In today’s digitally powered world, banks and payment firms face varied challenges such as declining transaction fees, a constantly changing regulatory landscape, emerging payment techniques, competition from new entrants such as BigTech and FinTechs, and increasing demand for real-time, accessible, and digital-first payment experiences that integrate seamlessly to support business and lifestyle needs. Additionally, the pressure to innovate and reimagine customer journeys is compelling banks and payment firms to rethink their technology strategies.

Legacy codes, disparate systems, and siloed databases prevent incumbents from establishing workflows, running analytics, and ensuring interoperability and efficiency across payment systems. These barriers make it difficult for enterprises to adapt to changing demands and regulatory requirements, which, in turn, slows time-to-market. Hence, banks need to take a more strategic, innovative, and timely approach to unlock more value from their payment systems.

Building a modernized digital payments infrastructure that enables trusted and secure payments for organizations will be the key to profitability for all payment providers. While the need to modernize legacy systems is undeniable, different approaches to achieve that goal are emerging, and enterprises need to employ a modernization approach that best suits their strategic priorities, risk appetite, and targeted end state. Small and midsize banks should build a target-state vision for their payment systems and drive internal alignment between the business and technology teams to undertake this modernization journey in a phased manner and at a sequence and speed in line with global demand.

Scope

Industry: banking

Geography: global

Contents

In this study, we explore the changing market drivers and approaches to modernization in the payments industry and discuss the modernization challenges and best practices for small and midsize banks.

Membership(s)

Banking and Financial Services Information Technology

Sourcing and Vendor Management