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#Payment Technology

Outsourcing card issuance to boost efficiency

Expert Opinion
5 Mins.

Neobanks have shaken the payment industry in the last decade with their agile and digital-first approach. At the heart of their business model are “as a service” solutions that enable greater efficiency and scalability. What can traditional banks learn from this?

In today’s digital world, businesses and organizations rely on a wide range of services to operate effectively and efficiently. E-commerce merchants, for instance, need more than just suppliers and manufacturers to run effectively; they also need website hosting, payment processors for transactions, analytics tools for monitoring sales and marketing campaigns, and more. Likewise, modern banks are built on more than just brick-and-mortar branches; today, they need to develop and maintain digital apps and online banking platforms, manage tools for customer relationship management, ensure security and compliance, and more – all while keeping up with evolving customer needs and expectations.

Developing and maintaining all of those capabilities in-house is costly and inefficient, diverting resources away from other core business priorities. Few organizations have the capacity to manage everything internally, and even those that do find it impractical. The more efficient solution is to outsource these needs to “as a service” providers, which offer specialist services on demand. 

The rise of "as a service" models

The “as a service” model, in its simplest form, involves delivering a service or product on a subscription or pay-per-use basis, rather than through a one-time-payment ownership model. The boom of the “as a service” model can be traced back to the emergence of software-as-a-service (SaaS) solutions in the early 2000s, which today are commonplace in most modern companies – examples include Microsoft Office 365 or Google Workspace. In 2024, the SaaS industry is valued at $317 billion in 2024, and is expected to grow to $1.2 trillion by 20321. But SaaS isn’t the only “as a service” offering. Other common examples include infrastructure as a service (IaaS) – such as Amazon Web Services (AWS) – or even payment as a service (PaaS), such as PayPal or Stripe.

Whatever the service or industry, the core benefits to the organization sourcing them are typically the same: greater cost and time efficiencies enabled by access to the latest tools and services, as and when they need them, without the burden of developing and maintaining them in-house. This frees up valuable resources and allows businesses to focus on core business, while providing the flexibility to scale and adapt as required. E-commerce merchants can focus on marketing and sales without worrying about payment infrastructure, while banks can concentrate on delivering excellent customer service without the need to develop and maintain complex software systems.

"As a service" in banking

Indeed, this model is the hallmark of neobanks and fintechs, which have successfully leveraged “banking as a service” (BaaS) offerings to provide customer-centric digital banking services, without being tied down by the back-end complexities. Instead, they partner with licensed financial institutions and “white-label” banking software companies to oversee technical, security, and compliance processes, allowing them to focus on brand building and customer experience.

“Outsourcing certain processes to ‘as a service’ providers would give banks more flexibility and adaptability in an ever-evolving market.“
Eric Megret-Dorne
Head of Card Issuance Services at G+D

It is against this backdrop that incumbents are under increasing pressure to become more efficient and stay competitive. Consumer expectations are changing, with more and more people turning to digital-first solutions and placing importance on matters such as sustainability and accessibility. However, traditional banks are often weighed down by complex processes and structures or lack the technical know-how to adapt quickly to such rapid change. Neobanks, by contrast, can react quicker because of their leaner structures. 

“To stay competitive and meet consumer demands for things like speed, convenience, and sustainability, banks must become more agile,” says Eric Megret-Dorne, Head of Card Issuance Services at G+D. “Outsourcing certain processes to ‘as a service’ providers would give banks more flexibility and adaptability in an ever-evolving market.”

Take, for instance, card issuance. On the surface, obtaining a new bank card has never been easier. Consumers can request a new card in a mobile banking app with a couple of taps and use a virtual card in their digital wallet while they await delivery. Alternatively, they can go directly to the bank to pick up and activate a new card instantly from a self-service kiosk. But while this experience is made as seamless as possible for the end user, this isn’t the case behind the scenes. 

The multitude of stakeholders, from card networks and banks to payment processors and vendors for printing and issuance, as well as varying standards and regulatory requirements across markets, all contribute to a fragmented card-issuance ecosystem. But because each touchpoint – whether physical or digital – is a potential opportunity to strengthen the emotional bond with cardholders, banks can ill afford such inefficiencies.

This is a perfect example of a process that is ripe for an “as a service” model. By partnering with a provider that specializes in card issuance, every step of the issuance journey – from card creation and personalization through to the customization of carrier packs and activation options – can be streamlined and managed in one place. Banks are freed from the burden of managing logistics, compliance, and technological upgrades so they can focus on customer acquisition and retention. Not only does this reduce operational costs, but it also makes banks more agile and adaptable to changing market demands.

Furthermore, the dynamic nature of the “as a service” model ensures banks (and their customers) continually have access to the latest card technologies and security features. In a market where consumers are not afraid to switch banks if their needs aren’t being met, this benefit cannot be underestimated.

A person using a smartphone that showcases different functions

A marketplace for card issuance services

G+D serves its banking customers with a vast portfolio of Convego® card products and card issuance services. Now, for the first time, all of those services will be bundled into a single portal – the Convego® Service Market. This “as a service” offering provides banks – both traditional banks and neobanks – with a “one-stop-shop” solution for creating and managing a secure, efficient, and convenient card issuance experience that is wholly customizable and suited to their customers’ needs. The service is available via easy-to-integrate APIs or quick-to-deploy portal applications. 

“With the Convego® Service Market, banks can create rich customer experiences from a single portal,” says Mehdi Heidari, Head of Product Management in Card & Digital Payments at G+D. “Whether that’s designing eco-friendly, digital-first payment journeys for an environmentally conscious Gen Z audience, or hyper-personalized payment cards for high-value VIP customers – the opportunities are endless.”

Let’s take, for example, Alexandra, Head of Diversity and Inclusion at a regional bank. Using the Convego® Service Market, she can create new cards with accessible features, such as notches; design a card carrier with QR codes linked to audio guides for assisted activation; and enable passwordless authentication to ensure transactions are both secure and convenient for users who may find it difficult to enter a password. In just a few clicks, she has created a more accessible payment journey.

When this process can be repeated on demand to accommodate different needs and requirements, it gives banks a level of agility that can help them stay competitive and thrive in today’s increasingly competitive financial services landscape. 

By leveraging an “as a service” offering such as the Convego® Service Market, banks not only gain from immense operational efficiencies that would not be possible without outsourcing, but also benefit from access to the latest technology and security features – both contribute to better customer experiences. When it comes to meeting the diverse and evolving expectations of modern consumers, such a strategy can prove decisive. 

Key takeaways

  1. Banks need to be more agile to adapt to changing market demands and consumer expectations.
  2. Outsourcing to “as a service” providers can enhance operational efficiency and help banks build better customer experiences.
  3. The card issuance journey is an example of a process that could benefit from an “as a service” model.
  1. Software as a Service (SaaS) Market Size, Fortune Business Insights, 2024

Published: 27/06/2024

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