EBAday 2023: Asking banks … do you feel in control?

Just over a year ago, my colleagues and I offered a few predictions about developments and trends in global payments and banking, intended to help financial institutions shape their strategy for the year ahead. We suggested that, after a year of changes across the financial services industry, 2022 would be the year banks focus on innovative strategies to lower costs and adapt to new models and service opportunities.

New challenges require banks to be in control

As we reflect on everything that has transpired in the past year, we can see progress in some areas and work still to be done. Banks continue to juggle competing priorities in their quest to remain compliant with regulatory and industry changes, innovate to stay competitive and reduce costs. We know there are interesting times ahead for the industry’s evolution as banks review and refine their current payments infrastructures, and consider outsourcing models like payment processing as a business.

Yet, while banks are rethinking old strategies in light of current challenges and choosing new payments and processes, innovation and growth will only be achieved by banks that remain in control of their own destiny.

Let me explain.

As predicted, banks are using the global deployment of ISO 20022 to consolidate the processing of payments into one single platform that is agnostic to payment type, single and bulk payments, currency, scheme and clearing settlement mechanisms. It is an opportunity for banks to restore margins, optimise internal processes and, last but not least, innovate payment services with the chance to realise the promise of open banking and open finance. Implementations, however, will need to sidestep ‘bank-specific approaches’ that would result in multiple interpretations of the standard and compound existing obstacles.

Instead, banks can take a more agnostic approach that ensures their payments processing infrastructure is agile and flexible enough to process all the ISO 20022 ‘dialects’. Only then will they truly benefit from the required efficiency, improved interoperability, and the business-value that richer payments data can create.

At the same time, banks are re-evaluating their payments infrastructure to respond to the rapid shift toward instant payments. Simply refurbishing batch legacy environments won’t be enough to handle real-time payments volumes. Instead, banks that invest in infrastructure to enable the agility and flexibility needed to keep up with rapidly evolving demands of instant payments will emerge on top.

While these are only two examples, they show that banks looking to retain or regain control can move toward a low-code, framework-based solutions that use modern architectural principles in a cloud environment. The open architecture of these next-gen payments solutions will enable the banks’ own IT teams to add bank specific functionality without the need to depend on vendor solutions (thus avoiding ‘lock in’). This brings the flexibility required to implement new functionalities that serve strategic business goals and meet customer demand within a shorter timeframe and lower risks.

Driving the payments transformation conversation at EBAday 2023

These are the types of discussions we welcome at EBAday on 20-21 June, in Madrid. The event is a great opportunity to progress discussions on how banks can face head-on the challenges related to shrinking profit margins, consumer demand for new services, the rise of account-to-account payments, developments in digital currencies, changes in national and international market infrastructure, and much more.

At Icon, we focus on providing banks with the expertise and technology they need to empower independence and evolve their processes and strategies with confidence. Because of this, we’ve been at the forefront of a sustainable and flexible approach to transformation, helping Tier 1 global banks move away from vendor dependency to build and run their own payments processing solutions. Now is the time for banks to take back control of their own payments transformation – or risk getting left behind.

If you are attending EBAday, stop by our stand (number 58) to discuss how to evolve your payments strategy and why IPF – Icon’s low-code, cloud-native payments framework – could be the answer to help your business meet today’s challenges. You can also set-up a meeting by contacting Icon Solutions.