Payomatic’s digital transformation towards mobile enablement for the citizens of New York
The blue and yellow PAYOMATIC banner is a familiar sight in and around New York, standing above almost 150 stores or Money Centers. Nearly half of these are open 24 hours a day. Since its origins in the 1950s, the company has provided an essential alternative to the formal banking system, providing the ‘underbanked and unbanked’ population with the facility to cash checks, pay bills and remit money overseas, among other services. The New York metropolitan area has always attracted a huge population of migrant and immigrant workers, and though these are by no means the only group to benefit from such services, they typically work irregular hours, maybe in multiple employments and get paid in cash or by check. Not infrequently they are supporting dependents overseas, necessitating a reliable and quick way to remit funds.
For these customers, the bureaucracy of the traditional banking route is not easily accessible. However, at PAYOMATIC, they can take care of all of their business in one place. At the same time as cashing a check, they are able to pay utility bills, buy money orders, and even try their luck with the NY Lottery. The ability to walk in off the street into a welcoming store environment is important to them, and for the many shift workers whose labor keeps the city humming, the late-night availability of so many stores is a boon. PAYOMATIC is the largest financial services provider and Western Union’s biggest reseller in the New York area.
From consultant to CIO
Like everyone else PAYOMATIC customers are busy people who want to take full advantage of the tools technology affords them. As a retail-type business with a large high street presence and the overhead costs that go with that, PAYOMATIC decided some eight years ago that it needed to bring all of its systems up to date and take advantage of the technology that had infiltrated the traditional banks. It partnered with Modus Agency, an award-winning digital innovation consultancy, to develop a multi-year plan focused on modernizing PAYOMATIC’s legacy software platforms. Modus’s Steven Mayotte and his team worked on this plan and developed a roadmap, working closely with PAYOMATIC’s CIO and COO.
In 2013 Mayotte transitioned from Modus to become Vice President for IT at PAYOMATIC, and in 2015 he was appointed CIO. It was a seamless progression, he explains. “When I first engaged with PAYOMATIC the company faced problems that are familiar in the retail and financial service space. With 150 locations, each one had a disparate view of the customer and each transaction was a function of that store.” Each time a customer came in with a check to cash, the customer service representative (CSR), or teller at the counter, had to take a risk on behalf of the company, making decisions about that customer and the issuer (‘maker’) of the check – and underwrite that risk. “If someone hit one location with a fraudulent check they’d probably move on to hit ten or 15 other stores because the systems did not talk to one another.”
Another issue was that the stores leverage distribution of around 15 partner products. Each of these, like PAYOMATIC’s largest partner for remittances and international payments, Western Union, has proprietary procedures. “There were disparate systems that tellers were expected to know how to use, then enter back into the main transactional systems, mostly in real time. Losses from fraud and teller error were high. The company had not really evolved to make use of the more modern technologies available. We endeavored to build a single source of truth for the customer, as well as an online transactional system that could integrate with every third party in real time through application programming interfaces (APIs).”
Directed to digital
This was an ambitious goal but an essential first step in the digital journey, he says – to consolidate data from the customer, the maker, and all other sources, create better analytics to understand customer behavior, achieve transparency into fraud patterns as well as underwriting models, and align these within the business so that accurate information would be available to its leadership for better decision making. It had been tackled before in the financial space, he acknowledges, but having looked at existing platforms, his team found that none of them would fit PAYOMATIC’s unique hybrid business model in the space between retail and financial services.
Partnering with Modus Agency for software development, a custom-written platform known as TL2 was created that can not only encompass the inventory management and tracking of the product (cash) but also recognize all of the treasury functions required by the Federal Reserve and the banking system as well as multiple partner systems. The new platform removed the burden from 800 CSRs of working with multiple platforms when completing customer transactions, dramatically reduced fraud losses and made it much easier to manage the peaks and troughs that the stores experience on paydays, holidays and at different times of day or night. “We have seen dramatic cost savings and efficiencies at every level,” says Mayotte. “This platform paved the way for us to automate back-office processes and enhance the in-store customer experience.”
