The payments ecosystem is undergoing a transformation, particularly with the emergence of disruptive digital players introducing new payment methods like cryptocurrency and central bank digital currencies (CDBC). The increased choices for customers have made it more competitive for traditional banks to capture market share. This is just one example of how the payments space has evolved.
In addition, regulators are closely monitoring the industry’s relationship with non-traditional players, such as fintechs and neobanks, to mitigate potential risks in the financial services ecosystem. It’s clear that change is constant within financial services, and organizations need to adapt to evolving compliance requirements set by regulators to ensure safety, efficiency, and resiliency in payment market infrastructures.
During this rapid transformation, financial institutions need to provide frictionless experiences to maintain client relationships and gain new market share. These challenges can be daunting for both banking institutions and payment companies striving for performance and growth.
Transforming the end-to-end payments journey
We believe that the goal for any financial institution is to have a deep understanding of the entire payment processing journey, starting from the point of sale to the final destination. The first interaction a customer has with a bank is often through a digital channel, such as the company’s website, mobile applications, or check payments. Regardless of the payment method, the payment system’s IT architecture needs to securely manage key functions like payments processing, clearing and settlement, risk management, integration and connectivity, and analytics and reporting.
Financial services organizations should have the flexibility and openness of a secure cloud-based payment solution that meets their specific requirements, including integration with other banking systems. As organizations seek this balance, hybrid cloud technologies are being embraced to securely transact with third- and fourth-parties, reduce IT costs, and manage transaction volumes and processing times better. These steps can help modernize payments for financial institutions.
IBM helps scale and modernize payments securely
IBM aims to assist clients in transforming modern payment architectures and maximizing their investments while accelerating cloud adoption for sensitive data found in mid- and back-office workloads.
Although checks are used less frequently, the overall value of processed checks remains high, necessitating quick and secure processing by banks.
Check Payments on IBM Cloud for Financial Services is designed to address this need, operating in a highly secure cloud environment with built-in compliance controls to meet financial services regulations. Our first-of-its-kind cloud incorporates industry-informed controls to help clients mitigate risk and host applications and workloads securely. Our IBM Financial Services Cloud Council is collaborating with over 130 technology partners and fintechs to validate their security and compliance posture for the benefit of financial institutions.
By utilizing Checks-as-a-Service, banks can take advantage of a managed, secure, and scalable cloud-based platform, freeing up resources to focus on other areas. This allows banks to leverage an ecosystem of cloud providers with established security, compliance, and resiliency capabilities.
Designed to build, strengthen, and refine
Digital transformation is an ongoing process, much like building and strengthening a muscle. It takes time to minimize risk and complexity. Likewise, payments modernization will continue to evolve with changing customer demands. Traditional and non-traditional financial institutions should seek modernization solutions that do not exacerbate existing IT challenges or introduce new ones.
As traditional players assess their payments strategies and operating models, they must determine the most effective approach to transform their modernization efforts and offer “value beyond payments.” Leveraging a technology partner that provides a secure cloud environment is crucial as the industry strives to innovate and deliver a seamless customer experience.
Learn more about IBM Cloud for Financial Services.
MD, Financial Services Digital Transformation