Case study: European Banks Modernize Their Card Platforms

Facing stiff competition, institutions move to digitize platforms for lower costs, scalability and flexibility

A case study

Banks in Europe face a real challenge when having to migrate millions of cardholder accounts to digital platforms to meet the mobile needs of consumers. It involves moving large customer bases from legacy mainframes to a highly scalable, microservices-driven architecture consisting of application programming interfaces (APIs) and real-time web interfaces.

It’s a difficult and sometimes thorny task, but banks don’t have a viable alternative. Regulatory frameworks such as the European Union’s Payment Services Directive 2 (PSD2) have put pressure on financial institutions to lower the operational and financial risks of running card programs. Meanwhile, best-of-breed banking products now offer consumers a seamless interface across mobile, desktop and in-branch platforms, where consumers can change settings on one and see the update reflected across the others.

In today’s mobile-based world, banks need speed and agility to bring new features to market. This includes simple tasks such as being able to enable or disable e-commerce transactions, change spending limits, or add a new cardholder—all within the palm of one’s hand. It’s certainly doable, but the stakes are high. Banks slow to make the change could face a drain on their deposits as customers go with financial institutions that can offer greater flexibility.

Consumers demand flexibility in a mobile world. Established banks using older technology face two primary obstacles when adding new features to their apps. The first, is the ability to add new features to mobile applications, which can take months with legacy systems. The other is time. Typically for legacy systems, if customers decide to enable e-commerce transactions, they have to wait at least a day for them to take effect, which essentially means they’ll either abandon the purchase, or find another provider to pay for the item. These types of customer requests need to be instant.

Komerční banka turns to Global Payments Europe and TSYS to modernize its debit card platform

TSYS and Global Payments Europe (GPE) have been working closely with European financial institutions to help modernize and bring their banking systems into the digital world. For example, we recently worked together to help Komerční banka (KB), the Czech Republic's third-biggest financial institution, revamp its debit processing for roughly 2.5 million debit cards.

KB, based in Prague, is seeing first-hand the growth of mobile banking. Its own payments volume in the space reached CZK 104.5 billion (€4.3 billion/ $4.5 billion) in the third quarter of 2022, up 49% over the same period a year earlier, according to its quarterly report. Mobile banking clients, up 115,000 in the third quarter over a year earlier, represented 68% of its customer base. That’s up from 26% just five years earlier.

Yet to continue the growth, KB needed to evolve. It operates in an economic environment similar to the rest of Europe where inflation—fueled by higher energy prices—has eaten into household budgets and corporate profits. The strains in the economy have crimped deposit growth, as consumers withdraw more funds to pay for higher priced goods and services.

How a next generation platform, modern technology and smart collaboration can transform a bank’s experiences

As part of KB’s five-year strategic plan to reach 2 million active customers by 2025, it has embarked on several initiatives as part of a digitization agenda. The plan includes a new platform for its mobile application and internet banking, as well as the modernization of its payment processing platform. The bank realized it needed to have a more flexible processing system that would respond to the everyday needs of its growing mobile banking base.

We proposed end-to-end processing services using TSYS’ PRIME payments stack based out of GPE’s Prague-based data center. This solution would allow KB to leverage the hundreds of APIs in PRIME’s software development kit to allow cardholders to truly personalize their card and payment experiences. Things like mobile cardholder controls for authorization settings and alerts, managing spending limits, and increased card security, all to ultimately empower customers with greater control over their money.

This service required GPE to build a new infrastructure in its center, with no less than 8 different environments covering the delivery lifecycle along with disaster recovery. This ensured we could perform accurate end-to-end testing to the highest standard benefiting KB and future PRIME Processing clients.

As the pandemic rolled in, TSYS, GPE and KB formed a solid project plan through close collaboration and mutually agreed commitments, drawing on TSYS’ issuer expertise and international footprint and GPE’s local knowledge.

GPE and KB also benefited from TSYS’ adoption of agile delivery methods. These include a continuous integration and continuous development (CI/CD) approach strengthened by TSYS’ strategic investment in modern tech for seamless—and fully automated—PRIME platform deployments.

An effective remote working model between the groups was quickly established during COVID restrictions and allowed for close collaboration and a trusted partnership to form. This combined with TSYS’ iterative delivery approach ensured speedy progress and collective tracking to achieve all milestone targets.

By January 2022, the pilot was ready to test among 150 KB employees and their family members. By November, the bank’s entire debit and credit card portfolio had been migrated—in advance of the holiday shopping season. With no critical issues and top quality migration with 100% reconciliation, KB saw immediate performance improvements.

“We’re delighted to take another step forward in our digital transformation with PRIME Processing. The seamless migration was representative of the consistent high level of knowledge and professionalism of TSYS and Global Payments experts and the great cooperation formed with KB during the pandemic. Modern technology is a game changer, and we’ve now witnessed firsthand the benefits of automated delivery and availability of PRIME Services from GPE. APIs and microservices underpin digital enablement and collaborative innovation. With PRIME we can foster partner integrations and enable new customer centric services, all while growing our customer reach on a single platform solution.

With the success of the issuer and ATM acquirer flawless migration, we have now successfully shifted from an inhouse model and legacy card management system to an outsourced next generation platform with GPE. Our resources no longer need to focus on operations, system support or maintenance. Instead, we can focus more on the needs of our customers and delivering innovation in payment card products and services—faster than ever before,” said Monika Truchlíková, Tribe Leader of Payment Methods, Komerční banka.

The Payment Stack for the Future

GPE has successfully integrated TSYS’ PRIME Processing into its existing value-added services ecosystem to form a robust stack of services spanning the entire issuer and acquirer value chain. With added support for all payment types, they can now respond to any portfolio consolidation or future growth plans that KB may have.

With PRIME’s digital technology framework, APIs and microservices, KB can now realize new digital payment experiences and journeys for its customers, delivering on its digital bank agenda.

For example, KB can now add new features to its debit card program, such as:

• One-click ordering of debit cards. Users will be able to receive a debit card right after approval of a checking or savings account. They will be able to tokenize the card in seconds and start using their mobile or smartwatch to pay for goods and services through digital wallets.
• Cardholder controls. Users will manage their own payment experiences and be more empowered to protect themselves from fraud, with controls such as blocking and unblocking cards of their choice, in real time.
• Setting spend controls. Users can set spending rules and limits, even by merchant category, such as allowing a dependent’s spend on fuel at gas/service stations while blocking gambling-related businesses.

With KB’s Czech and Slovakian debit card portfolios now consolidated on the PRIME Processing platform, and further plans for full credit card processing in place for its more than 250,000 credit cards, KB is already experiencing the ease and agility afforded by the TSYS payment stack. Added to that is the shift to real-time Kafka data streaming options available to KB and its partner ecosystem. These enrich the instant services it can offer to its customers, such as authorization or card alerts and offerings through the bank’s integrated omni channels.

From an acquiring perspective, GPE took KB live with PRIME ATM Acquiring. For now, the bank is acquiring their own cards, but it has the platform scope to grow their ATM acquiring business in the near future to support cards from other institutions.

Going forward, KB will continue to benefit from the scale of TSYS’ issuer processing expertise and value-added services. Combined with GPE’s state-of-the-art processing center and modern technology, PRIME processing will now serve as a growth platform for established financial institutions and future neobanks and fintechs—from across Eastern Europe and beyond—looking to leverage our expertise on security, innovation and scale.

Find out more

If you're interested in learning more about TSYS' PRIME Processing or our suite of digital APIs, click here.