Payment Modernization - The Big Survey - 2023

Research report by Finextra Research, in association with Volante
July 2023
PAYMENTS MODERNISATION:
THE BIG SURVEY 2023
01 Foreword .................................................. 03
02 Methodology ............................................. 05
03 Executive Insights Summary ...................... 07
04 Current Capabilities, Implementation Plans .... 08
05 Client and Market Demand and Drivers ........ 19
06 Conclusion ................................................ 39
07 About ........................................................ 40
01
Foreword: Embracing
Payments Modernisation
in a Dynamic Landscape
Deepak Gupta,
3
SVP/Head of Payments-as-a-Service
| Payments Modernisation: The Big Survey 2023

Volante Technologies
In today's rapidly evolving financial landscape, staying ahead of the curve

is no longer a choice; it is a necessity. Market dynamics have brought about
transformative changes, pushing the boundaries of traditional payment
systems and compelling financial institutions to embark on a journey of
payments modernisation. This survey serves as a crucial tool to navigate this
shifting landscape, shedding light on the key drivers, emerging trends, and
the path forward for payments modernisation.
The payment ecosystem has witnessed a revolution with the advent of

real-time and cross-border payments, open banking and API enablement,
ISO 20022 standardization, and the rise of payments as a service and
cloud-based solutions. It’s no coincidence that a resounding 93% of payment
modernisation implementation plans involve a cloud-based Payments-as-a-
Service delivery model. These disruptive forces have reshaped the way
we conduct transactions, challenging the status quo and demanding more
efficient, secure, and customer-centric payment experiences.
The need for payments modernisation is underscored by several critical

factors. The high cost of payment processing has long been a pain point for
financial institutions, prompting them to seek more cost-effective alternatives.
Simultaneously, the demand for real-time or intraday liquidity has surged,
as customers increasingly expect instant and seamless payment capabilities.
Furthermore, mitigating risks and meeting customer demands for enhanced
security and convenience are paramount in the digital era.
Against this backdrop, it is heartening to note that a staggering 72% of banks

have committed to increasing their budgets for payments modernisation in
the coming year. Despite the challenges posed by the macroeconomic climate,
financial institutions recognize the urgency and significance of prioritizing
this transformation. Such generous budget allocations reflect an unwavering
commitment to meeting the evolving needs of customers and remaining
competitive in the ever-changing financial landscape.
As you delve into the survey findings, I encourage you to reflect on the
opportunities and challenges presented by payments modernisation. It is my
hope that this survey serves as a catalyst for meaningful conversations and
strategic actions, empowering financial institutions to harness the power
of innovation, deliver exceptional payment experiences, and evolve their
organizations towards a successful future.
4 Together, let us embrace the urgency of payments modernisation and forge a
path towards a more secure, efficient, and customer-centric payment ecosystem.

02
Methodology
Building on 2021 and the expanded 2022 surveys, we will capture and explore
ongoing priorities within payments modernisation, with particular focus on the 5
growth or need for partnerships and cloud-facilitated account-to-account

payment applications and Payments-as-a-Service (PaaS) offerings (corporate,
SME and retail).
Analysis of responses will provide a comprehensive overview of the status and

adoption of real-time payment networks within domestic markets and increasingly
through intra-regional schemes and cross-border networks globally.
The background context of shifting regulatory requirements and nonmandated

initiatives alongside standards development will give colour and add depth to the
state of adoption and implementation one more year on, giving a clear status check
and trajectory of the overriding trends and attitudes in the space.
2023 survey was global in scope and had 300 full responses, 40% of which c level
or director equivalent; 60% senior management, director or VP.
GLOBAL RESPONSE
Survey Respondents
WHICH OF THE FOLLOWING BEST DESCRIBES

YOUR ORGANISATION?
Banks
(Tier 4) $10-1bn
10% 34% Large global banks

(Tier 1) >$250bn
Smaller national
and regional banks 17%
(Tier 3) $50-10bn
39%
International and national banks

(Tier 2) $250-50bn
GLOBAL RESPONSE
Survey Respondents
WHICH OF THE FOLLOWING BEST DESCRIBES THE

BUSINESS FUNCTION OF YOUR DEPARTMENT?
SME banking Other
3% 41%
6% Corporate transaction banking
Consumer retail banking

14%
6
17%
19%
Technology / Systems
Retail Banking
GLOBAL RESPONSE
Survey Respondents
IN WHAT REGION DO YOU PRIMARILY OPERATE?

