SiNSYS: Ensure payments innovation is on the cards – Dirk Brackenier
With the card payments sector at the mercy of shifting market trends, it is becoming more challenging for banks to respond quickly to customer demands. Dirk Brackenier of SiNSYS explains how outsourcing payments processing to a third party can provide economies of scale and position a bank firmly at the technological cutting edge.
The payment cards industry is rapidly evolving. Driven by a complex range of factors, both technological and socioeconomic, its pace of innovation shows little sign of letting up.
Take pre-paid cards, one of the fastest growing products on the market. In response to recent heightened customer demand, banks have become far more flexible in their offerings. This demand has, in part, been engendered by the financial crisis. Cardholders are approaching their finances with a new measure of caution, and increasingly view pre-paid cards as a good way to control their expenses. Banks, meanwhile, are using these cards to manage their risk.
More broadly, new breeds of European customers with very specific requirements are emerging across the continent. Lately, for example, there has emerged a trend for young people studying abroad to receive pre-paid cards from their parents. Banks are taking this as an opportunity to build new relationships, laying down roots for the years ahead and adapting their offerings as the students become professionals.
In some countries, governments are launching these cards as a means of paying social security. In others, where costly paper is being replaced with debit card systems, the incentive is primarily economic. Italy, for instance, has a high population of unbanked people and a burgeoning interest in pre-paid IBAN cards.
"We see a lot of diversity across Europe," says Dirk Brackenier, general manager of SiNSYS. "It depends on the needs and the typology of each market. What is important for us is to be able to see different functionalities based on different starting points."
The heterogeneity of this picture means that banks must remain inventive if they are to retain a stake in the competition. They need to keep abreast of changing trends, regulations and technologies, and adopt new systems accordingly. But, as Brackenier points out, this can prove a challenge, particularly for smaller banks.
"Banks often have restricted resources and sometimes also lack the knowledge and experience needed to implement new products quickly," he says. "Furthermore, they might not have the necessary investment capabilities to spearhead innovation, or the appropriate understanding of the regulations."
A rich variety of functionalities
Outsourcing these functions has, thus, come to be an appealing proposition. SiNSYS, a pan-European interbank company in the payment card service sector, was established to meet the plethora of demands that cannot easily be handled in-house.
The company is the first of its kind. With a portfolio of over 29 million cards, 700,000 merchants and a billion transactions per annum, processed in 12 countries, it offers a wide array of solutions across the entire card payments value chain.
While SiNSYS does not itself cover every link of this chain, it has a model in place that allows it to provide end-to-end outsourcing. Its offering is based upon processing services - supplied by SiNSYS - along with handling services in cooperation with regional partners.
"We have what is called an enterprise service bus, which is a web service layer that is able to connect applications from different providers," explains Brackenier. "There may be other partners involved but, with this enterprise service bus, they are connected to our main applications and the issuer's systems."
These applications are varied but SiNSYS' central mission is straightforward - to give clients an essential competitive edge. In practice, this means increasing revenues; rapidly bringing products to market; cutting costs through operational expertise and economies of scale; offering consultancy based on knowledge of European markets; and supplying flexible, tailor-made solutions.
Of particular advantage to partners, claims Brackenier, is SiNSYS' single issuing and acquiring processing platforms. "If you are active in ten countries," he says, "we do not have ten different platforms; we have one single application relevant to all your customers in all those countries." The platform integrates a number of additional applications, such as management tools and, where a particular functionality is available for one customer, it is automatically opened up to other customers too. The main benefit, however, is an economical and efficient set of processes - when regulations or technologies change, SiNSYS only needs to adapt its system once.
From the client's perspective, this is not a matter of tapping into a one-size-fits-all solution. In fact, they can retain a good degree of control over their outsourced functions. The modularity of the platform allows them to decide whether to use the full range of services on offer or to begin by scaling down to precisely what they require at present, requesting other services as and when they need them.
"We have a very flexible approach, allowing customers to design a part-programme based on their individual wishes," states Brackenier. "They can select from the rich variety of functionalities available on the system."
A shared gain relationship
Seen from the processor's point of view, the challenge is to manage the varying needs and priorities of different clients from different countries, while maintaining standards and platform consolidation as driving principles. "If you compare the Czech market with the Hungarian market, for example," posits Brackenier, "they have different expectations about how the same process can be implemented. The processor has to weigh this against their desire for harmonisation, which entails processing their services at a lower cost."
It is SiNSYS' job to achieve this finely tuned balance. Brackenier concedes that a pan-European programme is very difficult to implement, but SiNSYS' has multiple proven success cases where partnering with overseas clients has resulted in improved common processes, higher efficiency and cost savings.
The company's relationships with its banking customers might be described as symbiotic, with its own financial success tethered closely to that of its partners. This is not a matter of gainsharing per se.
"We are in favour of gainsharing in principle," says Brackenier, "but if you wish to apply it, you need to ensure that both parties can exert an influence over the result of the programme - that is, what the revenues and benefits will be. Banks are reluctant to share their decision-making processes." Instead, SiNSYS shares investments with its banking partners in ways that ensure the effort is repaid through a medium-term increase in business.
"In other cases, if we think a solution will be valuable for a bank, we will let them try it for a set period," says Brackenier. "And then, if it's not working for that client as well as we'd hoped, we stop it. Another way we contribute to gainsharing is by giving banks the tools to apply it with other parties."
A bold approach to outsourcing
This 'try before you buy' approach is just one example of SiNSYS' strong commitment to innovation. It has gained
a reputation as a processor that is unafraid to take on any number of new and different challenges. The company, for example, supports the Paylife prepaid card scheme, issuing both reloadable cards and disposable, anonymous gift cards. Extremely successful over the past few years, these cards have numerous functions developed by SiNSYS.
The issuer can take advantage of inventory management that supports distribution channels through sales partners, while the cardholder has reloading channels and advanced SMS pool services functionalities at his or her disposal.
"A quick return to market is becoming more and more important," says Brackenier. "Today there is an idea; tomorrow it will be implemented. When we look to the future, the developments we see in terms of pre-paid cards are in the mobile domain. We find that banks that manage payment systems in-house tend to struggle with this rapid rate of change. Our work is supporting this revolution."