4 Considerations for Moving Your Payments Services to the Cloud

According to a recent report by Datos Insights, 90% of businesses prioritize instant payments, yet many financial institutions lack the technology to meet growing demand from consumers. In addition to enabling instant payments, cloud-based payments-as-a-service (PaaS) models offer a variety of advantages to financial institutions. These solutions can help them reduce operational complexity, streamline payment processing, lower the total cost of ownership and bring new services to market more quickly.

Adopting a PaaS solution can also facilitate compliance with regulatory standards across different payment networks and jurisdictions by easily ensuring the service is updated as necessary with each release.

As banks and credit unions explore PaaS solutions, decision-makers need to be mindful of their organizations’ budgets, security parameters and other requirements. Here are four key considerations to look for when evaluating cloud-based payment platforms:

1. Open API framework to ensure seamless integration for future third-party solutions.

PaaS solutions with open architectures, APIs frameworks and multi-rail support facilitate seamless integration, adaptability and flexibility. Adopting a solution with turnkey business functionality can accelerate time-to-market, as well as allow financial institutions to onboard customers and members more quickly. Non-proprietary, open APIs coupled with a comprehensive set of out-of-the-box interfaces can help ensure a frictionless, secure and simple integration. An open API platform also enables interoperability with other banking systems.

As institutions’ business requirements, consumer expectations, compliance rules and technology needs evolve, it’s crucial that PaaS solutions can adapt to meet these changing demands. The foundation of an open API framework will help institutionalize a standard and seamless long-term onboarding and integration timeline, making it easier to adopt new solutions in the future.

2. Operational cost savings.

Adopting a PaaS solution can reduce a financial institution’s infrastructure expenses through operational efficiency gains. For instance, traditional on-premise solutions designed for peak capacity are prone to “oversizing,” which means expensive resources are underutilized when demand is lower.

Shifting to a cloud-based payments system allows institutions to take advantage of valuable features that on-premise solutions can deliver as well, but at a higher cost, effort and risk, including built-in elastic scalability, redundancy, security, analytics and compliance measures. Moreover, a cloud-based managed solution consistently updates to include the latest features, enhancements and security updates. This can alleviate the burden on internal IT teams, allowing them to focus on strategic initiatives rather than routine maintenance tasks.

3. Compliance with evolving regulations and requirements.

A PaaS platform should be able to seamlessly accommodate country-specific requirements, such as ISO 20022 standards in the U.S. and SEPA regulations in the EU. By November 2025, financial institutions operating in the U.S. must enable their payment systems, and any other connected back-office systems processing Swift financial messages, for ISO 20022 or implement a translation solution as a stopgap until proper support can be implemented. An ISO 20022-native PaaS solution is vital for ensuring compliance with FedWire migration to ISO 20022 adoption. In addition, a cloud-native PaaS platform undergoes continuous enhancements and updates to ensure ongoing alignment with industry standards.

4. Tangible improvements to the customer or member experience.

Adopting a PaaS solution shouldn’t just be about achieving internal priorities like enhancing operational efficiency. With its extensible, open API architecture, a PaaS solution should also provide value to consumers in the form of:

• Better visibility of payments status;
• Robust fraud prevention;
• Secure transactions;
• Emergency or just-in-time payments; and
• 24/7/365 service availability.

Payment tools that embed generative AI technologies present opportunities to further elevate and personalize the customer or member experience. By leveraging payments data and AI-driven insights and analytics, institutions can improve their operations, anticipate consumer needs, and offer proactive solutions to enhance their customers’ or members’ experiences.

Migrating payments services to the cloud can help financial institutions address a number of rapidly evolving demands, from new regulatory and compliance requirements to heightened consumer expectations. As decision-makers explore their options in the PaaS space, establishing a clear vision for what they hope to accomplish is critical. Evaluating platforms and solutions with this vision in mind will help institutions start the process on the right foot and take the first steps toward long-term success.

Radha Suvarna is Chief Product Officer, Payments Business Unit at Finastra, a global provider of financial services software applications across lending, payments, treasury and capital markets, and universal banking.