Payment Platforms in 2030 - Next-Gen incoming …

The next five years will see pivotal changes in payments. New methods, from digital wallets to instant and Account to Account (A2A) transactions, are flourishing while local payment methods such as Brazil’s PIX or Poland’s BLIK are growing in importance as consumers favor them for both cross-border and domestic e-commerce. BLIK, in particular, has come to dominate e-commerce in several European countries, while Wero has been introduced in Germany, France and Belgium as a European-native e-commerce solution that already counts more than 14 million users across these three countries1.

At the same time, several countries are trialling CBDC projects such as the digital Euro and the digital Pound Sterling in the UK, while more flexible API sets are making integrations easier and paving the way for hyper-personalized banking services which focus on individual customers’ specific needs. Future card platforms are going to have to be able to handle all of these changes – not to mention managing more sophisticated fraud types and growing threats from criminals to online transactions of all kinds.

These changes – together with continued digitalization of the global economy and the ongoing decline of cash – are driving banks to modernize technology stacks which are in some cases two to three decades old, creating new card platforms that are more capable and ready for the challenges of the future. In an article by Toms Jansons, Senior strategic product manager, we outline how attitudes to modernization have changed and what’s happening at present. In what follows, I want to outline some changes in approach banks will implement over the next five years – and the implications for bank strategy.

Steps towards next-gen platforms

Source: Celent, Retail Banking Core Systems: Next-Generation Core Banking Edition 2024.

As the above image from Celent shows, banks are now making the move to next-generation systems which will be cloud-native, and focused on micro-services delivered as components. Our internal tracking research of bank opinion reflects several elements of this overall shift to next generation platforms. Our studies show that banks are increasingly comfortable with systems deployed in the cloud. Initially this meant private cloud, but more recently banks have shown that they happy to use public cloud arrangements as concerns about security and data privacy recede.

Over the next five years, we’ll see cloud deployment adopted by a growing range of banks, including credit unions, building societies and others. The use of public cloud will go mainstream, including its use in mission-critical workloads such as core banking systems. Looking out to 2030, we’ll also see more development approaches that favour agile methodologies, reducing the time it takes for new products and features to be deployed. Deployment times and costs are going to be massively reduced as banks complete the full modernization of their core systems, and we’ll also see an acceleration of the current trend towards banks adopting managed services via SaaS as part of close partnerships with trusted vendors, often using subscription pricing models.

Components, coreless and automation

Thinking about how banks get to next-gen from where they are now, the “step-by-step” approaches our research shows banks favor at present will continue to dominate. This means we’ll see the progressive modernization of bank systems on a component-by-component basis until systems are fully modernized. In terms of core systems, we’ll see smaller and mid-tier banks using a primary platform as their core, while larger banks will likely abandon outdated core systems in favor of an orchestrated set of fully modern software components. We’ll also see low and no-code integrations become standard practice, enabled by more flexible, standardized API sets. As with cloud adoption, much of what I’m predicting in the systems space is essentially a massive acceleration of trends that are already evident.

The adoption of new standards such as ISO 20022 will be a huge help to banks in every sphere of activity, from cross-border and faster payments through to internal messaging. The presence of a single messaging format will enable the transfer of more accurate, richer data as part of the transaction process and promises to revolutionize areas such as authentication, fraud management, and even credit and ledger systems.

Click here to explore further card platform modernization journey and the evolving plans of major banks in Europe and beyond, or contact our subject matter experts for a problemsituation discussions