Flourish or flop: How to follow through on your payments transformation

When it comes to the digital economy, the United States has been a holdout. Still, there was $895.7 billion worth of U.S. digital transactions in 2020. As most are aware by now, the pandemic accelerated that growth. Still, many institutions find themselves unsure of how to approach the fraught transition out of their legacy infrastructure. For the last few decades, they’ve relied on core processors capable of handling vast amounts of information at once. What they can’t do is process individual transactions, one at a time. They also rely on regular downtime to function properly. Another potential risk to maintaining legacy systems is missing out on the flexibility of the now-popular cloud solutions. AWS boasts a 31% average cost saving on infrastructure, as well as a 69% reduction in unplanned downtime.

This is not to say cloud migration is a painless process. The banking core is the beating heart of a financial institution, and making any alteration is weighed carefully. The good news is once the transformation is complete, the inherent risks in altering a bank’s systems are cut significantly. Cloud computing allows banks to iterate on their systems and sandbox potential changes as well as keep redundant systems in place. The actual hardware that hosts these systems could be spread out over the country, drastically reducing catastrophic risk. Such services allow a bank to make a safe and steady migration from core banking to cloud computing, providing a unified service in the meantime, so no customer loses service.

Migrating away from an on-premises, batch-based core is a necessity for payments transformation, but other steps can ensure an organization’s success. One such example is going live with the RTP® Network. Real-time payment services are most financial institutions’ best shot at competing with the likes of Venmo and Paypal. We’re edging closer to a world in which payment services allow users to send money from one account to any other account. An “A2A payment” like this would allow users to pay their mortgage directly from a mobile wallet, for example. A student living with roommates could get everyone’s share of utilities and transfer that money to the utility provider in the same app without moving it between accounts manually.


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