Asia Pacific
Central Southern and Eastern Europe

6% 30% North America
10 %
UK 10%
15%
14%
Other Western Europe and Nordics
15%
Central and South America
Middle East and Africa
03
Executive Insights Summary
• A resounding 90% of respondents did or will leverage a payment solution

implementation involving a cloud-based payments infrastructure, globally.
• Globally, most new payments solution implementations are to take place

7
imminently- 67% within the next year (41% within six months, and 26%

within one year)
• Almost 80% state confidence in making best use of next generation cross
border payments outside of SWIFT, jumping from sixth place to third place
YOY (out of seven). Demand for cross-border options has become a key
objective with lower costs no doubt being a key driver.
• Infrastructure deployment change is greatest in North America, where the

greatest activity is within hybrid cloud- 60% indicated a big change in this
model, reflecting renewed appetite for resiliency in light of recent outages.
• There is a sea change in reliance on partners YOY- 40% cited use of vendor-
provided (PaaS), an almost fourfold increase (364%) on the corresponding
11% in 2022. With greater pressure on plans that may have been protracted
in light of recent economic conditions and a plethora of new rails and
developments, comes greater reliance on partners. This is even more
pronounced in North America, where 53% cite PaaS implementation.
• The greatest bank customer pain point is access to real-time or intraday

liquidity management- 79%- a new first place. Cost is a close second- 75%.
• European regions rank this a greater pain point- 82% (also in first place).
- North American customers' greatest pain point is the overall cost of payment
processing (78%). These two pain points stand quite far above all the others.
• The top driver for investment in payments modernisation for banks is

reducing cost (79%), followed by improving ability to meet customer
demand for value-added services and limiting system risk.
• Efficiency of cross-border payments is more keenly felt than in 2022 for

customers- up to 37% from 28%.
• Urgent priorities are clear and generous budget allocations reflect this. Over the
next year, 72% of budgets will increase (only 1% will decrease) to accommodate
deployment of new technology or significant upgrades of current systems,
including connecting to more domestic and intra-regional real-time networks,
cross-border networks and other payment methods and clearing rails.
04
Current Capabilities,
Implementation Plans
GLOBAL RESPONSE
8
Question 1
HOW WOULD YOU RATE YOUR ORGANISATION’S

CAPABILITIES IN THE FOLLOWING AREAS?
State your level of agreement with each of the following:
Cost-effectively delivering sophisticated products and services and managing compliance

2 3 Delivering the minimum capabilities required by customers and regulation
5 6 Not able to deliver
1 (Straight-through) 36% 30% 18% 11% 3% 0% 2%

integration with
corporate treasuries
2 Meeting demands for 30% 32% 20% 13% 2% 2% 1%
domestic real-time
and instant payments
3 Making the best use 31% 29% 18% 12% 6% 3% 1%

of next generation
cross border payments
outside of Swift
4 Using open banking 31% 26% 19% 15% 6% 2% 1%

and APIs to build a
wider customer value
network through fintech partners
5 ISO 20022 compliance 31% 26% 21% 13% 5% 2% 2%

for domestic clearing
6 ISO 20022 28% 27% 21% 16% 5% 2% 1%

compliance for
cross-border clearing
Straight-through integration was again the top answer, the majority of

respondents (84%) comfortable and confident in this respect, up a few
percentage points from last year, when it was also the top answer (79%).
Meeting customer demands for domestic real-time and instant payments is in
second place again, 82% compared to 78% in 2022- indicative of the interim
work ongoing to increase domestic real-time connectivity, hence capability
across a greater range.
An interesting result here is the third top answer- making the best use of
next generation cross border payments outside of SWIFT (78% proficient to
a greater or lesser extent). It indicates greater attention to detail as well as
availability and accessibility of networks but also increased awareness of how
different networks can be utilised for more cost-efficient flows on a per-flow
basis: being smarter about which rails to use and when. This option was
second last, last year. At this point in time, however, FIs feel their capabilities
here are pretty much on a par with making use of open banking and APIs to 9
build more value for customers through fintech partnerships.

