More than a mere buzzword, "omnichannel" is as close as the payments industry has come to assigning a name to the group of actions that make up a complete purchase across the retail store, Web and mobile devices.
Underneath that mix is a layer of enabling technology that allows different devices to communicate with each other, execute and protect transactions—and that is where technology integrator Volante Technologies sees a major international play.
Volante, a Jersey City-based company that has offices in London, Mexico City, Dubai, and Chennai, India, just began an IT project with Nedbank, a South African bank, to transform the institution's payments message service layer—or the technology that makes a card or mobile payment work the same way between parties—to accommodate new local regulations and the fast international proliferation of new payment channels.
It's a project that the company hopes to repeat in other global markets as real-time processing initiatives, mobile wallets and contactless payments take off.
"There's a lot of innovation in mobile banking and around the smartphone, and that's all based on messaging," said Mick Fennell, general manager of the Middle East and Africa for Volante, adding each new payments innovation changes the manner in which banks transaction systems communicate with each other—supporting a mobile wallet, for example, requires big changes under the hood. "Banks are continually being asked to change to take on new streams of data and new messaging to process that data."
In South Africa, regulators have set a September 2016 deadline to update authentication to replace non-authenticated early debit orders, which are considered fraud-prone, with authenticated collections that carry stronger user risk protocols. For Nedbank, that means adopting two international messaging standards, ISO 20022 and ISO 8583, and integrating those standards into digital payment channels.
For the bank, it's a chance to update its entire payments system to respond to multi-channel shopping and mobile wallets, Fennell said.
"The bank is reimagining its entire payments infrastructure and the messaging is just one element," Fennell said, adding the bank was using the messaging technology to enable a centralized payment hub for all channels.
Volante, which will start tests with Nedbank by the end of this year, hopes to extend the technology to other markets. Last week it announced an integration with Ripple, a distributed ledger technology company with a global real-time settlement protocol. That system will join Volante's existing library of 330 international and local standards that are designed to enable faster payment flows.
"Even in one market you may have a number of messages for faster payments, or batch processing, or low and high value payments, Swift, etc.," Fennell said. "And now you're adding mobile payments to that."
The greater global adoption of ISO 20022, an important part of the South African initiative, will encourage more real-time payments initiatives elsewhere, Fennell said, adding Volante hopes to take advantage of initiatives in the U.S., U.K. and other markets.
"Faster payments in the U.S. is one of the big shining stars on the horizon that everyone is gearing up for," Fennell said. "It's the biggest payments market on the planet."
As Volante moves forward, it will have significant competition from SAP and IBM, which both offer integration tools to financial institutions, said Tim Sloane, vice president of payments innovation at Mercator Advisory Group.
The challenge is to accomplish a shared interpretation of data between parties, Sloane said.
"XML was developed to help solve this problem years ago, but while it made data communications more resilient and flexible, there continued to be problems defining what each data element meant," he said, adding ISO 20022 attempts to define the business process that is implemented to create data elements.
"That said, it will take significant time and effort before financial institutions have the ability to implement a fully ISO 20022 compliant infrastructure," Sloane said. Data mapping and other technology measures such as Volante's Nedbank announcement are thus a "band aid" that enables a response to ISO 20022 while also creating bilateral connectivity with non ISO 20022 parties, he said.