As payments shift from traditional and manual workflows to automated, digital ones, everything will change.
And that’s a good thing for global commerce.
“Across the global landscape, three things are driving payments modernization,” Rossana Thomas, vice president and general manager of Enterprise Payments Platform at Fiserv, told PYMNTS for the series “What’s Next in Payments: Payments Modernization.”
According to Thomas, those primary drivers are the surge in demand for instant payments, the migration to cloud-based systems and the adoption of ISO20022.
Effectively unlocking these three drivers of payments modernization will help usher in a new era of efficiency and security across the payments and commerce landscape.
The increasing consumer demand for real-time transaction capabilities is driving the adoption of instant payment solutions worldwide, and Thomas highlighted that instant payments are crucial for meeting modern consumer expectations, offering immediate funds transfer capabilities that align with the real-time digital economy.
“It’s not just about moving money fast, but you also want to make sure it’s being done safely,” she said.
And as banks and financial institutions shift from on-premises infrastructure to cloud solutions, in part to better manage the expectations of their customers, they benefit from enhanced scalability, security and operational efficiency.
Thomas explained that Fiserv is actively aiding clients in this transition, facilitating moves to private or public clouds, which support more agile and responsive payment systems.
“The customer, regardless of whether it is a consumer or a business, they’re driving a lot of this change with their expectations. And the technology is driving those expectations to be more real time, more instant,” Thomas said. “Customers want flexibility with making payments.”
Payments modernization is a multifaceted journey, integrating new standards, technologies and processes to meet the demands of a digital-first world.
One of those new standards is the ongoing migration to ISO 20022. This global standard for electronic data interchange between financial institutions is transforming the way payment messages are structured and processed.
By providing richer, more detailed data, ISO 20022 enhances the ability to identify fraud, streamline reconciliation and improve liquidity management, Thomas said, explaining that the data-rich environment facilitated by ISO 20022 compliance will enable better fraud detection through advanced pattern recognition and more automated reconciliation processes.
“Data is the pot of gold at the end of this ISO rainbow,” Thomas emphasized. “I’m excited with all the changes that are happening.”
As it relates to the demands shaping tomorrow’s payments landscape, customer expectations for instantaneous and secure transactions are pushing financial institutions to modernize their infrastructure rapidly.
Thomas explained how Fiserv enables its banking clients to provide safe and efficient money movement, balancing speed with security, noting that as digital wallets and alternative payment methods gain traction, banking systems must evolve to offer greater flexibility, real-time capabilities and enhanced security.
Despite the clear benefits, payments modernization is not without its challenges. Thomas noted that prioritization is a significant hurdle. Financial institutions that must balance compliance requirements with modernization efforts can do so by leveraging compliance-driven changes as opportunities for broader technological upgrades.
She advocated for an agile approach, encouraging institutions to implement functionally ready solutions incrementally rather than waiting for perfect, all-encompassing systems. This strategy allows for quicker adaptation and problem-solving, ensuring that modernization efforts remain aligned with evolving business needs and customer expectations.
At the same time, successful payments modernization requires collaboration across the financial ecosystem. Banks must engage technology, business and operations partners. This holistic approach ensures that all components of the payment process are modernized, integrated and optimized for real-time operation, Thomas explained.
“One of the benefits of the ISO migration and evolving demands around instant payments is that it has driven banks to look at their modernization needs,” she added, noting that modernization initiatives should be driven by real business needs and provide lasting value.
Looking ahead, Thomas predicted significant disruption in the payments space from cross-border instant payments. As consumers and businesses increasingly engage in global transactions, the demand for seamless, real-time cross-border payments will grow. This shift will necessitate changes not only in technology but also in business practices and regulatory frameworks that will both define and support the future of payments.
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