The global digital payments ecosystem continues to evolve as new and incumbent financial institutions, payment networks, central banks, governmental agencies, businesses and other market players push for innovation. They all work toward the common goal of creating secure, compliant, real-time, ubiquitous and low-cost payment rails.

Payment rails are the most critical element when thinking about payments

No matter their size, scope or sector, all businesses that handle transactions and transfers deal with payments—and this means dealing with payment rails.

In a nutshell, a payment rail is a platform or network infrastructure that allows all digital money transfers to be made between payers and payees, regardless of country, currency, payment method, channel or persona (whether the payer or payee is a business or consumer). Each rail differs in how it carries out this payment workflow based on the payment type, speed, technology, settlement network or geographical location.

Using IBM Cloud to transform global payments rails

The need for continuously available payment processing requires a rethinking of end-of-day cycles and introduces the need for stand-in processing for the times when host applications are down for end-of-day cycles or unavailable due to system outages or maintenance. Liquidity must be managed 24 hours a day to ensure the availability of funds for both customers and the bank’s real-time payments, alongside clearing and settlement systems.  

There’s a huge opportunity for banks to work together to reinvent the way that payments operate across the financial infrastructure.

IBM Cloud for Payments provides a secure foundation for global growth in payments that opens new revenue streams, maintains positive customer experiences and ensures secure transactions (while maintaining the highest compliance standards). IBM Cloud for Payments offers end-to-end, as-a-Service solutions for check payments, cross-border payments and real-time payments.

When the payments infrastructure is digitized, payments management, cash forecasting and other payment operations improve. As clients further digitize legacy infrastructure, they start to get data faster and more consistently (even in real-time). That improves the clients’ overall cash forecasting, which results in their ability to move funds around and make liquidity decisions faster for innovation and growth.

Leveraging AI and machine learning to combat payments fraud

Cyberattacks, fraud, payment processing and fraud detection are all constantly innovating and clients expect the speed of their payments to keep up. Having integration with IBM Safer Payments (a real-time payment fraud monitoring solution) will help clients to improve fraud detection, manage through false positives and stay on top of new threats, without slowing down their transactions.

IBM Safer Payments on the IBM Cloud platform comes with an array of statistical, modeling and model-support tools to help financial crime professionals build models that can rapidly recognize and stop new/episodic payment fraud attacks across all cashless payment systems. Clients can also leverage IBM Watson Studio to develop new or revised models with considerably less data and realize faster model update cycles.

Building a cyber resilience strategy for critical payments infrastructure

Cybercrime costs are growing exponentially, with a 10% increase in average total cost of a breach.

The Society for Worldwide Interbank Financial Telecommunication (SWIFT) provides a network that enables financial institutions worldwide to send and receive information about financial transactions in a secure, standardized (ISO20022) and reliable environment. SWIFT linked more than 12,000 financial institutions (20,000 entities in total) across 200+ countries and territories—all of which are exchanging ~50M financial messages per day (10B/year).

To achieve frictionless cross-border payments requires a community effort; no bank can achieve this in isolation. The inability to communicate financial messages between systems disrupts the international market, especially in the event of a cyberattack where we have ripple effects on the overall world economics. This is putting payment providers under pressure and requires banks to rethink the strategy about digitizing their payment infrastructure with resiliency and regulatory compliance to modernize payment mission-critical workloads.

Cyber resilience is more than security—it’s a component of operational resilience, which is the primary focus of DORA and other regulations. IBM offers a cyber-resilient SWIFT environment independent from SWIFT users’ nominal environments. In the event of a cyberattack, the SWIFT user can continue flowing messages through this SWIFT resilience environment. The solution is built on IBM Cloud for Financial Services, leveraging its built-in security and compliance framework.

Conclusion

When making or receiving a payment, extra time, lack of predictability and visibility, and loss of information can all have costly consequences. That’s why when it comes to reducing friction in payments—whether it’s check, wire, real-time or cross-border payments—financial institutions have no time to waste.

It’s essential to rethink old approaches by moving from transactional to cross-functional thinking. You can eliminate silos by modernizing payments infrastructure, establishing interoperability between payment rails messaging formats with ISO20022 compliance, and adhering to evolving regulatory and compliance legislation.  

Over the years, IBM has continued to offer innovative technologies—from building a check processor to launching IBM watsonx. We help financial institutions modernize their payment systems with the highest level of security and cyber resiliency on IBM Cloud for Financial Services. We also provide access to real-time innovation, enabling our clients to capitalize on new payment rails as they come to market with the same rigor of security and compliance.