Fearless imagination. This is how Fortune magazine recently described the #1 needed competency of all business leaders. And this is exactly what bank executives need to transform their payment systems in today’s digital and mobile age. This post explores the pressure on legacy bank payments systems and how they must be re-imagined for their successful transformation.
Payments systems need transformation
Accenture has called banking legacy payment infrastructure “dinosaurs in a digital world.” Boston Consulting Group regales the need for payments systems transformation and warns: “financial institutions must differentiate themselves, refine their strategies, and raise their execution game if they want to remain competitive.”
Beyond consultants, leading practitioners have recognized this need to transform core payments systems. BNY Mellon Bank’s 49-page report, entitled, “Global Payments 2020: Transformation and Convergence,” describes how the global payments landscape is in a state of fundamental transformation. They warn:
“Banks in particular will need to move swiftly if they are to take advantage of the opportunities on offer in the global payments business, or risk losing out to nimbler competitors.”
Lastly, it is recognized that consumer expectations—especially younger demographics—are changing and driving greater demand for the increased convenience and security of newer mobile solutions. It is clear that banking legacy payments systems—developed decades ago to primarily handle the card processing and aligned around bank operational silos—and their corresponding business models are ripe for re-imagining.
Next steps for re-imagining the core
Although payments systems business models have generated significant bank revenues, there are increasingly more competitive alternatives (which are detailed in the Accenture and BCG reports). Like Quisk has written before and BNY Mellon has recognized, payments systems must be viewed strategically as a value-added platform for evolving your bank’s brand value and improving your customers’ experiences.
During the process of re-imagining bank core payments systems and considering how newer digital and mobile technologies may be leveraged, bank executives should ask the following questions:
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