Published by Gbaf News
Posted on July 27, 2016
10 min readLast updated: January 22, 2026
By Shakir Ladak, CTO, Alpha Insight
Shakir Ladak
Speed and convenience have never been more in demand in the banking sector. The digitisation of the economy, the spread of smartphones and e-commerce are all generating huge pressure for the general acceleration of payments.
Alongside this are new fintech companies which focus on the user-experience and threaten established rivals with their technological ability to adapt quickly to changes in consumer behaviour. All of these forces have led to a growing consensus within the banking sector that payments will have to become instant or immediate, clearing in 15 seconds or less.
The European Payments Council already regards the creation of an immediate payments mechanism as a major priority, recognising the benefits in facilitating transactions for consumers and improving cash-flow and certainty for businesses.
In the UK banking sector, which already has the Faster Payments System, 24/7 instant payments are inevitable, with examination of the potential solutions now well-advanced. Meanwhile the US and Australia are not so far behind, with Norway, China and Brazil all entering the field. Indeed, developing countries may implement solutions more quickly, given the absence of conservative institutions in their financial infrastructure.
We can see that within the next five years, banks wanting to offer payment products rather than loans and investments will view instant payments as the norm, even if a universal, international scheme is a long way off.
Hampered by the past (Legacy Systems)
Predictably, the difficulty is that banks have to provide these new services with systems that are infamously unreliable and built up in the past in response to specific needs and requirements.
It is in overcoming this major challenge that operational intelligence solutions will become indispensable to success. Otherwise institutions risk a repeat of the 2012 Ulster Bank fiasco, in which 600,000 customers were unable to access banking services for nearly one month. This was an example of a home-grown solution failing to withstand the demands placed up on it.
Implementation of instant payments requires a radical rethink, with the working day extended to match consumer demand. For banks, operational intelligence is what will enable them to achieve this without a major overhaul of core banking systems.
Otherwise, it remains a daunting task. How can a bank detect new types of fraud that will inevitably occur, while monitoring its end-to-end service level agreements, new information flows and formats? At the same time it will have to build a support organisation to intervene when systems flag up that something in the new system of processing is going wrong.
Averting danger
The answer lies in operational intelligence solutions which allow a bank to do far more than simply monitor thousands of KPIs. They sort the wheat from the chaff, establishing what is critical in a bank’s business flows, using eye-catching visualisations that flag up dangerous bottlenecks in the processing of payments so that staff can intervene before any damage is done.
There is certainly a pressing need for this approach as banks enter into partnerships with software vendors to address the technological requirements for demanding new standards that will require clearing within a matter of seconds.
This is indeed a significant change. Currently, for example, UK banks have different standards for payments that may be going through the same system, such as CHAPS. One bank’s cut-off time for payments to go through to a set deadline, differs from another’s.
Coping with huge volumes
Clearly, as current technology is upgraded to facilitate the new standards, it will have to cope with vastly greater numbers of transactions than are currently processed.
Although fintech innovators may be touted as potentially having some silver bullet solution, in reality low margins on payments mean it will be many years before they are in a position to be a significant force in this market.
The truth is that the established banks will have to work with vendors to radically overhaul current payment systems, rather than dynamiting their core infrastructure and starting afresh.
Dealing with regulation
The danger is that moving to immediate payments in this way will leave banks with systems in which they lose sight of the transactional activity they are processing.
Not only will they run the risk of failing to meet important deadlines and obligations, they will also jeopardise their ability to fulfil the requirements of regulators, which, as is widely acknowledged, have become ever more onerous.
There is a genuine risk that these new immediate payments systems will be fatally undermined by their inability to successfully monitor end-to-end business activities, identify threats or areas of inefficiency or deliver operational performance. As a result, they will be unable to meet the reporting requirements of national and international banking regulators, with potentially severe consequences.
Operational excellence
The solution to these looming problems must involve operational intelligence. This means having the capability to achieve real-time visibility and insight into business and IT operations by running query analysis against live feeds and event data.
Monitoring tools feed streams of data into an operational intelligence solution, enabling immediate action to be taken in response to real-time alerts that are derived according to the right business logic.
This operational intelligence solution can provide a holistic view, flagging up bottlenecks or imminent processing failures before they do damage, using a predictive capability of great speed and accuracy.
Right across the immense project of upgrading to enable immediate payments, it is operational intelligence that will give banks the confidence and reassurance that performance can be measured in real-time so that customers and regulators alike are fully satisfied.
With payments becoming near-immediate, it is vital that a bank has near-instant operational intelligence so it can capitalise on the many opportunities opening up.
