Insight

Payments modernization positions banks for success

Mastering money movement is the key to banking relevance

Celeste Diana

Celeste Diana

Principal, Corporate Strategy, KPMG US

+1 516-456-1863

Courtney H. Trimble

Courtney H. Trimble

Principal, Advisory, Financial Services Solutions, KPMG LLP

+1 404 386 7085

Troy Hagey

Troy Hagey

Principal, Financial Services Strategy, KPMG US

+1 214-505-7361

An insight brief from KPMG Connected Enterprise for Banking.

There’s been an accelerated move to digital-first banking. Achieving this transformation requires a surgical approach to modernizing everything—from the business and operating models to the core banking platforms.

A payments revolution

The competitive banking landscape is shifting rapidly and radically. Non-banks and fintechs are aggressively going after the traditional banking customer—at a time when there is zero cost to switching. And digitally savvy customers are increasingly demanding differentiated customer experiences.

There are a number of converging forces that are driving a payments revolution. This includes alignment with ISO 20022—a new global standard for payment messaging; the open banking initiative; a changing regulatory climate; and real-time payments, among other competitive pressures.

Further impacting payments are third-party partnerships that lower customer acquisition costs by embedding banking services into leading fintechs and box stores. These non- banks are becoming payment facilitators, enabling them to move money and transact directly with the customer. They have the benefit of building payments capabilities from scratch, dodging the technical debt of traditional banks.

Legacy systems with siloed workflows are no match for these agile startups. Outdated infrastructures offer little integration across the front, middle and back office. And it’s that integration across channels that allows a bank to delight its customer—starting with seamless money movement.

The goal: superior client experiences

Every business decision needs to be made with the customer in mind. It’s the front-end, client-facing journey that should drive platform modernization.

Those that have embraced the digital agenda and have embedded payments modernization are able to meet rising client demands, delivering a positive customer experience across multichannel products and services. They know their pain points—and how to solve them. They have a deeper understanding of where, when, and how each customer wants to pay.

Banking is no longer someplace we go, but it’s something that we do.
Courtney Trimble, Principal, Financial Services Solutions, KPMG

Customers think of your bank as a whole. They have only one relationship and see no difference between spending, savings, borrowings, or investment. So to promote growth you need to accelerate your digital journey and strengthen your customer connection to differentiate yourself from your competitors.

Prioritizing modernization investments

There is a banking digital divide opening up, which is only going to happen faster and go wider. It’s the divide between banks that are investing in infrastructure to transform and develop better services and those that lag behind, risking becoming the “dumb plumbing” of the future.

Modernizing payments capabilities that speed up payments (if not real-time) and offer a frictionless front and back-end experiences will help ensure that you’re on the right side of that divide.