision is there," Bottomline's Campbell says. "[Now] banks have to figure out how to get there."

VISIT BS&T'S PAYMENTS RESOURCE CENTER for news, analysis, research and opinions on payments

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