Guest Analysis: Still on the Big Data sidelines? How you can make a move without betting the farm.
Charles Hogan
August 13, 2013 – Big data solutions in the transaction processing space are getting a lot of industry and media attention– looming large on the horizon as the next transformative innovation in our industry. Many are, quite reasonably, thinking carefully about their next steps. Waiting presents a risk of losing a first-mover advantage and thus a competitive edge with merchants. But the opposite extreme may be just as risky – diving in to build your own proprietary solution.
Clearly, big data as a source of customer insights is a tool merchants are ready for and a value-added service ISOs are in the best position to provide. As technologies that were once differentiators become more commoditized, big data offers an approach to delivering merchant value that is not technology- or device-dependent, but rather data-driven and thus sustainable over the life of the ISO-merchant relationship.
Many conservative players still sit on the sidelines, waiting to see which way the big data winds will blow before deciding on a strategy. This kind of approach will ensure a lost opportunity, as unseating those relationships later may prove tricky. Meanwhile, aggressive players may be considering the plunge into development and the creation of their own data-mining capabilities to offer merchants. Here, the risk is cost and complexity – how much time and money do you want to focus on maintaining a big data solution over time, and will you be compromising your core competencies in the process?
The risk, expense, and reward formula here is a complex one. But there is a third path for those looking to get in the game without completely upending their current business models: partnership. There are third-party providers emerging with a wide range of big-data solutions that ISOs can integrate as a value-added offering to merchants. This approach affords the opportunity to get into the game quickly, without a lot of risk and investment.
In considering the middle route, here are some things to consider.
- Private Label – Consider the ability to private label as this makes the solution yours in the eyes of your merchants and thus a unique differentiator for your business.
- Flexibility & Vision – Make sure they can accommodate the changes and growth of your business and that you share a common vision of the future.
- Project Road Map – The products and features will change and enhance rapidly over the next couple of years so understand the product today and where it is headed.
- Experience – Choose a partner that understands the payments space. This will ensure that you have access to the specific features merchants need and product updates that keep pace with market developments.
The rise of big data can’t be ignored. And ISOs on the fence may find themselves out in the cold as merchants begin to actively seek ways to plumb transaction data for a business advantage.
While a DIY approach may not be for everyone, doing nothing is far worse. At the very least, an exploration of the third-party solutions available is a wise move in a changing transaction landscape
[spacer height=3] [divide] [spacer height=3] Charles Hogan is co-founder and CEO of Tranzlogic and is a respected leader in the financial services and payment processing industry. Mr. Hogan will be moderating a panel entitled “Big Data in Payments” at the ETA Strategic Leadership Forum, October 15-17, 2013 in Scottsdale AZ.The views expressed in the posts and comments of this blog do not necessarily reflect those of ETA.