Search for Profit in Faster Payments

The difficulties that financial institutions have in defining a positive business case for investments made in faster payments. If you were looking for the step-by-step answer of how to turn your investment in new payment capabilities and other digital solution, it’s not here. What is described is the iterative nature of updating payment systems to meet the market needs and the difficulties in defining where the ROI will be found.

The future of payments will continue to evolve, making it a challenge to create a business case that is plausible and useful. “Banks must build holistic, flexible investment cases that address a range of business priorities” and “banks must build their investment plans to take into account the impact on all affected products and services.” It also urges flexible designs that can accommodate future changes. 

“New architectures need to leverage APIs and micro services to deliver a foundation for future product and service innovation,” the report says.

”Delivering payments capability as a series of services will provide new channel opportunities  and help power Open Banking and wholesale initiatives, pointing out the difficulty of applying ROI to the unknown. 

Where payments had often been seen by bankers as a back-office function, forward-looking banks now recognize it as a central enabler of their digital strategy. While that often elevated it to strategic status, it also links payments to other initiatives such as pricing, risk, and relationship management — increasing the number of stakeholder involved and probably the internal friction.

Financial institutions have certainly had to invest heavily in systems for regulation and security where the benefit is not direct revenue, but the risks and potential downside of not solving for these issues is untenable. Building for real-time/faster payments may need to be thought of similarly.