Vinay Prabhakar of Volante Technologies Reveals Biggest Regulatory Challenges Facing Businesses in Fintech

Volante Technologies, a payments-as-a-service (PaaS) software provider, recently announced that it was recognized for providing Wholesale Payment Systems. According to Volante, payments modernization efforts will improve instant payments, cross-border payments, and extended data capacities, yet are bottlenecked by both educational shortcomings as well as regulatory challenges.

Vinay Prabhakar, CMO at Volante, has provided actionable insights on how financial businesses can understand and capitalize on the exciting technological advancements available to them, including cloud-based, low-code PaaS payments solutions.

Prabhakar brings decades of experience working in Fintech to Volante, which is constantly iterating as it focuses on enhancing the financial and banking services ecosystem.

Our discussion with Vinay Prabhakar is shared below.


Crowdfund Insider: Could you give us a quick introduction on Volante Technologies?

Vinay Prabhakar: Volante is a global provider of cloud payments modernization solutions to financial businesses. Founded in 2001 in Silicon Valley, they’re recognized as one of the top players in FinTech, processing millions of transactions and trillions in value every day through their Payments as a Service (PaaS) platform.

Crowdfund Insider: How do banks and other financial businesses utilize your technology?

Vinay Prabhakar: Banks and other financial institutions rely on Volante to modernize their payment systems to enable 24×7 instant payment processing, ISO 20022 messaging, and more. This tech lets users spend less time maintaining technology and more time focusing on growing their businesses by creating payment services for their customers, benefiting consumers and businesses everywhere.

Crowdfund Insider: What are the biggest regulatory challenges facing businesses in FinTech and the broader financial sector?

Vinay Prabhakar: ISO 20022 mandates for domestic and cross-border payments. Many countries and cross-border payments networks are migrating their communications protocols to use ISO 20022 messaging. ISO 20022 is a vastly superior standard, allowing complex data to be attached to payments and allowing for non-payment messages like Request for Pay or billing messages.

However, ISO 20022 is different enough from previous standards that many legacy systems are unable to handle the new message types, meaning they either need to be upgraded, retired, or worked around. This creates a great deal of modernization complexity. Most ISO 20022 deadlines fall within the next 18 months, including the US Fedwire system and SWIFT cross-border payment processing. It would not be an exaggeration to say that the ISO 20022 program, for banks, is like Y2K was for the technology world – a massive driver of investment and effort.

Real-time payments:

Many countries are in the process of updating or replacing their payment systems to be real-time. In some cases, like SEPA instant payments in the EU, adoption of these payment mechanisms is mandatory. The combination of real-time processing and 24×7 availability creates significant technical challenges for financial institutions. Even where adoption is not mandatory, competitive pressures will likely force institutions to adopt new payments capabilities. Also, most modern real-time payment networks are based on the ISO 20022 standard, com, further compounding the modernization challenge.

Reporting – There are numerous reporting requirements from a mix of national governments and regulatory bodies that collectively place substantial burdens of regulatory monitoring and reporting on regulated financial institutions.
How do Payment-as-a-Service (PaaS) technologies accommodate the increasing demand for instant payments and cross-border payment capabilities?
PaaS is an ideal approach to accommodating the demand because it can be used to extend a bank’s infrastructure with minimal impact to existing systems. Additionally, PaaS requires no upfront investment in hardware, so a bank can start with very low volumes processed at very low cost, adding processing capability in a continuously scalable way. Most importantly, PaaS platforms allow banks to continue providing higher-value, innovative services that differentiate them from competitors.

Finally, compliance is complex, particularly for instant payments and for cross-border payments. PaaS providers and their cloud partners are continuously investing in security, privacy and compliance, meaning that banks can spend less time and effort in these areas. Volante has expended considerable effort on achieving SOC1, SOC2, ISO 27001:2013 and PCI DSS certifications, to mention just a few of the many standards that apply and that increasingly are becoming a minimum requirement for financial institutions considering a PaaS partnership.

Crowdfund Insider: How do you see the approaching ISO 20022 migration readiness deadlines affecting financial businesses’ shorter-term plans?

Vinay Prabhakar: Financial businesses that must comply with the ISO migration mandates and deadlines are currently evaluating the following options to meet compliance:

Upgrading an existing system to handle the ISO 20022 message circuitry: In some cases, this is infeasible as many institutions are running 20+ year old systems, which are effectively at “end of life” and cannot be updated.

Replacing the system in its entirety as part of a broader payments modernization effort: Some institutions are taking this approach, but it can be expensive and time-consuming, which means the short-term deadline is not addressed.

Taking a hybrid approach: Modernizing parts of their infrastructure by introducing cloud/PaaS components for ISO 20022-relevant tasks while still using the older systems for the core processing. This is the most attractive option due to the time crunch for testing and completion deadlines.

Crowdfund Insider: If you could offer educational advice to financial businesses who feel behind or underprepared for the migration, what would you say?

Vinay Prabhakar: Don’t panic, there is time! Despite the looming deadlines and migration projects that may seem impossibly complex, there are approaches to compliance—and to showcasing value beyond compliance—that can be accomplished well before the deadline. For example, Volante offers a 14-week migration strategy for Fedwire-ISO 20022 compliance that does not require institutions to modify their existing payment or core systems in any way.

Crowdfund Insider: Beyond ISO20022 migration, what key trends do you see impacting the payments and FinTech industries?

Vinay Prabhakar: AI/ML technology is probably the single most disruptive trend that has surfaced in the last two years. However, its impact on the payments and Fintech industries is still in its early days. That said, there are a few reasons why AI has not immediately disrupted payments the way it has in other industries.

Firstly, payments are heavily regulated, and any changes must go through a regulatory process. Second, AI works best on large sets of public data, and financial data is protected. However, we are confident in predicting that just as mobile phones, the internet, and 5G changed the way we pay, AI will change the way we make payments as well – but exactly how, remains to be seen.

Other trends include the increasing acceptance of blockchain-based technologies, particularly for cross-border payments; 5G networks; crypto; and the central bank digital currency movement.

Demographic trends also matter: Gen Z and Gen Alpha have grown up with social media and attitudes to privacy that give them a very different outlook from previous generations. As they mature into the workforce, this will change their behavior as treasurers and corporate finance leaders as well, driving further change in the banking industry.

Crowdfund Insider: What does the future hold for Volante? Any exciting upcoming news?

Vinay Prabhakar: Volante is preparing for its annual industry and customer conference, Volante Evolve, which is held in NYC every November. Volante is also diving deeper into exploring how AI/ML can revolutionize the payments industry, and we expect to be releasing more information about new products and services that are AI/ML native in the coming months.

Above all, Volante’s success over the last 20+ years has come from staying true to the company’s original founding mission: to serve as the trusted partner to our customers, giving them the freedom to evolve quickly and efficiently. We will continue leaning into this vision and investing in our people and technology to bring the benefits of our solutions to an ever-increasing range of financial businesses of all sizes, worldwide.



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