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Saying goodbye to the old...

I blogged earlier this week about the importance of payments and banks adding value for their corporate customers, which is being highlighted at IPS. Electronic payment volumes are still increasing and banks have to look at how they are being managed and processed.

But for many institutions this can be easier said than done. The past 30 years have seen literally billions of dollars spent on payment systems, and the payments infrastructure within many financial institutions is siloed, with different payment types often having their own systems, information, processes and people to support them. It isn’t uncommon for a medium to large financial institutions to have between 60 and 100 individual systems to process payments.

However, the cost of maintaining these systems; the downward pressure on the per-transaction fees that banks can charge; and the need for speed in responding to innovation in the market, is leading many banks to look at their payments landscape  and start to consider how it can be evolved to become more consolidated and efficient.

We’ve heard lots of talk about payment hubs in the past few years, and while I agree that consolidation is key, it end goal isn’t just about getting all of your payments onto one system, it must be about intelligently and effectively bringing together processes and technology to reduce inefficiencies and increase flexibility. It doesn’t really matter if you go from 100 systems down to 5 or ten rather than just one, if you have delivered significant benefits at the same time.

But getting there isn’t easy. In most financial institutions it isn’t a case of throwing out the old and bringing in the new, it is a more gradual evolution , but the end goal is still the same – efficient technology and infrastructure on which the bank can deliver the processing functionality, flexibility and scalability it needs today and into the future.