Payments infrastructure modernization is becoming increasingly important as banks contend with growing transaction volumes, new payment channels, and rising expectations for faster and more flexible services. Legacy systems built around separate business lines can make it difficult for financial institutions to adapt quickly as payment technologies evolve.
One approach is to consolidate previously siloed payment capabilities through centralized payment hubs. By creating infrastructure that can support multiple channels and payment types, banks can establish a more flexible foundation for future innovation while reducing some of the limitations created by fragmented legacy systems.
As the title to this article states, banks are being forced to recognize some of the limitations of their existing payments infrastructure or be at risk of getting left behind. Since payments cross nearly all lines of business, silos will need to come down to make this possible:
A lot of attention is on payment systems that facilitate timely and secured transfer of payments. An increasing array of solutions aimed at different customer segments, expanding access channels, mobility, large volume, faster settlement and enhanced technical support have all added to the pressing needs of banks to look for ways to strengthen their payment systems.
Payment Hubs Offer an Alternative to Siloed Systems
In an effort to bridge legacy systems and create a more nimble platform on which to innovate, some are turning towards the creation of payments hubs. This is a large undertaking for any organization and is an effort with a long-term perspective:
Advances in technology, gateways, devices and channels have driven transformation in the payment system. This game-changing trend has particularly impacted banks in the last five years with a shift from traditional silos to a well-organized central hub solution being preferred by the banks. The shift has largely been driven by the desire of banks for integrated systems capable of tying together various business units and channels like Internet, ATM and mobility.
Moving from separate legacy platforms toward a centralized payments hub represents a significant undertaking, particularly for banks with complex systems spanning numerous business units and channels. However, the growing range of payment technologies and customer access points is increasing the need for infrastructure that can operate across traditional organizational boundaries.
For financial institutions taking a long-term view, payments infrastructure modernization could provide a foundation for integrating channels, improving operational flexibility, and responding more effectively to future changes in the payments landscape.
Overview by Sarah Grotta, Director, Debit Advisory Service at Mercator Advisory Group.
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