ISO compliance is clearly a challenge still, and is obviously not making the
cut for priority from a global viewpoint. While ISO will bring about welcome
speed, efficiency, transparency and value, the aggregated global view takes
in regions where ISO compliance really hasn’t bedded in yet. Twenty-four
per cent of global respondents consider their capabilities regarding ISO
compliance for cross-border clearing to be – at best - delivering the minimum
required by customers and regulation. At worst, this includes not able to
deliver at all. This was the lowest ranking option of the five ‘capabilities’ listed.
ISO compliance for domestic clearing was second last, at a comparative 22%.
However, even in Europe there is a sense of a stronger focus on real-time
payments and API connectivity than ISO compliance.
European respondents are less confident about their ability to make best use of
next generation cross border payments outside of SWIFT. Thirty-one per cent
said they were delivering the minimum required by customers and regulation;
16% even less than that. It is the least confident answer, capability-wise.
EUROPEAN RESPONSE
Low Confidence in delivering

31% minimum for non-SWIFT
cross-border payments in Europe
This suggests the focus is still heavily on ISO compliance, and understandably
so, and there will be some catch up work expected in the next few years as
European counterparts get to grips with alternative rails and more bespoke
payment routing capability.
This is particularly the case for ISO compliance for domestic clearing,
with the strongest response across the board for cost-effectively delivering
sophisticated products and services and managing compliance, at 30%.
Maintaining best efforts- again, naturally- regarding open banking

innovation through the use of APIs, and real-time payments.
In North America, the top three answers align with the overall global view
capabilitiesare highest in integration with corporate treasuries, meeting
demands for domestic real-time payments and making use of next generation
cross border payments outside of SWIFT.
10 With the FedNow instant payment service set to be launched in July 2023 for bill
payments and Account to Account transfers based on the ISO standard, as well
as Fedwire and CHIPS (the Clearing House Interbank Payments System) also
migrating to ISO, having been announced by the Fed to take place by 2025 and
2024 respectively, US payments organisations will have been investing resource
into ISO 20022 compliance for domestic clearing, hence perhaps the high ranking
of this second answer- 87% ranking strongly their output in this area.
NORTH AMERICAN RESPONSE
87% Domestic ISO payments migrations

are high priority in North America
ISO 20022 compliance for cross border clearance is simply not a priority, or at
least respondents don’t feel very advanced or sophisticated in their work on
it, yet as it continues to be embedded in services globally, and as cross-border
options and flows generally increase, North American firms are likely to need
to turn their attention more in this direction in due course. For now, services,
efficiency and value for clients regarding domestic real-time payments is the
order of the day.
After several protracted delays, SWIFT is migrating to ISO 20022, which

is extending to APIs, and efforts around ISO domestic and international
compliance can be expected to be ramped up.
GLOBAL RESPONSE
Question 2
IN WHAT TIMESCALE CAN YOUR ORGANISATION BRING

NEW PRODUCTS AND SERVICES TO MARKET?
Please select one of the following:
One month 18%
Six weeks 23%
2-3 months 31%
4-6 months 16% 11

6 months + 7%
1 year + 5%
0% 10 % 20 % 30 % 40 %
YOY there is slightly greater global collective confidence in ability to

bring products and services to market reasonably quickly. The majority
of respondents (72%) can do this in two to three months or less, and an
impressive 18% within one month. Only 7% take between six and 12 months;
5% over a year.
The stronger integration and API capabilities have clearly resulted in

increased fintech partnerships, and this would explain the better efficacy here,
but firms still have some way to go to speed up in this respect.
Question 2

