Hexaware maps out how payment providers can keep up with customers

Consumer expectations and emerging technologies are driving a rapid evolution in payments, demanding payment providers modernize payment infrastructure. To help providers get ahead of looming changes, Hexaware has laid out a three-generation, five-year journey, calling the evolution “Payscopium.”

Hexaware sees a three-generation transformation for payments based on shifts in consumer expectations (see Exhibit 1). Over the next two years, a triad of technologies—artificial intelligence (AI), machine learning (ML), and cloud—will mature to deliver payments-as-an-experience (PaaX). The second generation, in two to four years, is a pivot to cryptocurrency; central bank digital currency (CBDC) will come into play, harmonizing digital currency adoption, at which point payments will evolve into payments-as-a-lifestyle (PaaL). The final generation, three to five years out, is an era of invisible payments (InPayments), where payments will work seamlessly behind the scenes to enable underserved markets to access financial services with finance embedded, providing financial services outside of financial institutions.

• Payments-as-an-experience: The focus is on driving a frictionless payment experience through improved interfaces and smooth transitions.
• Payments-as-a-lifestyle: The future becomes a digital currency ecosystem, with cryptocurrency creeping into all aspects of everyday life and trade; central governments will power this.
• Invisible payments: Common barriers to financial inclusion are lowered through technology, allowing small businesses and lower-income households to participate in payments.

Enterprises need to make significant infrastructure modernization investments to position themselves to capture the future revenue pools that will emerge from changing market realities along the evolution of payments.

Exhibit 1: Reimagining the future of payments through the Payscopium lens

Source: Hexaware, HFS Research, 2023

Payment providers need a modern core infrastructure to successfully execute along the payment evolution

Payment infrastructure modernization requires platform or application rationalization, cloud adoption, expansion, development of a microservices architecture or applications to extend an existing payments core, API enablement, enhanced settlement and clearing, and heavy and ongoing dosages of automation and artificial intelligence. Partners such as Hexaware can support in meeting these requirements.

Pushing new functionalities and offerings out to customers in line with the payment evolution requires a modern core. Payment infrastructure needs regular investments and structural changes to stay nimble through open cloud-based solutions. Payment providers recognize this, with nearly two-thirds ranking payment infrastructure modernization as among their top-three investment priorities in the next two years (see Exhibit 2).

Exhibit 2: Nearly two-thirds of payment providers have made modernizing their payments infrastructure a top-three investment priority

Sample: 150 payment providers
Source: HFS Research, 2023

Hexaware brings Generation 1, PaaX, to life for leading commercial cards and payments fintech

Hexaware is bringing PaaX to life today. It enriched the customer experience for a payment provider that offers spending management services for commercial fuel cards. Hexaware designed and executed a payment experience that delivered speedy financing and extended the relationship with the cardholder, the drivers in this case, by feeding them real-time data on gas stops, fastest routes, charging station locations, restaurant stops, and similar services. It superimposes this information over Google Maps. The solution required the confluence of AI, ML, and cloud-based open-API technologies, delivering cost savings of more than 12% per trip.

The Bottom Line: Payment providers need partners to navigate rapid changes in consumer expectations.

Whether or not you are convinced crypto will be part of our everyday lives within four years as part of Generation 2 in Exhibit 1, don’t doubt that payment providers must pay close attention to imminent, consumer-driven evolutions in payments. Payment providers must invest in modernizing their payments infrastructure or risk irrelevance. The potential for new offerings, customers, markets, and growth in emerging outcomes will be largely unachievable without investments in infrastructure, enabling capabilities, and talent. Savvy payment providers must partner with service providers such as Hexaware that have the capabilities necessary to help them through a rapid period of consumer-led change.