For those hearing about TAS Group for the first time, would you share some background on the company?
TAS Group was founded in Italy in 1982, driven by the launch of the national debit Card scheme “Bancomat” on one side, and by the modernization roadmap set by Bank of Italy’s White Book on the clearing & settlement of high value as well as retail payment transactions. We were the main technological partner of the central bank and of all major commercial banks, becoming very soon the leading provider of e-money and payments technology to the entire market. Over time, we grew Internationally, so our offices now span 7 countries, the largest installations of our core platforms being in Poste Italiane (issuer of over 35 million prepaid cards) and in central European banks (managing millions of financial messages each day over Target2, the Pan-European RTGS infrastructure governed by the ECB).
Having been involved in EMV migrations throughout Europe and Israel for the last 18 years, we decided in 2015 to bring our expertise and software assets also into the US market to facilitate and accelerate the transitions to the new technological standard.
In 2016 our governance changed through a Management Buy Out, aimed at propelling our go2market and delivery model abroad. Our mission is to play a leading role in the new digital age of financial services, this is why we consider ourselves a “Fintech startup with 30 years of history.”
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What is your strategy for 2018?
Our strategy is based on three main pillars:
- Internationalization, i.e. the growth of foreign business in high priority target regions, the most important of which is the USA;
- Leverage a brand new Digital Software Factory, i.e. an intensified focus on Software Quality and Productization, and an acceleration in bringing enabling technologies such as cloud services, biometrics, Open banking, etc., which are fundamental for success in the digital transformation era;
- Broadening of the offer beyond TAS’ traditional financial services customer base, to serve customer segments that have been only marginally addressed so far by the Group, such as the Retail market, and Fintech start-ups, which becomes strategic in view of European and non-European regulations breaking down constraints to unlock competitiveness for the benefit of end users.
Inorganic growth is ultimately an additional driver of expansion in the strategy of TAS Group’s new governance: increasing production capacity as well as geographic commercial penetration are the focus of the TAS Group’s M&A committee scouting activity.
What about the US market? What are the main trends you see in Fintech/card payments market?
We see in all markets a clear acceleration towards “instant” services/payments and the proliferation of alternative devices to the traditional “cards”, e.g. virtual cards, smartphones, wearables, etc. This will result in a massive increase in volumes of payments and in data, which will attract even more new Fintechs into the market. TAS is broadly aligned with these new players and frequently partners with them.
There’s also more attention and investment going into security and privacy improvements by Banks and Payment Service Providers. There are many different reasons for this and it varies by region. In the US recently there were a couple significant data breaches headlined by the media that will cost the companies involved financially and in terms of reputation. In Europe, the drivers are PSD2 and GDPR regulations. At a worldwide level 3DSV2 is a going to bring change. Cybersecurity threats and digital identity theft are paramount globally – and investments to counteract them will increase in all regions.
Some key technological trends that we see in the payments space are the increased use of AI and cloud computing. Artificial intelligence (neural networks, machine learning, etc.) is transforming many industries and card payments is no exception. There’s a lot of press about the use of AI to improve Fraud Protection for card transactions – an area where TAS is investing heavily with impressive results. Cloud computing is enabling digital transformation and innovation in every industry at an unprecedented rate. The economies of scale of cloud computing are reducing the cost of enterprise computing so fast, that small and medium card processors using cloud computing actually have a competitive cost advantage to larger processors managing their own data centers.
What is TAS Group’s winning formula?
TAS Group’s competitive edge is due to its vast experience and expertise in modern software architecture that is robust, modular, scalable, cloud-ready, easy to customize and integrate with other functionality through the use of APIs. The company goes an extra mile in helping international clients create need-based solutions through various local partnerships.
TAS Group’s Cashless 3.0® offering, an end-to-end card payment platform, empowers clients with a one-stop-solution for card issuance, transaction processing, acquiring, and fraud management. The modular, cloud-ready solution integrates seamlessly with legacy systems and is scalable and flexible to create a customized fit for specific business needs.
