PaymentsJournal
No Result
View All Result
SIGN UP
  • Commercial
  • Credit
  • Debit
  • Digital Assets & Crypto
  • Digital Banking
  • Emerging Payments
  • Fraud & Security
  • Merchant
  • Prepaid
PaymentsJournal
  • Commercial
  • Credit
  • Debit
  • Digital Assets & Crypto
  • Digital Banking
  • Emerging Payments
  • Fraud & Security
  • Merchant
  • Prepaid
No Result
View All Result
PaymentsJournal
No Result
View All Result

The Heritage of Legacy Payment Systems

By Louis Blatt
May 9, 2011
in Industry Opinions
0
0
SHARES
0
VIEWS
Share on FacebookShare on TwitterShare on LinkedIn

Media.

The past 30 years has seen billions of dollars spent on payments systems – with financial institutions building up a plethora of different systems and technologies designed to meet specific needs and develop competitive advantage. However, as the payments infrastructure gets more intricate and unwieldy, the harder it is for financial institutions to realize the potential benefits of technology.

Software vendors and financial institutions have a lot to answer for when it comes to the complexity of payment systems. We have often seen financial institutions racing to be one of the first to market with new services. More often than not, the industry has bolted on a new platform for the new service, rather than spend extra time building new functionality into existing systems. The lack of maturity and adoption in service based software development methodologies resulted in the inability to bring to market a unified solution. This has led to complex and siloed systems that have become a burden.

The technology that prevails in many financial institutions is a combination of old and new, dating from the 1980s, 1990s and 2000s. There is little room for scalability or agility in older systems, which are not designed for flexibility or the need for real-time processing. The result is an imperfectly integrated blend of old and new technologies that compound the tangle.

Consolidation has also driven complexity. The number of independent financial institutions has decreased rapidly over the years, as larger institutions seek growth and expansion through a wave of mergers and acquisitions. But along with new markets, new customers, and new revenue opportunities, financial institutions have also acquired additional systems to add to their own rambling infrastructure.

Another driver of system duplication and complexity is globalization. Facing diminishing returns from domestic markets, established financial institutions in North America, Europe and Australia have turned to Latin America, the Middle East and certain countries in the Asia-Pacific region, where the prospects are much more attractive. Regional institutions have been acquired and in the process their existing systems, designed for local requirements and legislation, have been added to the payments landscape of the bank.

Finally, the regulatory landscape is changing rapidly, bringing with it new demands for compliance, audit, transparency and control. Financial institutions will need to update platforms and processes necessary to issue and manage cards in this new environment.

As a result of all of these factors plus customers’ constant demand for new and more convenient methods of payments such as mobile, technology has become all-pervasive: it has multiplied through all aspects of a financial institution’s payments operations and replicated across channels, payment types and business divisions. Many organizations are, in effect, a series of separate mini banks that simply operate under a unifying brand, but with a completely independent view of external customers and internal resources. But at some point, the development of monolithic systems that increasingly consume the development and support budgets at banks has got to stop, and financial institutions need to take a long-term, cross-organization view for the future of their payment systems. The need to move to the next generation system is no longer disputed but how that migration should occur is the key question. Banks must develop a plan to migrate to a more modular and unified system that offers the business agility required but does not compromise the availability, reliability, and scalability of the legacy systems.

About ACI Worldwide
ACI Worldwide powers electronic payments for more than 800 financial institutions, retailers and processors around the world, with its broad and integrated suite of electronic payment software. More than 75 billion times each year, ACI’s solutions process consumer payments. On an average day, ACI software manages more than US$12 trillion in wholesale payments. And for more than 150 organizations worldwide, ACI software helps to protect their customers from financial crime. To learn more about ACI and understand why we are trusted globally, please visit www.aciworldwide.com. You can also find us on www.paymentsinsights.com or on Twitter @ACI_Worldwide.

0
SHARES
0
VIEWS
Share on FacebookShare on TwitterShare on LinkedIn

    Get the Latest News and Insights Delivered Daily

    Subscribe to the PaymentsJournal Newsletter for exclusive insight and data from Javelin Strategy & Research analysts and industry professionals.

    Must Reads

    Authorization Rates

    Boosting Revenue for Merchants by Optimizing Authorization Rates

    May 12, 2025
    Why Payment Orchestration is the key to international merchant growth

    Ensuring Payment Decisions Pay for Themselves

    May 9, 2025
    cross-border

    As Businesses Reevaluate Cross-Border Relationships, Financial Institutions Can Help

    May 8, 2025
    Nacha WEB Debit Account Validation Rule Verification Solution, Quovo ACH Payment

    The Brave New Future of the Disappearing Account

    May 7, 2025
    solana financial

    After an Upgrade, Solana is Primed to Be the Blockchain of Choice for Financial Institutions

    May 6, 2025
    PAR values

    The Connecting Thread: How PAR Values Can Mitigate Fraud and Supercharge Loyalty Programs

    May 5, 2025
    mobile banking

    How Mobile Banking Apps Can Be the Center of Customers’ Money Movement Activities

    May 2, 2025
    uk visa mastercard

    The Warning Signs Looming Over Credit Card Lending

    May 1, 2025

    Linkedin-in X-twitter
    • Commercial
    • Credit
    • Debit
    • Digital Assets & Crypto
    • Digital Banking
    • Commercial
    • Credit
    • Debit
    • Digital Assets & Crypto
    • Digital Banking
    • Emerging Payments
    • Fraud & Security
    • Merchant
    • Prepaid
    • Emerging Payments
    • Fraud & Security
    • Merchant
    • Prepaid
    • About Us
    • Advertise With Us
    • Sign Up for Our Newsletter
    • About Us
    • Advertise With Us
    • Sign Up for Our Newsletter

    ©2024 PaymentsJournal.com |  Terms of Use | Privacy Policy

    • Commercial Payments
    • Credit
    • Debit
    • Digital Assets & Crypto
    • Emerging Payments
    • Fraud & Security
    • Merchant
    • Prepaid
    No Result
    View All Result