Payments are a cornerstone of financial institutions’ business models and revenue goals. They are also a key component of everyday life for businesses and consumers who need to move money. As a result, banks and credit unions everywhere need a payments strategy that supports the opportunities and threats of the modern world. The payments industry is ripe for innovation, and banks unwilling to embrace innovation risk being left behind.
Financial institutions choose one of two main approaches when developing a payments strategy: a proactive offensive strategy or a reactive defensive strategy. With detail-rich plans and data-driven insights, proactive strategies leave little to chance. In contrast, reactive, defensive strategies have more of a “we’ll cross that bridge when we get there” mindset. Financial institutions that opt for a proactive, offensive strategy are at an advantage over those taking the defensive route.
Jack Henry recently released a whitepaper, titled 11 Big Questions to Help You Develop a Modern Payments Strategy, to help financial institutions understand what questions they should consider before implementing a payments strategy. By answering these questions, banks will be well prepared to succeed in their payments modernization efforts.
Three of the key questions addressed in the whitepaper include:
1. How are you going to aggressively and successfully compete near- and long-term?
Traditional financial institutions and credit unions are not the only organizations that recognize the potential of payments: fintech and big techs are right there with them. Non-traditional competitors with recognizable names are alluring to consumers who choose to put their trust in a brand they recognize.
Banks are well aware of the threat that these competitors pose. In fact, a Jack Henry survey of over 130 bank and credit union CEOs found that 75% of respondents believe payments-centered fintechs such as Square, PayPal, and Venmo are their biggest competitors.
2. Do you have a payments data strategy?
Payments data are full of actionable insights, but are notorious for being siloed and difficult to share. Financial institutions need to aggregate and analyze this data using advanced data analytics to gain visibility into those insights and propel their data strategy.
3. What’s your plan to comply with ever-increasing regulatory requirements?
The financial services industry is a highly regulated space. With every change in presidential administration, new challenges and priorities emerge for regulatory compliance. With an emphasis on making financial services more accessible and equitable, the Biden administration will undoubtedly create even more compliance obstacles.
The whitepaper addresses eight other big questions:
- Is Banking-as-a-Service (Baas) your friend or foe?
- Are you open to open banking?
- Are you supporting the incredible demand for real-time payments?
- Is SMB banking important to your performance and growth?
- Do you have a near- and long-term digital currency plan?
- Are you confident in your payments fraud strategy and solutions?
- Is your marketing budget sufficient and are the results worth the investment?
- Are your payments channels future-ready?
By carefully considering these questions, banks can develop an offensive, detailed strategy that ensures payments success in the modern world.
Fill out the form below to download Jack & Henry’s complimentary whitepaper, “11 Big Questions to Help You Develop a Modern Payments Strategy.”
