The rapid shift to digital payments is exerting pressure on banks to modernize their payment systems quickly, according to a survey by Accenture.
In the survey, 75% of banking executives confirmed that they are under pressure to modernize digital payment systems. The IT consultant has predicted that nearly 420 billion transactions worth US$7 trillion would shift from cash to cards and digital payments by 2023.
“COVID-19 has accelerated the shift to digital payments at a pace banks could not have predicted,” said Sulabh Agarwal, who leads Accenture’s Payments practice globally.
“While banks’ investments in new payments systems have focused primarily on meeting compliance deadlines, the way they will drive value moving forward is by embracing the changing consumer dynamic and improving the customer experience.”
Not just the pandemic, there are many other factors driving payments modernization, including changing government regulations and new industry standards such as ISO20022 and Open Banking.
While payments transformation is part of most banks’ broader digital transformation efforts, two-thirds (65%) of bank executives said that the cost of maintaining legacy technology in their payments systems is impeding their ability to invest in new customer solutions.
For example, even though many banks have adopted cloud systems in other parts of their business to improve operational resiliency, only 38% of banks are investing in cloud systems for payments.
Latin America and Southeast Asia are among the regions where demand for digital payment systems is soaring. “The e-payments opportunity for banks varies greatly by market,” says Alan McIntyre, another Accenture executive.
“The greatest opportunity will be in markets like Southeast Asia and Latin America, where cash usage has dominated and, in some regions, even increased during the pandemic.”