We expected 2020 to be a year of fundamental change for the payments industry, with the global migration to the ISO 20022 common payment standard, ever-expanding adoption of instant payments, digitalization of services through open banking and the essential refactoring of technology.
But then came the pandemic, which accelerated those changes and the need for modernization.
As we reach the fourth quarter of 2021, where does the industry stand? What happened, what's changing and, perhaps most importantly, what is still to come for financial institutions?
Fiserv collaborated with Celent to understand the state of payments across regions. In May and June 2021, Celent surveyed 214 senior payment professionals who are retail and corporate bankers across North America, Europe, Middle East and Africa, Latin America, and Asia-Pacific.
It is clear the industry understands that it needs to change rapidly.
– Gareth Lodge, Senior Analyst, Celent
"It is clear the industry understands that it needs to change rapidly," Gareth Lodge, senior analyst for Celent, said. "The need to cut costs and respond to industry changes makes that challenging unless banks act, and act now."
The survey focused on the payments modernization journey, adoption of ISO 20022, the pandemic's effect and the outlook for payments.
There are several key findings from the survey, including good progress from financial institutions on their modernization plans. More than half of banks said they are updating their ACH systems or have done so over the past five years.
However, financial institutions seem to be lagging in their efforts to meet the ISO 20022 mandate. Sixty-one percent said they have done the bare minimum required to be ISO 20022 compliant, and 21 percent of mid-tier banks have no plans to upgrade their wires platforms, which is a requirement of the standard.
The survey also found that financial institutions believe the rapid payments changes caused by the pandemic will be permanent and that the pace of change may even increase.
Additionally, 82 percent of financial institutions said they believe the next five to seven years will see their organizations move to payments-as-a-service or a managed service in the cloud.
Full results are summarized in the Celent research report, “The State of the Nation for Payments Modernization.” The report shows payments remain an exciting and rapidly growing industry and highlights areas of improvement needed to reap the benefits of the payments evolution.
Register for your copy of the exclusive research to find out how financial institutions globally and in your region are responding to customer, regulatory and technology challenges.