The co-founder of a cloud platform for global card processing insists that recent payment systems outages are the price the world pays for widely used yet outdated infrastructure.
Robert Kraal is the CBDO of Silverflow, which offers a cloud-native solution with a single API for card networks. He spoke after some of those flaws were exposed in recent incidents.
On July 18, the Bank of England experienced a temporary outage to the CHAPS interbank payment system, which processes 200,000 payments worth $467 billion daily. According to published reports, the failure was traced to an issue at SWIFT, a Belgium-based network that banks used to send secure international messages. That was quickly followed by a Microsoft outage that plagued systems worldwide.
While many technology areas iterate quickly, some banking infrastructure is decades old. Financial institutions cobble together systems as they add new functions. Different departments within a single entity deploy incompatible technologies, and acquisitions add more.
“The systems outages are a regrettable consequence of an outdated infrastructure,” Kraal began. “Some of the most vital parts of the payments ecosystem can be up to 40 years old and are held together with patches and workarounds. For the most part, this works, but these outages show that it can and does fail. So, would we advise that the entire payment system be torn out and replaced?”
“While it would certainly be good for us, a company that provides modern payment systems, it wouldn’t be good for payment companies or merchants who rely on them. Many of these legacy systems are irreplaceable, for now at least, and any replacements need to take place in a step-by-step, strategic way.”
Kraal said financial systems must view these incidents as calls to modernization.
“There may be ways that modern systems could have prevented the problems that we’ve seen this week, so we in the industry need to take a hard look at what can be modernized,” he said. “This is particularly true when it comes to data. Legacy payments systems weren’t built in the current ‘data is the new oil’ environment, so they weren’t built to provide payment companies with the data they can use to improve their systems and hopefully avoid problems in the future.”