Building on the success of new transactional platform PAYOMATIC turned its focus to data. From data silos, the company has achieved data democratization. “At first we leveraged external partners to help us with data warehousing and ETL processes, then as our capabilities matured we hired a dedicated team internally focused on data engineering. The team partnered with analysts and built a platform enabling on-demand data exploration and reporting in our on-premise infrastructure. As we’ve grown, the size of our data continues to expand exponentially. To deal with the problem we are architecting our next generation data platform running on the public cloud.” Mayotte is looking at Tableau for data visualization and Apache Hadoop for large-scale data processing on the public cloud. “Migrating to managed cloud solutions lets our team focus on delivering business value rather than on hosting and setup.”
He’s proud of the way his staff has been able to develop their skills and learned how to leverage the efficiencies presented by the public cloud. For example, PAYOMATIC uses AWS managed Kubernetes to run their microservice workloads. “Previously our deployment times weren’t bad but they took the better part of a day running a mixture of automated scripts, manual procedures, and testing: now with our investment in DevOps, continuous integration, and continuous delivery we can deploy our microservices workloads to Production in minutes!” It’s especially gratifying to him to have built a focused, tight-knit team that has delivered results like these when other companies might have engaged Big Four consultants costing millions of dollars.
These days, development teams have a big tool chest they can raid. For example, Terraform, the infrastructure-as-a-service (IaaS) tool from HashiCorp has, Mayotte testifies, played a huge part in the DevOps work of his teams, enabling them to easily access Amazon or other cloud resources.
Cybersecurity laws are evolving, he points out, with New York being the first state to publish financial service sector information security regulations. “Our CISO and his team are responsible for security compliance and we use IBM QRadar and other cloud-based SIEM (security information and event management) monitoring software tools to detect cybersecurity attacks and network breaches.” PAYOMATIC has invested scrupulously in tools and auditing from a risk management perspective, and is fully compliant with the New York State Department of Financial Services (NYS DFS) Part 500 cybersecurity regulations for financial institutions.
inPOWER: card on the run
Two years ago, Payomatic started to develop its hottest new offering, a prepaid MasterCard that allows Payomatic customers to pay bills, withdraw money from an ATM, shop online, or have paychecks and other government checks like tax refunds directly deposited, all without a traditional bank account. The inPOWER card, accredited to the highest PCI Level 1 standard, has not been on the market long, having been launched in November 2018 but, linked to a new mobile app it’s already transforming customer engagement, he enthuses. “The organization, having tackled the behind-the-scenes technology was ready to start engaging with customers in a new channel – mobile.”
Payomatic partnered with a mobile commerce specialist to identify the highest value opportunities to transform consumer experience and extend the familiar store experience into the digital world. Assigning a dedicated product team, Stuzo researched the customer base to produce a product strategy and roadmap. The result was a mobile app for iOS and Android that launched with the inPOWER card. “All of the services supporting the mobile app run on AWS cloud. The app’s initial features focus on inPOWER customers with plans for new products and features in 2019. Early customer adoption has been excellent. We are really excited about mobile as an alternative distribution channel to the stores. It gives us a much closer relationship and understanding of the customer and their behavior.”
Connecting the in-store experience with the digital experience will be his focus over the coming year, he continues, adding features like staging transactions, which are making it easier to complete them in store or even ‘on the run’ using mobile technology. “Utility payments make up a large portion of our bill payment transaction volume. Say a customer has been saving up to pay multiple bills at the month’s end. When they come to visit a store there is a lengthy data entry process to complete all their transactions. Our vision is that customers store their bills in our mobile app and choose to process their payments in-store or through the mobile app. ”
Steven Mayotte has a palpable relish for his role as CIO of PAYOMATIC, which he says is not really about technology so much as about customer engagement. “Younger customers would probably rather not come into a store at all, but they are always going to need our financial services. My view is that we must meet the customer wherever and however they want to be met. We need to be relevant to all our customers for the next 30 years or more and the technology is just serving to advance that strategy.”