Many financial institutions are trying to run their critical payments function on disparate, cobbled-together systems, whose complexity and inflexibility make it difficult to respond to new customer needs and market demands. This presents a number of challenges to banks.

Firstly, there are spiraling costs and stifled revenues. It is estimated that managing and maintaining legacy systems still consumes up to 90 percent of an institution's IT budget (in North America and Europe), leaving little more than 10 percent for innovation and program development. In such a highly competitive market, leaving such small sums for innovation and the support of new product development is dangerous.

In addition, innovation is being stifled. Operational staff are fighting to stand still. Neither budget nor resources are available to do much more than maintain the status quo. Innovation (within the boundaries of regulation) in the payments field is vital. But legacy systems can have a deadening impact on innovation in a number of ways. They can reduce time-to-market because of complexity; engender a lack of customer focus because each system gives only a splintered view of each customer; increase operational risk; limit commercial opportunities because there is often little or no cross-channel information sharing; and make liquidity management difficult.

Overall, the pressure of maintaining and supporting legacy systems consumes resources and has rendered payments an expensive commodity rather than making them a strategic and financial advantage. If payments are the life blood of the banking industry, then outmoded technology is clogging its arteries.