One month 16%
Six weeks 29%
2-3 months 27%
12 4-6 months 14%

6 months + 6%
1 year + 8%
0% 10 % 20 % 30 % 40 %
North America is the strongest in this respect- the top answer- 29%
respondents stating they can bring new products and services to market
within six weeks. And yet slightly more organisations take over a year than
between six and twelve months- 8% and 6% respectively.
The speed could reflect a recent surge of activity towards being ready for
the imminent FedNow launch, which would include an abundance of
fintechs offering accelerated capabilities in this respect.
EUROPEAN RESPONSE
Question 2

One month 21%
Six weeks 22%
2-3 months 30%
4-6 months 16%
6 months + 7%
1 year + 4%
0% 10 % 20 % 30 % 40 %
GLOBAL RESPONSE
Question 3
HOW HAS DEPLOYMENT INFRASTRUCTURE CHANGED

OVER THE LAST 12 MONTHS?
Please rank the following options in order
Greatest deployment change 2 3 Smallest deployment change
1 Private cloud – 41% 28% 21% 10%

applications running on
privately hosted cloud
or on a combination of private cloud and data centre
2 In privately owned 27% 26% 24% 23%
and managed 13
data centres

3 Hybrid cloud – 21% 29% 24% 26%
a combination of
applications/core
systems in private data centre/cloud and public
4 Multicloud – 11% 17% 31% 41%
cloud native deployment
across multiple public
clouds by Payments-as-a-Service providers
By far the greatest change in deployment infrastructure has been in private cloud,
including applications running on a combination of private cloud and data centre.
Forty-one per cent globally state a great deployment change here. Granted, this
change could be either scaling up or scaling back of this use. In the context of
the growing slice that PaaS providers are taking of system deployment- up
from 9% to 11% in 2021 to 2022 and the clear increasing trajectory of this into
2023 up to 40% as we see later - we can deduce that these changes are likely
attributable to moving certain applications away from private and into a hybrid
or multicloud set-up with a PaaS provider. And such partnerships are likely
increasing due to the clear challenges in being able to grow and modernise
payment portfolios quickly.
Last year, payment systems were mostly deployed in private cloud (38%),
followed by 29% in own data centre, and those who had recently completed,
were currently executing or planning new systems resoundingly using cloud
or PaaS provision, at 89.2%. Even privately managed data centres often
incorporate some elements of cloud, given the sheer volumes of data and
workflows organisations are dealing with, on an increasing level. There are
also varying definitions about cloud hosting and provision and considerable
overlap of definitions, whereby firms have a set-up that could be described
as each cloud category. Hence, the strong figures across the board indicating
great change in infrastructure shows this is not only a fluid space, continually
developing as organisations modernise and get to grips with their flows and
cloud technology, but that cloud technology, enabling different types of service
provision, really is the de facto platform approach for modernisation.
Question 3

1 Private cloud – 47% 24% 18% 11%

2 Hybrid cloud – 16% 44% 20% 20%
a combination of
applications/core
and managed
data centres
14 4 Multicloud – 11% 11% 31% 47%


In North America, the picture is slightly elevated, with hybrid cloud

representing an increased proportion of deployment change, and more so than
Europe or the rest of the world. Here, hybrid cloud is the second most popular
answer regarding infrastructure change, with 60% indicating a big change
within this model. Recent outages may well have influenced these changes, as
maybe they have overall in the survey, but particularly North America. And,
as general knowledge, capability and modernisation strategies develop, the
industry is likely to produce a stronger shift towards multicloud set-ups, and
the greater resilience and flexibility this provides.
EUROPEAN RESPONSE
Question 3

1 Private cloud – 37% 31 25 7

and managed
data centres
3 Hybrid cloud – 26% 22% 30% 22%
a combination of
applications/core
4 Multicloud – 11% 11% 31% 47%
Timescale responses corroborate this outlook, as do more probing questions
on implementation approach.
Globally, most payments solution implementations are to take place

imminently- 67% within the next year (41% within six months, and 26%
within one year). Eight and nine per cent respectively have recently completed
or are currently engaged in a project.
GLOBAL RESPONSE
Question 4
DO YOU HAVE PLANS TO IMPLEMENT A NEW

