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The push to the modernization of payments is not a recent phenomenon. Financial institutions and intermediaries have regularly been moving through rounds of improvement; but, this time, the pace of transformation, its scope, and impact are unprecedented.
Drivers of the Modernization
We have noticed two primary drivers for this dramatic movement.
We are already witnessing how the pandemic has accelerated the digital adoption of consumers and businesses to a new level as they are exploring digital channels to learn new ways of making and receiving payments. This massive adoption presents another opportunity for the financial institutions to increase usage and expand their customer base further with timely investments in modernizing their payments infrastructure according to customer needs and market trends.
Understanding Modernization
Traditionally, modernization meant improving user experience through channel-specific offerings based on multichannel strategy. Then followed an era of consolidation of channels and client-facing applications, and the platforms came with API gateways and enterprise bus technologies.
But today, it means a much more comprehensive approach to payments that includes:
Approach to Modernization
EY believes the financial institutions can capitalize on the opportunity at two stages: (1) optimizing and redesigning the end-to-end payment process and (2) building payment platforms with a coherent vision of the long-term future.
According to them, the underlying principles governing the changes on the platform and technology side are:
Accenture suggests that taking the more holistic approach to redesign the payment systems instead of just complying with new regulatory requirements is essential to capture returns while advancing along with the disruption within the industry.
Benefits to Stakeholders
The modernization effort has multiple benefits for all parties involved:
Promising Outlook
Long-term investments into modernizing payments are a significant undertaking, particularly under the current uncertainty and risks associated with the pandemic. Nevertheless, the survey organized by Finextra earlier this year concludes that an encouraging number of financial institutions worldwide expect to invest in new solutions and modern infrastructure within the next six months.
Summing it all, the modernization drive has something for everyone and is already in motion, stimulated by the excellent opportunity and a massive challenge to financial institutions.
REFERENCES
This content is provided by an external author without editing by Finextra. It expresses the views and opinions of the author.
Roman Eloshvili Founder and CEO at XData Group
06 December
Robert Kraal Co-founder and CBDO at Silverflow
Nkiru Uwaje Chief Operating Officer at MANSA
05 December
Ruoyu Xie Marketing Manager at Grand Compliance
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