By Shakir Ladak, CTO, Alpha Insight
Shakir Ladak
Speed and convenience have never been more in demand in the banking sector. The digitisation of the economy, the spread of smartphones and e-commerce are all generating huge pressure for the general acceleration of payments.
Alongside this are new fintech companies which focus on the user-experience and threaten established rivals with their technological ability to adapt quickly to changes in consumer behaviour. All of these forces have led to a growing consensus within the banking sector that payments will have to become instant or immediate, clearing in 15 seconds or less.
The European Payments Council already regards the creation of an immediate payments mechanism as a major priority, recognising the benefits in facilitating transactions for consumers and improving cash-flow and certainty for businesses.
In the UK banking sector, which already has the Faster Payments System, 24/7 instant payments are inevitable, with examination of the potential solutions now well-advanced. Meanwhile the US and Australia are not so far behind, with Norway, China and Brazil all entering the field. Indeed, developing countries may implement solutions more quickly, given the absence of conservative institutions in their financial infrastructure.
We can see that within the next five years, banks wanting to offer payment products rather than loans and investments will view instant payments as the norm, even if a universal, international scheme is a long way off.
Hampered by the past (Legacy Systems)
Predictably, the difficulty is that banks have to provide these new services with systems that are infamously unreliable and built up in the past in response to specific needs and requirements.
It is in overcoming this major challenge that operational intelligence solutions will become indispensable to success. Otherwise institutions risk a repeat of the 2012 Ulster Bank fiasco, in which 600,000 customers were unable to access banking services for nearly one month. This was an example of a home-grown solution failing to withstand the demands placed up on it.
Implementation of instant payments requires a radical rethink, with the working day extended to match consumer demand. For banks, operational intelligence is what will enable them to achieve this without a major overhaul of core banking systems.
Otherwise, it remains a daunting task. How can a bank detect new types of fraud that will inevitably occur, while monitoring its end-to-end service level agreements, new information flows and formats? At the same time it will have to build a support organisation to intervene when systems flag up that something in the new system of processing is going wrong.
Averting danger
The answer lies in operational intelligence solutions which allow a bank to do far more than simply monitor thousands of KPIs. They sort the wheat from the chaff, establishing what is critical in a bank’s business flows, using eye-catching visualisations that flag up dangerous bottlenecks in the processing of payments so that staff can intervene before any damage is done.
There is certainly a pressing need for this approach as banks enter into partnerships with software vendors to address the technological requirements for demanding new standards that will require clearing within a matter of seconds.
This is indeed a significant change. Currently, for example, UK banks have different standards for payments that may be going through the same system, such as CHAPS. One bank’s cut-off time for payments to go through to a set deadline, differs from another’s.
Coping with huge volumes
Clearly, as current technology is upgraded to facilitate the new standards, it will have to cope with vastly greater numbers of transactions than are currently processed.
Although fintech innovators may be touted as potentially having some silver bullet solution, in reality low margins on payments mean it will be many years before they are in a position to be a significant force in this market.
The truth is that the established banks will have to work with vendors to radically overhaul current payment systems, rather than dynamiting their core infrastructure and starting afresh.
Dealing with regulation
The danger is that moving to immediate payments in this way will leave banks with systems in which they lose sight of the transactional activity they are processing.
Not only will they run the risk of failing to meet important deadlines and obligations, they will also jeopardise their ability to fulfil the requirements of regulators, which, as is widely acknowledged, have become ever more onerous.
There is a genuine risk that these new immediate payments systems will be fatally undermined by their inability to successfully monitor end-to-end business activities, identify threats or areas of inefficiency or deliver operational performance. As a result, they will be unable to meet the reporting requirements of national and international banking regulators, with potentially severe consequences.
Operational excellence
The solution to these looming problems must involve operational intelligence. This means having the capability to achieve real-time visibility and insight into business and IT operations by running query analysis against live feeds and event data.
Monitoring tools feed streams of data into an operational intelligence solution, enabling immediate action to be taken in response to real-time alerts that are derived according to the right business logic.
This operational intelligence solution can provide a holistic view, flagging up bottlenecks or imminent processing failures before they do damage, using a predictive capability of great speed and accuracy.
Right across the immense project of upgrading to enable immediate payments, it is operational intelligence that will give banks the confidence and reassurance that performance can be measured in real-time so that customers and regulators alike are fully satisfied.
With payments becoming near-immediate, it is vital that a bank has near-instant operational intelligence so it can capitalise on the many opportunities opening up.
Explore more articles in the Top Stories category