15
PAYMENTS SOLUTION, I.E. THE REPLACEMENT

OF ONE OR MORE SYSTEMS?
No plans 7%
Within six months 41%
Within one year 26%
Within two years 9%
Recently completed a project 8%
We are in the middle of a project 9%
0% 10 % 20 % 30 % 40 % 50 %
Question 4

No plans 4%
Within one year 22%
Within two years 8%
0% 10 % 20 % 30 % 40 % 50 % 60 %
North America is slightly behind the global curve, but catching up fast, with
52% planning to implement within six months; 23% within one year; 9% in
the middle and 5% having recently completed a project. This could be taken as
further indication of the region getting ready for instant services via FedNow,
FedWire and CHIPS, and associated migration to the ISO standard.
EUROPEAN RESPONSE
Question 4

No plans 10%
16
Within one year 28%
Within two years 11%
0% 10 % 20 % 30 % 40 % 50 %
Europe has the greatest swathe of ‘no plans’, at 10%, while 39% have plans
within the next six months, and 28% within one year. It also has the lowest
number of being in the middle of a project (4%). This compares to 9% both
globally and in North America. Here, what is reflected is Europe having
already embarked upon or completed payments systems implementations,
around SEPA and TARGET, for example, in line with earlier deadlines.
GLOBAL RESPONSE
Question 5
DID OR WILL YOUR PAYMENT SOLUTION IMPLEMENTATION

INVOLVE A CLOUD-BASED PAYMENTS INFRASTRUCTURE?
Yes No
90 %
10%
If Yes: Is your cloud Strategy:
Cloud-based solution managed 51%

by the financial institution
Vendor providing cloud-based 40%
Payments as a Service (PaaS)
Own data centre 9%
0% 10 % 20 % 30 % 40 % 50 % 60 %
Ninety per cent said their implementation involved a cloud-based
payments infrastructure, with a vendor providing cloud-based PaaS at
40%; a cloud-based solution managed by the financial institution at 51%;
and own data centre at 9%.
This 40% vendor-provided PaaS figure illustrates a seismic shift in the

market towards outsourcing within one year. Up from 11% in 2022, this is
a 364% increase.
YOY there are some interesting differences, which are reflective of the
global market and indicate trends: in 2022, 58% were in the middle or had
recently completed a project. This is down to 17% in 2023. In 2022, 8% were
due to implement within one year and 3% within two years, however this year 17
26% will implement within one year and 9% within two.

In 2022, 25% were implementing within six months, and this year 41% will.
Within a year, globally, plans have changed hugely. The newer planned
projects likely got shelved or protracted as well as others having been brought
to the fore and there is a sense of overload and urgency that will bed down as
conditions globally settle.
Last year Europe led with the greatest activity and North America followed
closely. This year North America leads, with 52% planning a project in the next
six months; 23% within the year, and the lowest number ever with no plans- 4%.
Question 5

Yes No
91% 9%

Own data centre 2%
0% 10 % 20 % 30 % 40 % 50 % 60 %
In North America, of all the 2023 payment solution implementation plans, 91%
said it would be cloud-based, with 53% having partners provide cloud-based
PaaS; 45% managing the cloud-based solution themselves, and a mere 2% in own
data centre.
The urgency for the clear benefits of cloud-based payments solutions and,
specifically for the outsourcing of these, is most acute in North America, where
upcoming real-time deadlines are clear and present and cost considerations are
acutely felt (as the next section will reveal).
EUROPEAN RESPONSE
Question 5

18 Yes No
87 %
13%

Own data centre 8%
0% 10 % 20 % 30 % 40 % 50 % 60 %
Europe results reveal slightly fewer implementations on cloud-based payment

