Payment experts on a global mission

Pay­ments are the equiv­a­lent of the car­dio­vas­cu­lar sys­tem of an econ­o­my. Until recent­ly, pay­ments in the glob­al econ­o­my were dom­i­nat­ed by a few well-estab­lished play­ers who, dri­ven by economies of scale, grew for sev­er­al decades through merg­ers and acqui­si­tions into their cur­rent for­mi­da­ble size.

Dom­i­nat­ing the mar­ket, they have until now had lit­tle incen­tive to mod­ernise their tech­nol­o­gy. Pay­ment plat­forms for these insti­tu­tions were often built, at best, in the late-1970s to the mid-1980s and have not been mod­ernised since then, as there has been lit­tle moti­va­tion or need for these organ­i­sa­tions to change the way they work.

Today, how­ev­er, these estab­lished play­ers are com­ing under threat from new entrants with “rev­o­lu­tion­ary” pay­ment meth­ods and tech­nolo­gies, from mul­ti-appli­ca­tion smart cards and mobile devices to vir­tu­al cards and cur­ren­cies.

Accord­ing to Bloomberg Busi­ness­week, there are more than 1,500 star­tups now oper­at­ing in the new pay­ments meth­ods space, rang­ing from $1‑billion com­pa­nies to small­er play­ers with val­u­a­tions in of just a few dozen mil­lion dol­lars. Often these star­tups stem from uni­ver­si­ty room-mates try­ing to earn a bit of extra mon­ey, who invent some peer-to-peer trans­ac­tion sys­tem, build a pro­to­type mod­el and sell it off to inno­va­tion-thirsty investors, much as hap­pened in the inter­net and e‑commerce star­tups boom sto­ry of the late-1990s.

These star­tups have quick­ly realised the need for a mod­ern pay­ments plat­form that is ful­ly inte­grat­ed and flex­i­ble, but also secure, robust and scal­able, which can sup­port their growth to help them become real rivals to incum­bent play­ers. This, in turn, has increased the pres­sure on estab­lished pay­ment providers, who now also require mod­ern pay­ment plat­forms capa­ble of sup­port­ing mil­lions of busi­ness trans­ac­tions a day.

Although the need for such tech­nol­o­gy plat­forms seems to be well recog­nised by both groups, it is still not clear where this plat­form should come from. Pay­ment tech­nol­o­gy is a rel­a­tive­ly con­ser­v­a­tive area, more akin to a tra­di­tion­al bricks-and-mor­tar type oper­a­tion than a Sil­i­con Val­ley start­up. For decades the mar­ket was dom­i­nat­ed by very few monop­o­lies, which appeared impos­si­ble to break, mak­ing it unat­trac­tive to investors look­ing for short to mid-term exits to sup­port.

The result of this has been that the indus­try has failed to evolve or mature and has cre­at­ed a sit­u­a­tion where there is a strong demand for a new tech­nol­o­gy plat­form, but a lack of cred­i­ble sup­pli­ers.

BPC BANKING TECHNOLOGIES

There is, though, one provider capa­ble of deliv­er­ing such inno­va­tion. BPC Bank­ing Tech­nolo­gies with 140 cus­tomers – banks and pay­ment proces­sors – in 50 coun­tries on five con­ti­nents is a lead­ing play­er in the nar­row but extreme­ly sen­si­tive niche of pay­ment tech­nol­o­gy, pro­vid­ing solu­tions for all kinds of retail elec­tron­ic pay­ments through cards, mobile, inter­net and vir­tu­al cur­ren­cy.

Devel­oped and ful­ly owned by BPC, its pay­ment plat­form SmartVista has been con­sis­tent­ly ranked by Gart­ner as a lead­ing provider and in 2013 was named best tech­nol­o­gy pay­ment plat­form by Ovum. It has a strong track record: in the last 15 years not a sin­gle cus­tomer has been lost to a com­peti­tor and in the past five years it has been grow­ing at up to 70 per cent a year, despite the var­i­ous twists in the geopo­lit­i­cal land­scape and the glob­al econ­o­my.

