How you provide payments solutions often depends on where you are providing them, HPS CEO Abdeslam Alaoui Smaili said.
Based in Africa, HPS is a payment solutions provider that has branched out into developed markets around the world. The best solutions for any one company vary on many factors, Mr. Smaili said.
Plenty has changed during HPS’s 27 years in business, but one key decision made early on has kept it on target, Mr. Smaili said. Instead of approaching a problem from the IT perspective like most companies do, they first consider the user’s perspective. What’s their knowledge level of technology? What are their clients’ needs? How well can they work with a solution?
Normal solutions took months to implement and were expensive, Mr. Smaili said. Back in the 1990s, executives cringed at the prospect of down time, and that’s only gotten worse since. That factor had HPS focus on more seamless add-ons, beginning with ATM functionality and debit, credit and pre-paid cards. Their goal was a one-stop B2B shop where customers could buy only the functions they required.
The reason significant technological change is so complex is it needs to touch many different parts of a system, Mr. Smaili explained. You have to open one project for each part of the system. Instead, thing about simpler integrations which can meet the client’s needs while keeping things as basic as possible.
“You maintain that equilibrium,” Mr. Smaili said. “Don’t bring sophistication without value.”
HPS operates in three distinct markets and has a different approach to serving each one, Mr. Smaili said. In the markets they have served for a while it’s about providing long-time customers with the tools to defend market position and keep them on top. When dealing with regions they have more recently expanded to such as Europe, North America and Southeast Asia, the discussion centers around replacing legacy systems, which in some cases may be more than three decades old and are costly to maintain. While in more agile systems customers can try add-ons to see their effect, the size of that job doesn’t make sense for legacy tech operators.
“On legacy systems this approach is not just possible,” Mr. Smaili explained.
In these situations it is a mindshift, where financial institutions look at new ways of doing business where they issue, acquire and complete other activities at a reasonable cost. The time to market is good as instead of months or years, projects become live in days or weeks.
Their third market are digital banks and fintech firms which also need adaptable technology, which Mr. Smaili likens to building blocks that are interoperable with other components that can even come from different providers. There is risk involved in migrating millions of account histories, he said, but the process is assisted by an HPS aging mechanism that projects the significance of data years ahead of time so it can be prioritized.
The most interesting developments are occurring in emerging markets, as most have skipped several iterations markets like North America experienced. It was mostly cash to mobile, with nothing in between. That meant HPS had to prioritize user experience and consider functionality on the models of phones most in use in each market. A simple and intuitive UX was crucial.
Such markets were also more patient with when they expected profits to start being generated, Mr. Smaili said. The ROI could be three years. That wouldn’t cut it in New York.
“At the end of the day it is the same goal,” he said. “We have to enable people to buy and sell and to be actors in their economy.”
In those developing markets competitors are more likely to be mobile operators, who quickly understood the level of penetration of the technology, much quicker than banks did, Mr. Smaili said. They’re not lenders but transaction processors, and those are lower risk but higher commission activities with much quicker payouts.
“Our positioning is really in the middle of this because at the end of the day there is payment everywhere,” Mr. Smaili said. “There is in the banking industry, it is in the telco industry, it is everywhere.”
Another key factor is what Mr. Smaili called Financial Inclusion 2.0. There is so much potential to help people better manage their financial affairs. Only those who actually need subsidies receive them. He imagines a person accepting a small payment and immediately sending portions of it to utilities, insurance providers and school fees. Because the user would be registered, their name and address are likely on file. That enables credit scoring which opens the possibility of small loans.
“This small device, when properly managed can pull up a whole country,” Mr. Smaili said. “We have seen this in Kenya, we have seen this Ghana where it has really impacted the communities positively.”
Contributors
