Modernizing Payments and why we are still using cheques?

Making Money From Moving Money One reason for the slow pace of modernization in the payments industry is that we still cling to the traditional ideas of "payments". Payments are a reciprocal action to the receipt of a good or service or the settlement of a debt. Put more simply, it's the exchange of money for something between two people or a person and a business.

A quick look around the world shows that the old view is beginning to change, and we are seeing the acceleration of payments modernization.  I would say that much of this is can be attributed to the introduction of real-time payments and FinTech disruptors who are separating the payment method from the funding source.

Disruptors are leading the way…

By separating the payment method from the funding source, the disruptors are able to offer new services and attract more and more payments users. 

●      Klarna offers simple payment options with a variety of funding sources.

●      NETS and Mash Credit offer POS credit options.

●      TransferWise and Revolut bring a wide variety of remittance options and currencies.

A few of these disruptors already have millions of customers using their services. But it's not just because they have separated the payment from the funding source. 

They are growing and gaining market share because they created their products and services through a lens of the user experience.  They took a customer first approach and understood that in order to create services that people would use, they needed to create new digital products that would meet the growing expectation and evolving needs of customers. 

We need only look at our past to see why our industry is lagging behind in the payments space.  

Our deep, dark secret… we still like cheques!

To many in the industry, modernization means bringing new technology to bear on existing processes and products, instead of reimagining the end-to-end process to better suit customer needs – while still being in line with all financial, legal, and regulatory requirements.  

We are usually guilty of bolting on new systems and piecing together a “new” solution to keep up with the market.  But it really isn’t modernizing our legacy systems. And worse, in the end it causes us more grief when we do begin to truly modernize our infrastructure.

A wise payments guru told me many years ago that Payments have always been additive.  We add new ways to pay but we don’t take away the old methods.  That’s why we are still using cheques in today's digital world!  

To truly modernize we need to change the way we think, how we approach solution development and how envision payments working.  As an example, we need to begin challenging the need for cheques and push to create digital products and processes that can support the reason our clients use cheques in the first place!  Surely it is time for us to accept a digital vision of how we can provide new payment services that actually resolve customer pain points. 

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Find out more in CGI’s “Making Money from Moving Money” paper: https://bit.ly/2UBWVe3