With cus­tomers in ‘bank­ing break­through’ coun­tries, we have proved we can direct­ly address any emerg­ing tech­nol­o­gy needs, total­ly by-pass­ing lega­cy sys­tems

“But this is only begin­ning of the sto­ry,” says Ana­toly Logi­nov, chief exec­u­tive of BPC Bank­ing Tech­nolo­gies. “Although it took us near­ly 15 years to get ready, we are now unique­ly posi­tioned to sup­ply in full the glob­al demand for new pay­ments plat­forms.”

Head­quar­tered in Switzer­land, with sales and imple­men­ta­tion offices in major eco­nom­ic hubs, includ­ing Zurich, Madrid, Sin­ga­pore, Dubai, Lon­don, Johan­nes­burg, Pana­ma and Mia­mi, and devel­op­ment cen­tres in Europe, Rus­sia, the Mid­dle East and Asia-Pacif­ic, the com­pa­ny is well placed to help cus­tomers take advan­tage of new oppor­tu­ni­ties aris­ing in any part of the globe.

But how could all this hap­pen? “We are almost a text-book sto­ry,” says Mr Logi­nov. “What we have now is a result of a com­bi­na­tion of extreme luck, ambi­tious long-term plan­ning and strict adher­ence to very few, rather con­ser­v­a­tive, prin­ci­ples.”

The com­pa­ny was cre­at­ed in the mid-1990s by ex-Dig­i­tal Equip­ment Cor­po­ra­tion employ­ees, who were respon­si­ble for projects for the finan­cial indus­try.

“From the very begin­ning, we want­ed to chal­lenge the glob­al monop­oly of a very few play­ers with pro­pri­etary solu­tions, and cre­ate mod­ern, ful­ly inte­grat­ed, flex­i­ble and scal­able plat­forms that could han­dle both exist­ing and future pay­ment types,” says Mr Logi­nov. “We also want­ed to sup­port or cre­ate any prod­uct they want­ed and for them to be ful­ly free to choose the envi­ron­ment they like – hard­ware, sys­tems, periph­er­als, ter­mi­nals, cards – all with the same or bet­ter func­tion­al­i­ty as exist­ing pro­pri­etary solu­tions.”

The busi­ness ini­tial­ly drew on the expe­ri­ence of its founders, but also ben­e­fit­ed from the exper­tise of tal­ent­ed Russ­ian soft­ware devel­op­ers to con­struct the SmartVista plat­form. With a back­ground in for­mer Sovi­et Union space and physics research insti­tu­tions, these skilled indi­vid­u­als helped imple­ment the plat­form in soft­ware codes, ensur­ing some of the largest finan­cial insti­tu­tions in East­ern Europe were able to progress from noth­ing to using the most up-to-date solu­tions, as well as act­ing as a test-ground for the new­ly built plat­form.

The busi­ness ini­tial­ly focused on ensur­ing its tech­nol­o­gy was proven, with organ­i­sa­tions that were will­ing to take advan­tage of being “first movers”. One ear­ly cus­tomer was Sber­bank in Rus­sia, who from start­ing with few­er than 100 ATMs today uses the SmartVista plat­form to han­dle more than 20 mil­lion trans­ac­tions every day, from 70,000 ATMs, 10,000 kiosks and 300,000 point-of-sale ter­mi­nals.

Nei­ther is this con­fined to basic func­tion­al­i­ty as SmartVista enables the inte­gra­tion of inter­ac­tive voice and video com­mu­ni­ca­tions from Sber­bank ATMs, using Adobe Flash Play­er and web browsers to cre­ate a voice-over-IP ses­sion between cus­tomers and call cen­tre staff. “Essen­tial­ly this sys­tem can be used to turn each ATM into a mini-branch, where cus­tomers can inter­act with bank staff remote­ly to get advice and assis­tance,” Mr Logi­nov explains.

BREAKING NEW GROUND

BPC Bank­ing Tech­nolo­gies, though, has a longer-term ambi­tion to chal­lenge the monop­oly of exist­ing pay­ment tech­nol­o­gy providers and become a tru­ly glob­al play­er. “Many of our com­peti­tors, who mush­roomed at the same time as us in the wake of oppor­tu­ni­ties in emerg­ing mar­kets, were tempt­ed to build quick solu­tions to address the local and imme­di­ate needs of cus­tomers ran­dom­ly scat­tered over the globe, who could not afford solu­tions from the dom­i­nant glob­al providers,” says Mr Logi­nov.

