Four Guideposts for Investing in Emerging Technologies

Dondi Black, EVP and Chief Product Officer at TSYS

Dondi Black, EVP and Chief Product Officer at TSYS

One of the most challenging decisions for a business is discerning when and where to place investments in emerging technologies.

The choices can be perplexing, and the stakes are high. Get it wrong, and a company may risk its long-term relevance in a rapidly changing market. Get it right, and an enterprise stands to positively differentiate itself while expanding organic brand loyalty and revenue.

The key is to understand that there is no single determining factor in identifying what innovation or technology will go beyond the hype curve to become sustainable and impactful for clients. In my experience, what you say no to, is equally as important as what you say yes to. As others ponder the next big decision as part of their technology spending budgets, I would like to share four best practices I leverage in approaching these crucial decisions:

1. Maturity of the Technology

Many technologies need time to cure. Consider how feasible it will be to embed new technology in a way that minimizes friction for end users. Will end-user adoption require education or simply exposure? What level of companion investment may be required to mitigate inherent risk in new technology? The economics of cloud computing and rapid evolution and adoption of large language models fueling GenAI adoption, for example, make these areas ideal investment sectors for many businesses.

2. Competitive Landscape

A deep understanding of the market requires more than identifying competitors and assessing the key features and functionality of similar products or services they offer. Go a few layers deeper to consider their current market share—individually and as a collective. How has their market share changed over the last 2-3 years? What insights can be gleaned about their strategic direction from their distribution channels, partnerships, or alliances? Having a line of sight into those components, paired with insights you can glean from existing clients, partners, or peers, helps form a comprehensive view of any headwinds or tailwinds you might expect on the heels of material investment.

3. Market Potential

Rather than focusing on the total addressable market, adjust your aperture to contemplate the constrained addressable market. In addition to assessing the competitive landscape, as we covered previously, you might also assess if there are regulatory or geographic constraints that serve to limit or enhance your position. For the benefit of TSYS and our clients, we need to be able to scale innovation investments. Today that means adopting technologies that eradicate the need for custom development in favor of enabling rapid and responsive design configurability.

4. Accessibility and Societal Impact

More than ever before, companies and their shareholders are focused on environmental and social impact. For the financial services and payments industries, in particular, innovations and technologies that enable safe access to regulated products—and that support the drive to reduce their carbon footprint—are increasingly of interest. For an organization like ours, ensuring solutions are deployed and serviced in a way that helps lift economies and drive sustainability is of top importance.

"In my experience, what you say no to, is equally as important as what you say yes to"

Applying this guidance as we make decisions about where to invest enables TSYS to thrive as we embrace the future of payments. Today, we are actively transforming our business and deploying the payment stack of the future. This transformation commitment is reflected in our technology stack investment, ensuring our environment is optimized to enable every part of the payment ecosystem. Our transformation investment addresses security, scalability, and ease of integration. Considering the guidance above, here are three areas of current investment focus inside TSYS:

5. Next-Generation Analytics

Spending on AI, including software, hardware, and services, is projected to reach $154 billion globally this year, an increase of nearly 27 percent over 2022, according to a report by International Data Corp. Similarly, spending on public cloud services will grow to $597 billion in 2023, up 22 percent, according to Gartner Inc. As the payments industry accelerates toward real-time payment initiation and settlement, our clients need on-demand access to their data. Our investments in next-gen analytics enable data sharing and visualization across multiple portfolios on demand. Leveraging our modernized tech stack, clients can more easily activate their data to detect and prevent fraud, minimize credit risk, or even manage regulatory requirements as they expand operations to new regions faster than ever before.

6. Fraud and Risk

More channels for account onboarding, servicing, and money movement translates to more points for potential compromise. Organizations are projected to spend $188 billion globally this year on information security and risk management products and services, up 11 percent over 2022, according to Gartner Inc., a research firm. With that in mind, we are directing investments to expose new microservices that help clients curate a layered approach to their fraud and risk strategy. For example, we see behavioral and physical biometrics at the point of authentication, coupled with adaptive AI to detect anomalies based on qualified payment attributes, to be transformative in the quest to secure the transaction lifecycle and reduce losses associated with scams and synthetic identities.

7. Business-to-business Payments

The global market for B2B payment services is expected to grow to $2.5 trillion by 2030, up from $1 trillion in 2021, according to Straits Research, a consulting firm. Our investment to move TSYS’ payment processing capabilities and value-added services, such as virtual issuance, to the cloud furthers our expansion in the B2B sector. Investing to enhance our commercial payment solutions to support embedded payments, real-time integrated payments, intelligent cash-flow, and expense management will ensure our clients have the automation and tools necessary to allow them to focus on growing their business.