Consumers Demand Payments Modernization

Enough with all the “digital transformation” talk, right?

Wrong.

Modernizing payments capabilities is one of the clearest paths out of the trackless post-pandemic forest, and businesses of any size that got ahead of it early are reaping rewards now.

PYMNTS FI’s Guide to Modernizing Digital Payments done in collaboration with Red Hat, examines developments in modernization as an imperative for business in a world full of “digital shifters” who have moved their spending in-app and online.

Among the first things we learn is that these “digital shifters” have demands.

“FIs and payments providers are constantly looking to improve and accelerate payments for various reasons. Consumer demand for real-time payments is the most popular, with 77 percent of institutions citing this as a primary factor. Sixty-eight percent cited the need to quickly bring solutions to market, and 59 percent said they need to reduce costs or maintain profit levels,” according to the new edition of the FI’s Guide to Modernizing Digital Payments.

‘Digital Services That Customers Crave’

Speed and security motivate today’s peer-to-peer consumer. COVID-era studies consistently show that consumers are losing patience with financial institutions (FIs) that can’t match Big Tech for sheer dazzle. It’s seen as incumbent on FIs to bring forth the same quality of experience.

“Payments modernization is about charting a course to improve the way money is moved, the technology that supports it and the impact on delivering the digital services that customers crave,” Brad Davis, head of consulting services, North America financial services, Red Hat, told PYMNTS.

Fair enough, but it’s a lot to take on for many — if not most — companies in a bizarre quasi-recessionary economy that runs hot and cold by the day. Small steps are the answer.

“Taking a holistic view but making incremental changes is allowing organizations to progressively modernize their payment services. Everything from payment initiation to clearing and settlement is being impacted by advancements in channels, messaging protocols and networks to support the rapidly growing digital economy,” Davis said.

Head In The Hybrid Cloud

Many companies are getting over the digital hump by taking on transformation in bite-sized pieces, but with a unified strategy that increasingly involves hybrid cloud architectures.

“Hybrid cloud platforms can be a potent enabler for a progressive approach by hosting multiple architectures and generations of technology in the same operating environment across on-premises … or off-premises infrastructure,” Red Hat’s Davis said. “This provides organizations the flexibility to modernize on their own terms while reaping the commercial benefits sooner.”

Not only that, but a modernized payments infrastructure is also a moneymaker. People tend to minimize that aspect, mostly because it’s secondary to the mission of being a better FI.

“Competing with FinTechs and challenger banks that already offer the fast, seamless payments consumers seek means making significant investments in core banking upgrades and payments modernization initiatives,” according to the new Tracker. “Both changes might require significant upfront investments, but they will likely be worth it in the long run.”