Platform Ecosystems: A Second Chance for Payment Hub Solutions

Payment hubs were supposed to be the backbone of payment transformation in a bank. However, a payment hub as a concept and as an application itself has changed. While originally serving as one place to manage all things payments, now, payment solutions are more modular and allow flexibility to be deployed for individual payment types or for managing a singular process across multiple payment types. Payment hubs now look to bring in the efficiency of a modern solution at a far more granular level instead of at the holistic level as originally envisaged. What caused this transformation?

The biggest impediment was the cost to ‘rip and replace’. Costs were often much higher than what was originally anticipated, and many banks had to abandon their efforts halfway. Organizational challenges around the way payment business teams were organized in the banks also played a role: for a program this size to be successful, all product teams had to align their vision and investment objective.

Fast forward to 2023 – is the concept of a payment hub dead? At its most basic level, the payment hub application orchestrates a payment transaction and ensures that the bank does not lose visibility all throughout the lifecycle. Given the multitude of payment types today, banks possibly need this capability more than ever before. While today’s payment modernization initiatives may not involve a single central solution to act as a ‘hub’, many banks are investing in building smaller chunks of functionality that are loosely coupled to replicate a payment hub-type environment. The payment hub is not dead, but in this new iteration, the journey looks different, and banks now have new options to implement.