Blog

Summary

Payment models are changing radically, creating both challenges and opportunities for financial institutions. New digital-only banks have accelerated innovation, while the pace of global change has created a new competitive landscape. UK financial institutions face additional pressure from the need to migrate to new technology platforms based real-time and high-value payments to support ISO20022.

Quality of experience will be paramount in this new landscape, for merchants, businesses, and the end consumer. The need to avoid expensive downtime is a given, but banks must also optimise service delivery to meet evolving expectations. This requires real-time insight into performance across the entire payment infrastructure.

Every aspect of the payments model is changing. Through Faster Payments, the UK led the way in creating real-time payments. But the rest of the world has caught up fast or surpassed the services delivered by UK financial institutions. Customer expectations have also moved on, driven by mobile payments’ ease of use and rising limits for real-time payments.

Things have moved fast here: the limit for Faster Payments in the UK is now £1 million per transaction. The value of products purchased via mobile devices in the UK during 2020 was around £65 billion. By 2024, m-commerce retail revenues are predicted to surpass £100 billion.

There is zero tolerance among merchants, businesses, and consumers for glitches in these payment processes. Expectations are for 100% reliable, error-free, immediate transactions. At the same time, banks face ever-tighter regulatory scrutiny and financial penalties for failure to process payments within the defined timescales.

The increasingly demanding, complex, and competitive payments market is creating new operational risks. Avoiding outage is essential, but banks must also constantly improve their quality of service, and ensure they target their investment on the areas that deliver most value and growth, to deliver a genuinely frictionless payment experience.

While each payment mechanism presents different challenges, they can no longer be considered in isolation. Implementing a single performance monitoring solution across the entire payment infrastructure (cards, real-time and high-value payments) is hugely valuable. With an omnichannel view, financial institutions can achieve cross-infrastructure insights that can provide the agility they need to respond to an unprecedented pace of banking change and to customers’ desire for a frictionless experience, irrespective of payment type.

Links: https://www.ukfinance.org.uk/press/press-releases/cards-used-half-payments-first-time-last-year