These busi­ness­es gained an ini­tial advan­tage and mar­ket share, he says, but were unable to sus­tain their cus­tomers’ growth when it came to more mature and diver­si­fied mar­kets. “Now we do not see them any­more,” he adds. “Our next ambi­tion is to chal­lenge the incum­bent lead­ing sup­pli­ers where they are strongest at first-tier glob­al accounts.”

The busi­ness intends to achieve this goal by stick­ing to the same basic prin­ci­ples that served it so well at the begin­ning of its jour­ney. “We will con­tin­ue to build tru­ly glob­al, ful­ly func­tion­al and flaw­less­ly inte­grat­ed solu­tions while stay­ing cus­tomer focused and cus­tomer depen­dent,” says Mr Logi­nov. “Often peo­ple assume ‘glob­al’ means US focused, but with SmartVista, we bring a wealth of busi­ness and tech­nol­o­gy solu­tions, and ideas accu­mu­lat­ed from our cus­tomers in 50 coun­tries.”

With SmartVista, we bring a wealth of busi­ness and tech­nol­o­gy solu­tions, and ideas accu­mu­lat­ed from our cus­tomers in 50 coun­tries

BPC cer­tain­ly boasts an impres­sive inter­na­tion­al cus­tomer list, includ­ing ERSTE Group, where it is build­ing a com­mon card plat­form on a sin­gle site to replace mul­ti­ple sys­tems in sev­en banks acquired by the group in East­ern Europe, and the State Bank of Mau­ri­tius, where it has replaced 11 dif­fer­ent appli­ca­tions with SmartVista to cre­ate a ful­ly func­tion­al and seam­less­ly inte­grat­ed solu­tion.

Oth­er notable exam­ples of cus­tomer projects around the globe include a micro­fi­nance scheme in Cam­bo­dia where BPC was among the first to deploy bio­met­ric tech­nol­o­gy at ATMs, and oth­er ini­tia­tives focused around pure­ly mobile trans­ac­tions in coun­tries such as Kenya and Malawi, Afghanistan and Iraq.

“As Bill Gates said, with cus­tomers in ‘bank­ing break­through’ coun­tries, from Indone­sia to Namib­ia, Botswana, Kenya and Malawi to Viet­nam, Cam­bo­dia, Laos and Myan­mar, we have proved we can direct­ly address any emerg­ing tech­nol­o­gy needs, total­ly by-pass­ing lega­cy sys­tems,” says Mr Logi­nov.

The orig­i­nal data­base and built-in prod­uct para­me­ter­i­sa­tion mech­a­nism, which allows cus­tomers to incor­po­rate new pay­ment chan­nels and prod­ucts imme­di­ate­ly, while main­tain­ing inte­gra­tion with nec­es­sary infra­struc­ture – some­thing often neglect­ed by star­tups – will also remain, allow­ing cus­tomers to main­tain stan­dards around issues such as secu­ri­ty, through­put opti­mi­sa­tion, audit­ing, report­ing and ana­lyt­ics.

In addi­tion, the busi­ness, for now, will stay pri­vate­ly owned, adds Mr Logi­nov, mean­ing it can ensure its focus remains on help­ing cus­tomers and avoid any expo­sure to mar­ket fluc­tu­a­tions or oth­er exter­nal forces beyond its con­trol.

The busi­ness is now ready to take on the chal­lenge of using SmartVista to replace lega­cy solu­tions, while sup­port­ing new pay­ment meth­ods. To date, estab­lished first-tier glob­al pay­ment providers and big-name pay­ment star­tups have proved unwill­ing or unable to take the nec­es­sary steps, but Mr Logi­nov remains con­vinced they will soon realise this is the only way they can sur­vive in the mod­ern pay­ments era.

“We are ful­ly ready both to replace lega­cy sys­tems for estab­lished play­ers and build future-proof plat­forms for seri­ous mod­ern star­tups,” he says. “They will come – because there is no one else who can offer the right plat­form for their needs.”