The payments ecosystem is at an inflection point for transformation, especially as we see the rise of disruptive digital entrants who are introducing new payment methods, such as cryptocurrency and central bank digital currencies (CDBC). With more choices for customers, capturing share of wallet is becoming more competitive for traditional banks. This is just one of many examples that show how the payments space has evolved.

At the same time, we are increasingly seeing regulators more closely monitor the industry’s relationship with non-traditional players (such as fintechs and neobanks), aimed at mitigating the introduction of potential risks into the financial services ecosystem. It is clear to us that change remains a constant within financial services, and organizations must be prepared to adapt to evolving compliance requirements on the safety, soundness, efficiency and resiliency of payment market infrastructures put forth by regulators.

Through this period of rapid transformation, financial institutions must also deliver frictionless experiences to help maintain long-lasting client relationships and gain new market share. These pain points can pose a challenge for both banking institutions and payments companies to meet performance and growth ambitions.

Transforming the end-to-end payments journey

We believe the goal for any financial institution is to better understand the end-to-end payment processing journey—beginning from point of sale all the way to the final destination. The first contact that a customer has with the bank is often made by using a digital channel, such as visiting the company’s website, using mobile applications or submitting a check for payment. However the payment is being made, the payment system’s IT architecture needs to securely manage the key functions, including 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 secured payment solution that is designed for the cloud to meet the financial institution’s specific business requirements, such as integration with other banking systems. As organizations look to achieve this balance, we are seeing them embrace hybrid cloud technologies to securely transact with third- and fourth-parties, reduce IT costs and better manage transaction volumes and processing times—all of which can help financial institutions modernize payments.

IBM helps scale and modernize payments securely

IBM aims to help clients transform modern payments architectures and maximize investments while accelerating cloud adoption for the most sensitive data, often found in mid- and back-office workloads.

While some may find that checks are used less frequently in their day-to-day, we see that the overall value of checks being processed still remains quite high, meaning that banks must be able to process them quickly and securely.

Check Payments on IBM Cloud for Financial Services is designed to do just this, and it operates in a highly secured cloud environment with built-in compliance controls to help meet financial services regulations. With built-in controls informed by the industry, our first-of-its-kind cloud aims to help clients on their missions to mitigate risk and host applications and workloads in the cloud in a secured environment. Our IBM Financial Services Cloud Council is also working with more than 130 technology partners and fintechs to validate their security and compliance posture to expedite value for financial institutions.

By leveraging Checks-as-a-Service, banks can gain the benefits of a managed, secured cloud-based platform built to scale up and down to meet changing check volumes, freeing up resources to focus on other areas. This can allow a bank to leverage an ecosystem of cloud providers that have the security, compliance support and resiliency capabilities in place and in turn.  

Designed to build, strengthen and refine

Digital transformation is an ongoing process that should be treated like a muscle; it takes time to build, strengthen and refine to minimize risk and complexity. Likewise, payments modernization will continue to evolve with changing customer demands. Both traditional and non-traditional financial institutions should continue to seek modernization solutions for payments that don’t extend nor exacerbate their existing IT challenges (or even introduce new ones).

As traditional players assess their existing payments strategies and operating models, they must decide on the most effective way to transform their modernization approach to ultimately offer “value beyond payments.” Leveraging a technology partner that delivers a secured cloud environment is key as the industry strives to innovate while delivering a seamless customer experience.