There has been no shortage of downbeat economic statistics over the past year, from high unemployment rates to declining gross domestic product (GDP) values. Consumers and businesses have demonstrated remarkable resiliency and adaptability during the past 12 months, however, and commerce, rather than disappearing, has largely gone digital. Consider this countervailing statistic: The worldwide value of digital payments — consumer electronic payments conducted online and at the physical point of sale (POS) — is estimated to grow 22 percent year-over-year to reach $6.7 trillion in 2021.
These shifts raise vital questions for banks, which have historically facilitated and financed commerce. Can banks maintain their critical place in the multitrillion-dollar payments value chain, or will they be displaced from it as Big Tech firms and FinTechs increasingly move into what was once their exclusive turf?
A New Approach For Modernizing Payments In Banking is a research-based report that offers a roadmap illustrating how banks can deliver robust payment capabilities when and where consumers want and need them while overcoming the limitations of legacy core processing systems. Technology has opened up a new path for banks, allowing them to progressively modernize their payment systems using technologies like cloud processing, application programming interfaces (APIs) and microservices. The report also features on-the-ground perspectives from two banks — Chase and Truist — that have taken their own paths to deliver new and enhanced digital payments and banking services.
One does not have to look far to appreciate what’s driving the digital payments shift. Thanks to services like Amazon and Uber, consumers have increasingly come to expect fast and flexible payment capabilities to be embedded into the services they use every day. These trends extend to the brick-and-mortar space as well, as consumers turn to contactless payment-enabled digital wallets and QR codes, technologies that have experienced considerable uptake since the pandemic. PYMNTS’ research has shown that 45 percent of U.S. consumers have shifted to digital channels to purchase retail products, a fourfold increase from the pandemic’s onset.
Many banks recognize that overhauling their payments infrastructures is a long-term process, but they are also prioritizing the ability to deliver services in the here and now. Dan Massey, Truist’s head of digital banking, told PYMNTS that the bank’s microservices approach is helping it quickly bring services to market while also guiding its broader innovation strategy.
“This allows us to get these experiences to our clients sooner, and it also helps us to migrate clients in waves so we can very carefully monitor the [client] experience and learn from that and quickly release improvements to that as we go,” Massey said.
One of the fundamental premises behind building flexible and agile bank payment platforms is that services can be quickly rolled out and adapted to meet changing market demands. Chase has seen this firsthand, as peer-to-peer (P2P) payments have surged among the bank’s customers, which is likely part of larger shift away from cash and checks.
“People appreciate that these payment solutions make it easy to track spending in a way that’s contactless and convenient,” Allison Beer, chief product officer and head of customer experience and digital at Chase, told PYMNTS.
These represent just a sampling of the playbook’s insights. For the full story, download the report.