Company insight
on having the systems in place, having a single data source and being able to do something with that data. The beauty of payments is that if I’m an organisation that provides access to payments services, I know more about the customer than their bank – what you spend, where, and who with.”
“That data is an incredibly valuable asset but you need to put it in one place with one set of control procedures to get insights from it, control costs and build analytical models and start to have high- value fraud alerts, for example, based on a real understanding of individual customers,” he continues. “Payments is the on-ramp to value-added services. Customers want fraud alerts instantly and merchants want a high success rate and want to know that the payments providers have the right infrastructure.” In other words, banks do have some advantages. For instance, different geographical regions embrace mobile payments at different speeds. The UK, western Europe, Asia and Scandinavia are all engaging at different speeds. That means a provider needs many different technologies to satisfy global agenda and regional differences in adoption rates – meaning banks enjoy a head start.
processing. It provides a digital payments solution that automates reconciliation, settlement, fee calculation and dispute management processes for market participants of all kinds, so it sees the problems and the opportunities from both sides.
“Banks have a technical legacy debt, but they have put in place mission control and enterprise capability that fintechs and non- banks have not, though they use newer technologies to address those problems,” Kilcoyne says. “Non-banks often acquire companies that have different solutions that may not be enterprise-ready, so may have to talk to us at SmartStream to help them with global support and regional level control and enterprise capability.”
The application of AI A hallmark of SmartStream’s approach is the application of artificial intelligence (AI) and machine learning (ML) to specific pain points in the financial transaction lifecycle. These technologies are capable of supporting both large banks and small fintechs in streamlining the payments process.
“Fintechs and non-banks are having to go through some of the same problems that banks went through,” Kilcoyne explains. “These are multi-disciplinary problems,
“Fintechs and non-banks are having to go through some of the same problems that banks went through. These are multi-disciplinary problems and one part of it stems from the software components, and another part is global experience.”
“Non-banks have an interesting problem in that the volume growth they are experiencing is substantially ahead of the predictions they made a few years ago,” says Kilcoyne. “So, they have point solutions to address particular volume projections, and they have worries about what happens if things go better than planned. “The controls, processes and systems they have are actually not satisfying the demands of global penetration and of their unanticipated growth,” he adds. SmartStream assists some of the world’s largest banks – and many non-banks and emerging fintechs – with payments
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and one part of it stems from the software components, and another part is global experience. We may have more experience of global market operations and regulations than some of the fintechs themselves, so we can help them position themselves. “We also have a lot of experience of the challenges that larger organisations face in terms of diversification, and in an environment where regulations are becoming more strict our solutions must always be compliant and ready for inspection by auditors or regulators,” Kilcoyne continues. “Fintechs benefit from solutions prepared for large T1
banks, and the rigour and oversight that demands.”
At the same time, the company offers an in-depth understanding of the financial services market. It appreciates the industry’s reliance on high-quality data – and the business problems that data can help solve. “We call it ‘domain recs’ – domain reconciliations – which derive from specific use cases and the provision of functionality to solve specific business problems,” says Kilcoyne. “For example, organisations usually do a point-to-point reconciliation: matching a debit to a credit. But what happens when they need to match one to many or many to one? How do they match the corresponding transactions? We do that for all kinds of securities and for many other asset classes. “With us, fintechs can leverage big bank DNA,” Kilcoyne continues. “Banks are always involved somewhere in the chain, so they benefit from knowing that all the other elements in the chain are well controlled. That improves both their operational overhead and their risk profile. It creates a more elegant ecosystem. The data is everything, and it helps to know it is clean and well controlled.” SmartStream first helps to ensure that high-quality data is generated throughout an organisation. This data can then be fed into analytical models powered by AI and ML, helping it spark meaningful insights – and positive customer outcomes. “Any analytical model is only as good as the data used to calibrate it in the first place,” Kilcoyne explains. “That is what we specialise in and we pride ourselves on our rich data control infrastructure. Organisations that provide payment services know a lot about customers, but ML models help them to learn more about customers and their behaviours.”
“They create an ecosystem that provides corporate intelligence and customer intelligence, which creates a virtuous circle,” he adds. “The models give organisations more intelligence, so customers give them volume, which enables better services such as fraud detection. With data you get facts, not opinion. ML models help an organisation learn and improve to deliver better outcomes with shorter lead time.” SmartStream prides itself on never using AI or ML for their own sake – but only when
Future Banking /
www.nsbanking.com
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