Are you banking on a house of cards?
The digital revolution has completely transformed the payments landscape. Yet despite this, the majority of banks still actively decide to remain increasingly burdened by the same inefficient, costly and, at times, no longer fit-for purpose payments platforms they adopted in the 1990s or even earlier.
Our latest white paper explores how this has left traditional banks fighting to retain their market share, struggling to improve margins and dealing with the sky-rocketing costs of maintaining operational norms. But what is even more astonishing is that not only are banks continuing to operate on these legacy card-based platforms, when they do decide to modernise, many replace their underlying technology with newer platforms that are still based on cards.
System replacement is a dirty phrase in the payments industry: the risk, the cost, the internal politics and the inconvenience are all huge deterrents. However, in a world that is increasingly embracing alternative payments and modern technological principles, running a business on a platform built for yesterday’s payment methods is undeniably illogical. You wouldn't use a Nokia 8110 as a SoftPOS, so why use a card-based platform to run today’s payments business?
In the last 20 years, the payments landscape has significantly evolved to pave the way for non-card-based payments. The sector is ruled by ‘generation now’ and digital natives, who often forego the face-to-face banking experiences of previous generations, instead preferring convenience and speed over security and personal interaction.
As such digital-only banks, or neobanks, are one of the success stories of the previous decade – not to mention Non-bank Financial Institutions (NBFIs), telecom companies, tech giants and many others crowding the market. Not only are these new competitors not burdened by running on card-based technology stacks of the past, they are running the backbone of their payments business on future-ready platforms that take full advantage of modern technological breakthroughs.
Despite this, not only are banks continuing to operate on legacy card-based platforms, but when they do decide to modernise, many replace their underlying technology with newer platforms that are still based on cards. If banks continue operating their businesses on the no longer fit-for-purpose payments systems of the past, they risk becoming irrelevant.
To find out how to build a payments ecosystem fit for the future and not just the ‘now’, download our latest white paper - Are you banking on a house of cards?