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Real-time payments for real-time banking

How banks can seize the full opportunities of immediate payments

Overview

Immediate or real-time payments systems and infrastructures are being planned or rolled out in more and more countries. With customers increasingly requiring ease, speed, convenience, security and always-on processing for their payments, the global momentum behind immediate payments is unstoppable.

Not only do banks need to meet consumers’ rising expectations, they are also facing intense pressure from governments to create nationwide and regional real-time payments systems that can be used by all financial institutions. Given these drivers, immediate payments is expected to become the new standard for banks – making it imperative that they support progress towards it. Any bank that fails to embrace immediate payments will face losing market share, relevance, customer relationships and revenues.

Key Findings/Analysis

The most fundamental change required by the advent of immediate payments is a shift of service mindset for banks. To retain and win customers in the future, banks must migrate their entire product and service mindset towards immediate delivery, both of payments and also all other banking-related offerings.

In terms of legacy payments systems, the changes required to banking technology to support immediate payments are profound and wide-ranging. The change also impacts other key components of the payments architecture landscape including initiation channels, payments order management, payment engines, core banking, fraud systems, document services and archiving systems.

Banks that succeed in moving to real-time payments will be well-positioned to seize a further new opportunity: the chance to develop and launch compelling new products and services for customers, both retail and corporate.

“Approximately 35 countries have implemented or scheduled hard launch dates for immediate payments”

Recommendations

To realize the opportunities that immediate payments opens up, banks need to take a proactive and holistic approach to the transition. This involves four key steps:

  • Formulate the vision and strategy for real-time payments early, setting out the vision, strategy and value proposition for shifting the bank from a 30-year-old legacy payments model to a 24x7x365 payments model. The bank can then define the scope for turning its vision into reality, including product types, geographies, channels and clients.

  • Take a hard look at the implications and opportunities around products and customers, including how increasing adoption of immediate payments will impact existing payment types and revenue streams.

  • Revisit platforms and system components, to pinpoint and address areas where significant modernization is needed to enable real-time processing and ensure continuous availability.

  • Implement organizational redesign of the bank’s payments value chain, ranging from customer service to fraud operations and intraday liquidity management.

DOWNLOAD REAL-TIME PAYMENTS FOR REAL-TIME BANKING (PDF, 1.63 MB)