By Mikko Rieger

Banks and credit unions are struggling with complexity and how to manage competing priorities. Mobile payments are growing by more than nine per cent a year, with more than 70 per cent of Canadians using their mobile devices for sending and receiving money1. Now too, consumers are showing increasing interest in Internet of Things (IoT) payments, including wearables, smart fridges, virtual assistants and soon, connected cars.

This means that banks and credit unions need a back-end infrastructure that can flex to accommodate new and diversifying payment-enabled form factors. Furthermore, open banking is coming to Canada. According to PwC, it’s only a matter of time before this fundamentally reshapes the payments industry2.

These concurrent industry developments are creating the following pain points:

  • If open banking and account personalization services aren’t made available on smartphones, then consumers won’t use them, and banks won’t be able to leverage them to differentiate themselves and create revenue;

  • If tokenization isn’t used to secure transactions initiated from mobile devices, then an increasing amount of payment and account data will not be adequately protected; and

  • If payment-enabled connected IoT devices, which have been growing in popularity in the Canadian market3, aren’t supported in the back-end by issuers, their card offerings may become obsolete once these devices become mainstream.

Virtual cards and the existing card infrastructure enable these services. However, legacy systems are holding issuers back from responding fast enough to changing market conditions.

According to Ovum, nearly two-thirds of banks believe their payments infrastructure will need a significant upgrade in the next three years as the back-office domain becomes a key part of their digital strategy4. But this is a massive undertaking, and issuers are understandably wrestling with how best to approach it.

To streamline the process and ensure that they reach the best solution, here are the key questions to ask when developing a card, mobile and IoT payments infrastructure strategy.

1. Is outsourcing right for my bank or credit union, or should we keep development in-house?

(a) Can your existing consumer management system (CMS) support the growing and evolving payments ecosystem?

(b) Do you have a large enough team of developers experienced in this area to build your own infrastructure and implement it with minimal disruption to end users?

(c) Will the significant capital expenditure be recouped quickly?

(d) Are you confident in your technical ability and capacity to quickly create an infrastructure that enables scalable, value-added financial services that can be accessed on any connected device?

If your bank or credit union can answer “yes” to all of the above, then there’s no reason that you couldn’t develop and manage your infrastructure internally. If the answer to any of the above is “no”, however, outsourcing may be the best approach.

2. We’re going to outsource our infrastructure upgrade. Should we go with a software-only or full-service provider?

(a) Do you need to launch new products quickly to ensure faster creation of new revenue streams?

(b) Would you benefit from bespoke technical support in developing new and innovative services?

(c) Would you benefit from informed regional support and a collaborative development process that takes your institution’s individual needs into account?

(d) Do you want to be able to guarantee your end users a stable infrastructure with high availability?

(e) Are you moving towards a lean fixed-cost setup, so building and maintaining a team to manage a provider and realize the upgrade isn’t high on your list of priorities?

If the answer to any of the above is “yes” then a software-only provider may not have the capabilities required to successfully implement and manage card, mobile and IoT payments infrastructure on an issuer’s behalf.

3. We have identified a full-service CMS provider. What questions should we ask them to ensure they’re the right choice?

(a) Does it have migration experience?

(b) Is the solution flexible enough to adapt to future consumer demands and new financial products?

(c) How smooth is the onboarding process? How much disruption to our end users will there be? Can we migrate product by product, instead of all at once, to mitigate possible risks?

(d) Can the solution be expanded to cover value-added services beyond CMS?

To learn more about the challenges and opportunities behind upgrading your card infrastructure, download our eBook Payments: Card vs Mobile vs IoT. Does it Even Matter?

Mikko Rieger is senior vice president of consumer management services (CMS) at Nets ( He has a background in software platforms, cloud adoption and telecoms and has worked across Europe and North America. He holds a B.Eng. in electrical engineering, a Dipl. Ing. In computer engineering, a Master’s degree in engineering management and an MBA in finance, entrepreneurship and innovation from Northwestern University.

1 Research and Markets, “Canada Mobile Wallet and Payment Market Opportunities (Databook Series) – Market Size and Forecast across 45+ Market Segments”, January 2019.

2 PwC, “Canadian Banks 2019”, report.

3 Michael Tompkins and Viktoria Galociova, “Canadian Payment Methods and Trends: 2018”, Payments Canada, report, December 2018.

4 “Banks see payments infrastructure renovation as key to digital strategy,” Finextra, October 22, 2018.

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