For over a decade, financial companies have adopted various strategies to modernize their payments solutions. In particular, modernization involves using groundbreaking technologies to create integrated payment solutions as per customer’s needs.
For example, stage I of modernization centered on the merging of channels and customer-focused applications.
Now, stage II will involve fintechs matching various international standards–per the ISO20022, Open Banking–and steering towards faster and cost-efficient ways to complete transactions.
Companies now agree that any digital transformation should involve rethinking their primary banking & payment solutions by following best modernization practices and a more comprehensive approach to the payments value chain.
What are the Driving Factors for Payment Modernization?
Today’s payment enablers are inspired by the driving factors for modernization. Often, these motivators fall into four main groups:
- Shopper expectations
Shoppers’ needs have changed significantly. In the age of digital payments, buyers need accessible, painless, and instant transactions. Digital payment providers are learning to track their audiences’ needs to create more satisfying payment experiences.
- Compliance with industry & government regulations
Financial companies must also digitize their operations to match all industry and government regulations. This means meeting all the requirements by all standards, e.g., the GDPR, PSD2, and Open Banking in the EU.
- New tech and innovation
Groundbreaking technologies and innovations are another force in payment modernization. Solutions like the cloud, troves of data, Open APIs, and analytics-guided services are changing the face of transactions.
- Fresh competitors and disrupting forces
Relatively new players are disrupting the digital payment space in many creative ways to serve their customers better. Some known players include FinTechs, NonBanks, Challenger banks, and BigTechs.
In the meantime, traditional banks are also restructuring and modernizing their services to compete effectively against innovative startups through collaborative payment ecosystems formed when they merge with new players to pioneer more customer-focused solutions.
Companies must understand the various modernization models and jump in with a well-thought-out plan to succeed in the payment modernization process. These projects should be sustainable with long-term benefits, not just short-term initiatives that will use plenty of resources and fade away before giving good ROI.Author Bio: Blair Thomas has been a music producer, bouncer, screenwriter and for over a decade has been the Co-Founder of eMerchantBroker, the highest-rated high risk merchant account processor in the country. He has climbed in the Himalayas, survived a hurricane, and lived on a gold mine in the Yukon. He currently calls Thailand his home with a lifetime collection of his favorite books.