Between 32 per cent and 36 per cent of banks and services providers feel their organisation is, at best, only delivering the minimum expected standard of payments products and services, according to global cloud payments provider Volante.
The findings were highlighted in Volante’s Payments Modernisation report which asked banks and service providers, across different regions, their views on trends in payments modernisation, cloud and ‘as-a-service’ delivery models for corporate and retail payments.
The survey outlined that the COVID-19 pandemic has accelerated digital change, with 68 per cent of organisations seeing changes to product and service delivery models accelerate since the pandemic took hold in 2020.
Some 70 per cent of respondents also said they have seen digital adoption “dramatically increase” in the customer base.
“While budgets are tighter overall, investment in payments system projects will accelerate greatly through 2021”, predicts Volante. “This is driven by customer demands for real-time liquidity management and better cost and efficiency of payment processing.”
However it added: “The downside of all this change is that it is expected to be executed with
smaller budgets and more stringent project approval processes.” This is reflected in the 63 per cent of organisations that said they are being expected to do more with less.
Elsewhere in the report, Volante says investment in services connecting to real-time payments infrastructure, real-time liquidity management for corporates and open banking application programming interface have many banks “feeling confident about their current capabilities”.
But in Europe, where domestic real-time payments are at various stages, and new overlay services are emerging in the more mature markets, “respondents were less likely than their US counterparts to rank their current capabilities as highly sophisticated”, Volante found.
59 per cent of US respondents say they are delivering “cost-effective sophisticated products and services and managing compliance or current domestic real-time payments capabilities”, but Volante questions whether this is over confident.
Volante warns that with the Federal Reserve’s competing FedNow instant payments service expected to roll out in 2023, and the 2022 live date for Canada’s Real-Time Rail, there is “still a lot of change coming up for North American institutions to deal with”.
Discussing the impact and support of ISO 20022 in the payments industry, Volante says adoption is already “widespread, particularly in cross-border payments” which is reflected in its survey which found cross-border payments is the area in which banks are “most comfortable with their current progress”.
“This bodes well for the future of SWIFT’s gpi once it has migrated to ISO 20022”, says Volante, “after which it will be integrated with the Eurosystem’s TARGET Instant Payments Settlement.”
In its report, Volante also says interoperability is a “key consideration that’s likely to feature in any payments modernisation initiatives”.
“While many domestic and cross-border payments networks are aligning in terms of message standards such as ISO 20022, and similar API-based architectures rather than static file delivery, transformation remains an essential requirement”, Volante adds.
Volante’s survey invited 150 banks and service providers to comment on the survey. 44 per cent of respondents are from the EU, UK or Nordic countries, with North America and Asia Pacific making up an additional 44 per cent of respondents.
Some 47 per cent of respondents serve at global banks, with the remainder split across regional and local banks as well as fintech and payments services providers.
A further 48 per cent of respondents work in the corporate transaction banking space, with the remainder in consumer and small business payments.
