Payments & Transactions

How banks can attain new competitive differentiators and customer value in payments processes

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Today, the pace of change in the payments industry seems to accelerate exponentially, as customers increasingly demand instant, contextualised, and in some instances “zero-touch” payments (think “Uber”). At the same time, the regulatory environment is also evolving rapidly, with compliance to regulations such as the revised Payment Services Directive (PSD2)  promising further industry-wide change.

While the payments industry has traditionally been a “cash cow” for banks, in a world defined by Fintech disruption where existing sources of value in payments become non-differentiators – and with many banks running payments processes in-house at historically low cost points – how can banks offer value and differentiate the offerings they provide to their customers?

As the value chain around payments is transforming, it turns out to be a lead catalyst in accelerating the need for a more holistic transformation across the entire organisation and value chain of a bank. This is not a surprise, considering that payments is one of the most core processes of banks.”  Raoul van Engelshoven, VP IBM FSS – Europe  

IBM fintech and financial industry thought leaders see four main areas in which payments institutions can offer new competitive differentiation and build customer value:

Customer value at frictionless speed: To meet customer expectations, your payments systems must become ever-faster, easier and more accessible. IBM is leading the industry in helping our clients deliver real-time payments capabilities by increasing digitization of services and products. Ever-more savvy retail and commercial customers are demanding it and evolving technology is now in place to enable open banking.

Radically reduce Total Cost of Ownership (TCO): Banks will need to attain unprecedented efficiencies to reduce TCO. IBM has a demonstrated record of success in this area, as it is currently helping a number of clients around the world modernize their payments processing systems. IBM can deliver a fit-for-purpose modular architecture and feature reusability, which allows you to more quickly integrate multiple channels including mobile phones, cash management, web portals and blockchain to help dramatically reduce the cost of future projects and drive further TCO savings.

Transform structured/unstructured data into Customer Insight: New cognitive technologies offer banks unprecedented competitive differentiators. IBM is leading the industry with cognitive computing platforms that enable banks to leverage not only structured but also unstructured data for customers insights – enabling new competitive advantage with new business models and revenue streams – to deliver added value to the owners of the data, namely your customers.

Adoption of a holistic ecosystem approach. It is expected that the impact of the ecosystem on how you as a bank operate will be significant. To accelerate innovation, address necessary cultural changes and stay ahead of changing customer expectations, banks need to be holistic and strategic in how they set up, lead and manage their ecosystems. The ecosystem strategy, including co-collaboration, creating incubator hubs, running hackathons, and making equity investments and acquisitions where appropriate would fuel the changes to your future payments business – and support creation of customer value.

Learn more about how IBM can help you apply the latest innovation in payments and realize the competitive advantage of technological differentiators like cognitive banking technologies and radically reduced TCO.

Attend Money 20/20 Europe 2017, where IBM experts will give you a deeper dive into these areas of new competitive advantage and customer value.

For more information visit

Cloud Application Innovation, GBS Marketing, Europe IBM Global Markets, Marketing

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