CEB TowerGroup Blog – Is Your Payment Infrastructure Fit for Service?  Are You Sure?

Andy Schmidt
Research Director, Commercial Banking, CEB

07 April 2014

Payment Volumes and Revenues Are Increasing Worldwide

Non-cash payment volumes continue to increase globally as populations grow, markets mature, and the need for speed and efficiency becomes more pressing.  Revenue opportunities are also growing due to the economics around payment processing, leading to predictions that the global payments market will be worth US $1.1 trillion by 2022.  As a result, competition is also increasing as non-bank participants look to displace existing payment providers to secure their own piece of the payments revenue pie.

Infrastructure Suitability Can Be Fleeting

The challenge for legacy payment providers — including banks and payment networks — comes down to a single world: suitability.  The reason for this is that many payment infrastructures were not built to meet the demands for flexibility that the current market requires.  As a result, they are often no longer suitable for meeting the growing demands of banks and their clients, creating the opportunity for more flexible payments providers to woo desirable customers away.

Assess the Present While Planning for the Future

These factors make it vitally important for banks to periodically assess their payments infrastructures to address the following key questions:

  • Does it meet the needs of my target market?
  • Will it support my payments strategy both now and in the future?
  • Is it cost effective to run, test, and support?
  • Does it fit my overall technology strategy?

Examining your infrastructure using these criteria allows payment providers to better quantify whether they are meeting the needs of the business, while also objectively cataloging the shortcomings — if any — that their infrastructures have so that a remediation plan can be put in place, whether it involves customization, the addition of new modules, or complete replacement.

In the event change is required, the assessment process should continue, albeit in a slightly different form, to ensure that the proposed changes meet the bank’s anticipated future requirements while also addressing the existing shortfalls of the current systems.  This way, payment providers will be able to ensure that their infrastructures best position them to provide the flexibility that the market requires along with the revenue opportunities and cost efficiencies that banks so greatly need.