Retailers push payment modernisation as customers ask for more: KPMG

The payments environment is evolving rapidly with a range of new payment alternatives and channels competing for market share; new technologies like contactless payments and QR payments are gaining traction (particularly in emerging markets); and new ancillary services like buy now, pay later (BNPL) are growing in popularity.

As the report reveals, FIs and retailers are keenly aware of the need for modernisation. And they recognise that significant benefits, including better customer experiences, more streamlined operations, long-term cost savings and enhanced security, can flow to players that are able to remain competitive in the payments landscape.

Yet continuous modernisation isn’t easy, the report notes. And many of the executives in the survey said they face significant challenges as they strive to modernise their payment systems to meet customer expectations and regulatory requirements.

Customer expectations are the leading driver for payments modernisation and there is a reluctance to rip-and-replace these systems due to cost pressures, key person dependencies and the spaghetti of connections across the architecture, the report notes.

A sequenced journey, supporting partial functionalities being transitioned to newer technology, could speed up this move through transition states. Payments-as-a-service, public/ private/ hybrid clouds and component-based architectures may provide a solution to payments modernisation, it says.

Undertaking modernisation programmes while ‘keeping the lights on’ is difficult. Resourcing modernisation teams to the right size is critical for success.

Payment data presents a gold-mine of information for firms. The clout of smarter technology, AI and increased digital interactions will likely further improve this and present data monetisation opportunities, the report notes.

The report, titled ‘Modernising payments: Global perspectives from financial and retail executives on payment modernisation strategies and trends’, presents findings of a September 2024 survey of 750 FIs and 600 retailers.

ALCHEMPro News Desk (DS)