My name is Jan Willem. I'm very pleased to be here today. I'm going to take you through 20 minutes on how to drive value from the modernization and how to pick and choose the modernization approach in light of the value that you can unlock for yourself, for your business.
First, an introduction. Vice President and I'm responsible for payments within Sapient. My payments journey started in 2008. Same year my daughter was born, so I can remember it well, or which order I don't know yet. And since then, I was at Barclaycard where I led strategy for the commercial and acquiring payments and ever since worked with merchants and various payments players from the networks, from the bank operators on payment strategy, commercial strategy, growth strategies in the market.
In financial services, we deal with payments both as a sector and as a capability for many of the players out there. What we bring that's unique is that our focus is primarily on transformation. Over 95% of our work is transformation, less than 5% is based on running operating things for clients. And in transformation we bring both the delivery skills from an engineering perspective and a data science perspective in combination with product experience and strategies. Which means in payments we work on both front stage innovation and back stage modernization. And ideally we bring them together, but it's not always the same.
Today to talk about how do you get value from modernization and payments, I'll talk about three perspectives first to get to a tailored approach. Tailored approach first of all for what is then the end state that you're going for, what's the approach that you choose and what are the options in there. A perspective on what kind of player are you, but also what ambition do you have with payments which drives the modernization choice. And then four value themes that we discuss a lot with clients now and where we do a lot of work. Some of them will resonate for you.
So very quickly, what do we expect of modern payments or what does that mean? I think we just heard how Nationwide had brought some of the payments to the cloud, working with Form 3, one of the partners to run a cloud native service in payments. Payments wants to get us out of the dark ages of where we are today. We have siloed systems, siloed data, lack of speed, high cost, high cost of chains. It's hard to deal with the new requests coming your way. Of course, there's a great sunlit upside on the other side of the modern technology where everything will be fast, cheap and easy to do, which is based on cloud native and better controls based on data at its core, how you operate based on modern engineering practices. But foremost, whatever you build out there needs to be driven by the business strategy or the value case that you're after. Otherwise, it's just another tool.
What we see is that move to modern technology underpinning the payments has a proven pattern to go from A to B to get there. It's around progressive modernization. This is a very simplistic picture, but the essence of progressive modernization is that you need to decouple the older systems that you have, both at the top end from an integration layer and from a data perspective. Then you have the ability over time to put in new systems, but progressively add more products, more customers, more channels into your new stack. It looks very simple on the page. It takes a bit more effort in real life. I think afterwards we have a session here to talk about how the modernization is going. I think that will be very enlightening about the choices that you can make still in a detail. But this is the proven blueprint. We've done that with a couple of clients. You heard other speakers here today how they move forward. This is the essence of the blueprint.
Still, while there is a view on where do the payments need to be from a technology perspective and how do you get there, every time we speak to a client, there are still discussions going on about, yeah, but what do I do in this case? Do I really need to move to a modern payments architecture for this event? Yes or no? There are three flavors that we come across quite often. It's around fixing at the edge, a little bit of tinkering in what you do, sticky tape in another solution that you have. Sometimes a very good approach for a small change of what needs to happen. But long term, it won't help you. The upside is it's quick, it's fast, it can do maybe what it needs to be doing, but it doesn't get you to the end state of a lower change cost, more resilience and more agility as an organization. What you want to get to is to move to a more native build. And then in between, you have the incremental approach for modernization. Only moving to the native build gets you in the end to a point where you can benefit from technology stack, but it's a journey that you're on. And not every event or every change that you need to do in the meantime will have to follow that pattern. And we'll discuss in more detail how.
So that's about where the technology is going to, how do you get there, but then what do you do with the question now, is there a change, how will I embed that? Of course, the options are very different for each one here. It depends on your business model. And we identify about four core business models that are payment related or payment centric.
The second one is around the payments. The second one is what's your current market position, but also what's your ambition in there? Are you a market leader? Are you a challenger? Market leader being, I already have a significant share of the market. For me, payments are important, so I want to be leading. I don't want to miss out on the next opportunity. A challenger, smaller player, but huge ambition. I want to dominate this space. I think no other player can do it better than I can. But we still have the majority, and it is still the majority of players that are more on the fence. What do we do in the payment space? And it's important to identify that before you make an investment case.
So we know where we want to go. We know there is a way to get there. We know our business model and our ambition. Then the question is, what are the events that we're looking at to determine how we're going to modernize? And we deal a lot with these four questions around value cases.
So going to the first, next-gen payments. Here are just three examples on the page. There is the digital euro or CBDC events that are going on, early stage discussions in market that could make a change going forward. There's instant payments, which is much more established, especially in Europe. And then there is the, what here called A2A, account-to-account payments, primarily put from a perspective of what would it do if it replaced cards in commerce. Account-to-account, I can do in many different cases. So it's important here in all these to think about what's the benefit case that I'm after, and then therefore what does it drive for me.
Now, what do you see here and how we look at this is that some of these events could be transformational, but they're not proven yet as a value case. So quite often what you see is on the different approaches is that players will postpone the end, the biggest kind of investment in modernization until at least they have enough proof points that their next-gen payments that they're going after will make a difference. Now, that's also a question of who you are. If I'm a challenger in commerce payments, I'm going to bet my company almost on doing this because I need to play against the card providers. So I have a different reason for my payment innovation and for the modernization that I'm after. You see here as well is that, for instance, not all of the payments events are equally applicable to all. I need to be in a certain part of a business model to be able to benefit from one of these changes going forward. And most of the times, if I'm in the majority of the market, I will want to wait and see what the market leaders and challengers are doing, and I'll follow relatively quickly. It's a well-proven approach that many, many times gets done.
Payment as a service. There are actually two very different models in payment as service. There is the open banking on steroids, where we sometimes talk about in payment as service, and then there is the reorganizing the value chain in payments. So to the example that was mentioned before, using Form 3 as a gateway to instant payments in the UK is almost redirecting kind of the value chain. I've decided as a company that it's not differentiating for me, and actually I'm benefiting from their skill and their investment in regulation and potentially a fraud engine as a player, which I cannot do myself, and