Cashless 3.0 not only provides a direct connection to Visa, MasterCard, and Union Pay International networks and all the functionality necessary to manage the traffic of transactions on both the issuing and the acquiring ends but also allows to set-up, direct, incorporate, and update payment acceptance networks. TAS Group’s Card Management Platform has managed over one hundred million cards, and the company guarantees its continuous evolution.
How this solution will be a game-changer in the US market?
One of TAS Group’s goals for the US market, in broad terms, is to turn every Card Program Manager into a Processor. The value proposition is very clear and can be summed up with these four words: Improve Profitability and Control. Today’s biggest pain points that the Program Managers suffer from are the punitive per-transaction schemes implemented by the traditional Processors that start with guaranteed minimum fees, independent of the individual PM’s business model, and go on to “the higher the volume the more you owe” approach. TAS is offering flexible licensing terms, including on a per card basis, to better match program managers’ business models and to radically decrease their costs. According to our simulations, there would be more than 50% reduction in processing costs for a typical PM with very high transaction volumes, whereas for PMs with small-medium volumes the savings could be over 70%. Clearly TAS’ flexible model favors the small-medium program managers that fit less well into traditional processors’ priorities and commercial approach. TAS’ approach decouples in large part the volumes from the fees and effectively gives money back to the PMs. Furthermore the model become more economical in the long run as the PM card volume increases. The second aspect is the “Control” piece of the value proposition. Typically, any new program to be launched by the Program Manager is subject to their Processor’s workload and the priority it gives to the program – often dependent on forecasted card volumes. The Processor adds to the delays rather than acting as a facilitator. TAS’ approach disintermediates the PM and allows for a direct relationship with the Bank, and the use of a powerful and functionally rich software for the management of new card programs, greatly reducing the time to market of new programs and putting the PM back in control.
The Oracle relationship is instrumental to make TAS Group’s plan work. The use of Oracle Cloud and the SaaS model adopted by TAS greatly reduce the Capital investment required compared to on-premise models. The Cloud makes TAS’ proposition affordable to a larger population of PM’s. The technology is modern, intuitive and easy to manage. This greatly reduces the potential additional structural costs (read. cost of human resources) implicit in becoming a Processor.
Clearly, this new and innovative approach requires that the issuing banks, today sponsoring primarily the traditional Processors, are open to endorse these new entities. There are several compelling reasons why we believe this will happen quickly:
- Banks can achieve more favorable conditions by dealing directly with PMs rather than the large processors.
- The Sponsoring Banks’ customers, the PMs, are burdened financially by processing costs that comprise too large of a portion of the Program Managers’ overall costs. It’s in the banks’ best interest to support their customers.
- Reducing card transaction costs will ultimately result in card payments increasing their market share in the overall payments market. The Sponsoring Banks actively participating in this transition will gain more new PM customers that bring in additional card volumes and deposits.
Ultimately, this can be considered a disruptive approach and its large-scale adoption will take time. At TAS Group however we believe that the state of the art technology coupled with the innovative financial approach can truly be the “game changer.”
Could you talk more about your strategic partnership with Oracle?
Oracle has recognized TAS Group as one of the first three strategic worldwide partners to offer software and services through its cloud-driven Digital Innovation Platform. Responding to market demands for e-money solutions, Oracle is leveraging their strong partner network and enterprise software to deliver Platform-as-a-Service to enterprise customers. The modularity, flexibility, and robustness of TAS Card 3.0 – part of TAS Group’s Cashless 3.0® suite – makes it an ideal fit. Furthermore, our Cashless 3.0® suite is complementary to Oracle’s core banking application offering Flexcube and Oracle Banking Platform.
I’ve seen you will be participating in Power of Prepaid next April in Washington. What are you expecting from that audience and experience?
PoPP is an excellent venue to communicate and discuss with partners the value proposition outlined above. TAS’ target for this year is clearly focused on the Prepaid industry segment. We expect the Program Managers and the sponsoring Banks attending the event to be receptive of the advantages that TAS Group can bring to them.