The Point

Payments Offer Unprecedented Change and Opportunity. Are You Keeping up?


May  01 
Martin Coen  President, Enterprise Payments Solutions, Fiserv 

Many banks and credit unions have traditionally viewed payments as necessary and nondifferentiating, relegating them to the back burner of transformational priorities. Persisting in this view is a potentially serious mistake, given the pace and scale of change – change that is only just beginning.

The forces shaping the speed and ease of money movement are challenging, but at the same time they open a window of unprecedented opportunity for financial institutions. Payments are already on the other side of pretty much everything, whether it be consumers buying goods, trade and commerce, lending, supply chains, trade finance, or securities trading. As payments become more real time, online and information-rich, they become ever more central to the way consumers and corporations do business.

We believe three principle factors are driving change in payments, which provide both challenges and opportunities for all those involved:

  1. Increasing numbers of electronic (and increasingly real-time) global payments transactions
  2. The digital transformation of business and society, with payments being a key part of the user experience and micro segmentation a focus of financial institutions
  3. Increasing competition and speed to market of new products from new players and the more progressive banks

Embracing Change

Financial institutions that fully embrace those changes and the payments transformation will be those that benefit most from the opportunities. That will mean rethinking traditional approaches and operating models to put payments and the related information at the heart of business strategies.

Despite new competition from startups and larger tech companies, banks and credit unions are still at the heart of how money moves and remain highly trusted by consumers and businesses when moving money and safeguarding private data. Forward-thinking financial institutions are seeing the opportunity, recognizing the need for change and increasing their investment in real-time, information-rich, intelligent payment services. For these institutions, providing market-leading payment services is a foundation for competitive differentiation across business lines.

Developing and Implementing a Holistic Strategy

The financial institutions already finding success are those that have developed a holistic and differentiated payments strategy to support their specific business goals. The key objectives of such strategies have typically been to simplify the operating model, fully shift to real time and support more intelligent, information-rich services. This change in approach enables financial institutions to deliver real-time, integrated payment services through multiple client channels, rapidly take new products to market, scale as required and take advantage of structural market opportunities as they arise.

Some institutions are starting with a single use case, such as real-time payments, and progressively adding other payment types. Others are taking a more transformational approach by implementing a full payments platform to enable multiple payment types right from the start.

Putting Change into Practice and Minimizing Risks

Whichever path is adopted, financial institutions large and small need to find a way to manage the pace and complexity of change. Change can be uncomfortable, but the urgency to prioritize payments is increasing. Ensuring organizations have the right partner – one capable of delivering end-to-end payments solutions and offering a full range of payments strategy deployment options – is key to putting those changes into practice and minimizing the risk inherent in the transformation of this mission-critical function.

For those financial institutions that can set out a clear strategy and find the right partner with which to execute it, the opportunities in the market are unprecedented.