If payment modernization consisted of one or more quick, cheap, easy, or risk-free changes, banks would have already done it. It’s not that they don’t want to, but more that they are trapped between the risk of moving and the risk of staying.

The complexity of moving and the cost and risk of doing so mean that while many recognize the need for change, it doesn’t happen as quickly as we’d like. Consequently, recently the industry has elevated its talking about the critical need for payments modernization. One-third of bank representatives from both Europe and APAC that responded to a recent Celent survey, stated that payments modernization is a top three priority for 2024. Yet those banks that have yet to modernize are not just falling behind but are also putting, at best, their competitiveness at risk and, at worst, their ability to operate. As a result, it’s often just been easier to keep maintaining the current situation.

Banks have traditionally been hampered by their ability to innovate because of their technology. The cost and risk of making changes made it difficult to offer anything tailored to all but the biggest clients. And when banks did innovate, the changes were often hardcoded into the solutions, making any future change complex.

In short, banks could not afford to modernize, but now they can no longer afford not to.

While drivers for change are clear, banks shouldn’t fall into the trap that these are the requirements for a new system. They will form part of the requirements but should not be the sole reason. For example, many banks have sought lower-cost solutions, only to find that cost saving comes at, well, a cost.

This report sets out the many reasons why banks have to modernize and the consequences if they don't. More importantly, it sets out the how to modernize, from the importance of a clear startegy and vision, to selecting the right partner.