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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). As 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:
Successful bank leaders with “fearless imagination” will be those who:
In closing, U.S. President John F. Kennedy said: “Those who make peaceful revolution impossible will make violent revolution inevitable.” Bank leaders need to take action to ensure this “peaceful revolution” takes place within their organizations… and that their core payments systems are re-imagined.
That said, re-imagining banking payments systems takes courage and is both exhausting and exhilarating. In this brave new digital and mobile age, banks need to fail fast, learn from their mistakes and keep moving toward their new business objectives. There is no turning back. Let us know what you think.
This content is provided by an external author without editing by Finextra. It expresses the views and opinions of the author.
Galong Yao CGO at Bamboodt
08 July
Alex Kreger Founder and CEO at UXDA Financial UX Design
07 July
Anjna McGettrick Global Head of Strategy Implementations at Onnec
Nkahiseng Ralepeli VP of Product: Digital Assets at Absa Bank, CIB.
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