The 21-century payments industry is part of a sector that has come to reward financial institutions (FIs) prepared to push the boundaries by finding new, innovative ways of making money management user-friendly and convenient. Similarly, it does not suffer fools gladly. Mistakes are not easily forgiven.
More recently, sector success stories tend to flow from challenger banks and innovative money app start-ups. Clever people with clever ideas who think outside the box. Often the driving Ideas can retrospectively appear to be so simple we wonder why we didn’t think of them in the first place. Yet, there is one “box” organisations in financial services might want to think very much inside, and that’s the experimental sandbox.
Historically, military tacticians would plan military supply lines, troop formations, defensive strategy and so on, quite literally by drawing them in a box of sand. Now while IT developers and military personnel are an unlikely pairing, the historic term transfers nicely.
A sandbox is an isolated testing environment that offers FIs room to roam, room to succeed, room to fail, and room to try again. It lets organisations test new ideas and respond to regulatory requirements using real transaction types. Businesses can assess the effects of new services and validate them as part of their pre-live testing, eliminating risk and instilling confidence.
Thanks to the arrival of 21-century cloud-native technology, the concept of an experimental sandbox isn’t restricted to larger organisations who can afford the extra server space. Instead, the sandbox becomes an affordable operational expense, paid for when required rather than as an upfront capital investment.
Addressing the diversification agenda
The evolution of consumer spending behaviour has accelerated at pace in recent times. Consumers are savvier about how they spend and the payment tokens available to them.
This trend comes at a very interesting time for the payments industry. While on the one hand, we’re witnessing a heightened sense of sophistication in consumer expectations, on the other, innovation in the payments industry has been anesthetised due to a lack of modern infrastructure and the embargo this has placed on new innovations. Some challenger banks’ capacity to offer a reliable, fault free service has also been negatively affected by infrastructure issues.
The industry has reached a pinch point; it’s starved of innovation because the technology it’s embedded in is like an old racehorse; weary, stubborn, and if pushed, likely to collapse. The capacity to respond quickly to consumer demands with agility and flexibility isn’t realistic under these conditions.
The sharp rise in demand for new payment services is outgrowing supply. This change is both a threat and an opportunity for payments organisations. It has cranked up the pressure on businesses to get creative and get responsive. At the same time, there lies an omnipresent danger; if processes are rushed, things tend to break – particularly in a heavily regulated compliance environment.
Organisations need to be able to test fast, test deep, and test often. The risk of rushing and falling shy when it comes to testing practices bears significant risk. The volumes of negative media reports covering outages and IT meltdowns by FIs who have taken shortcuts is proof enough of this risk.
Testing for tomorrow
An experimental sandbox environment lets businesses simulate the effect of new services against the kinds of transaction profiles they are managing today, and crucially, their plans for tomorrow. Representative Transaction Files can be generated to reflect different payment ecosystems and thoroughly evaluated, so no stone is left unturned prior to live deployment. New services are validated as part of the pre-live testing and deployed almost immediately thereafter—at pace, with confidence.
Proving change is possible
From a business management perspective, an experimental sandbox offers one further crucial advantage: it creates internal confidence. Businesses, particularly larger businesses that are used to operational stability need this level of assurance if the entire operation is to buy into the concept of transformation, which is an essential success ingredient.
With a sandbox practice in place, new ideas can be validated, proven and deployed at an immense pace, outstripping the previous release models of vendor dependant upgrades. The more this happens, the more demonstrable proof points are created and the more collective confidence a business can garner.
Speeding up the time to market of new services for a financial organisation allows for a huge advantage over their competitors. It creates a real sense of sustainable progress and influence when it comes to creating the product roadmap they really want.
There’s a difference between being reactive and proactive when it comes to payments technology; it’s like treading water versus swimming to the end of the pool. The level of competitive agility created by the sandbox model allows businesses to get ahead – and stay ahead, rather than floating around in the same water as everyone else in the market hoping to make it out alive.
Some organisations may say they aren’t ready to migrate to the cloud, so how does this help? 21-century technology means a sandbox designed using cloud-native technology isn’t prescriptive. It can be deployed into the cloud, of course, but it can also be deployed onto on-premise servers, as well as a variety of hybrid configurations. It’s a choice that can be made by the business depending on what suits their individual requirement; it’s having full control over the deployment choice of technologies that is key.
Giving a new service it’s first ‘real’ test in a live environment bears too much risk. Testing is a practice that organisations in an increasingly competitive payments environment simply cannot afford to get wrong. Consumers aren’t loyal to brands like they once were, they’re loyal to organisations that guarantee good service. Fortunately thanks to the availability of experimental sandboxes, this is something businesses of all sizes can now achieve, affordably and risk-free.