We know that most financial institutions are burdened, to a greater or lesser degree, by siloed legacy payment systems. Part of the problem is that the limitations of this architecture of legacy infrastructure are not immediately obvious. Individual systems function, and function well for the most part. But although they serve their individual purposes now, there is little to suggest they will be able to work together to support financial institutions as they adapt their business models to the demands of a new decade.

The sheer volume of transactions that these legacy systems are expected to handle continues to grow - placing ever growing pressure on already creaking infrastructure. The financial crisis has dramatically accelerated the pace of change and has placed acute pressure on legacy systems. It brought about unprecedented levels of consolidation and tremendous regulatory change, and is accompanied by a fast-paced revolution in technology and a changing customer demographic.

Furthermore, the payments industry is no longer the exclusive domain of established financial institutions and traditional payment processors. New entrants from non-financial industry sectors are making their presence felt and challenging long-held notions about the payments business. These new entrants have been enabled by customer-friendly regulations and fast-emerging technologies, and are gaining ground in traditional B2B and B2C spaces as well as creating and fulfilling an electronic P2P payments environment.

These new entrants come without the baggage of years in the payments space. They offer new products and services, carefully targeted and often fulfilling a niche demand, without having to compromise because of their technological limitations.

The convergence of payments and consumer technology favorites is indicative of another critical factor facing financial institutions. Consumer's lives are increasingly digitized. Customer expectations are therefore changing rapidly. Younger customers in particular are used to services delivered online and in real time and expect similar levels of service from their financial institutions. Traditional banking brand strengths, like reliability and security have less meaning for the next generation of customers for whom speed and convenience are the key brand values, with reliability and security considered hygiene factors. And legacy systems cannot always meet these expectations.

The payments industry is therefore at a tipping point. Financial institutions need to be more proactive in the payments evolution while managing crisis-driven business pressures and new regulatory and compliance imperatives. First of all, they will need to make some prompt decisions about how to redesign or accelerate their revenue-focused and cost-focused payments strategies. New pressures threaten to overwhelm the legacy systems on which the payments business has been built.