solution infrastructure in recent transformations or planned ones. Within this
87% contingent, 61% is or will be managed by the financial institution itself;
31% provided by a PaaS vendor; and 8% is a strategy within the institution's
own data centre.
That Europe shows lower (albeit still the overwhelming majority) cloud-based
payment solution plans reveals the extent to which some such plans will have
already been undertaken and completed, in line with PSD2 implementation
and more advanced ISO 20222 developments, SEPA and TARGET. Additionally,
taking into account Europe's greatest pain points and investment drivers,
which are 'access to intraday liquidity', 'reducing cost' and 'limiting system
risk' respectively (as we explore further on), a cloud system approach may be
aligned more to these objectives than to payments solutions.
These nuanced results show that with greater pressure of plans comes
greater reliance on partner provision. This is most pronounced in the US,
again indicative of the convergence of several new payments rails, domestic
and international developments and a backlog of projects in light of external
forces adding time and resource pressure to modernisation plans.
05
Client And Market
Demand And Drivers
GLOBAL RESPONSE
Question 7 19
WHAT ARE THE GREATEST PAIN POINTS YOU HEAR

ABOUT FROM YOUR CUSTOMERS?
Please rank in order of frequency/importance:
Greatest pain point 1 2 3 4 5 6 7 8 Smallest pain point
1 Access to 29% 29% 21% 8% 4% 3% 4% 2%

real-time or intraday
liquidity management
2 The cost of 34% 22% 19% 9% 8% 3% 3% 2%
payment processing
3 Efficiency of 16% 21% 22% 20% 11% 4% 4% 2%

cross-border payments
4 Integration with bank 7 12 17 28 17 10 6 3

systems via APIs
5 ISO 20022 4 3 8 18 28 17 13 9
messaging support
6 Lack of extended / rich 4 3 5 7 16 37 16 12

data around payables
or receivables
7 Speed of access to 4 6 5 6 8 18 33 20
new payment services
8 End-to-end visibility of 2 4 2 5 7 10 20 50
payment transactions
The greatest customer pain point is access to real-time or intraday liquidity

management, with 79% ranking this strongly (in the top three ‘pain’ rankings).
In second place is the cost of payment processing, with 75% ranking it in the top
three on the scale.
This represents a shift in service delivery from last year, where the cost of
payment processing was the greatest pain point, at 73% ranking it in the top
three on the scale; and access to real-time or intraday liquidity was the second
greatest pain point, at 71%.
There is a more pronounced demand for real-time connectivity YOY, but also
the change illustrates work already accomplished in lowering costs through
payments modernisation projects already completed. Last year, 49% of
respondents agreed or strongly agreed that they had already made a return
on the investments they made in payments products and service delivery over
two years prior, in 2019 and 2020. Hence, it is to be expected that this will
continue and as a result, address and therefore soften the major pain points as
time progresses.
Banks’ own internal costs will manifest in greater efficiency and cost
savings for the customer, enabling them to tackle more focused issues and
deliver a more granular, informed and integrated service, i.e. offering clarity
20 and certainty on cash positions through real-time / intraday liquidity
management. We can expect data around payables and end-to-end visibility of

payment transactions to move up in priority (for clients and as a result, their
banking payment providers) as organisations tackle the clear and present
challenges of real-time connectivity, domestic and cross-border, and ISO
messaging standards.
What’s more, businesses will have had their current and long-term viability
and projections brought into sharp focus due to macroeconomic and
geopolitical influences and are relying on ever-smarter services and insights
from their payment providers. In turn, those providers are clearly increasingly
turning to expert partners for faster delivery of new and optimum products
and services.
The order of pain points follows the same as that of last year, however there
are some differences worth highlighting. The third greatest pain point, that
of ‘efficiency of cross-border payments’, is more keenly felt than a year ago.
Thirty-seven per cent of respondents ranked this very strongly compared to
28% ranking it very strongly in 2022. This increase of almost ten percentage
points year on year is indicative of heightened expectation and demand for
international cross-border payment requirements and reflects the increased
use of options beyond SWIFT as well.
Integration with bank systems via APIs, and ISO 20022 messaging support
are both less painful this year than last for customers, illustrating the kind of
projects already achieved and the above, more urgent, pressures.
The Europe contingent charts the pain points in the same order as globally, with
the top pain point of access to real-time or intraday liquidity management being
slightly stronger- 82% deemed it very painful, in the top three ranks of pain.
This is compared to the global figure of 58% for those top two grades.
EUROPEAN RESPONSE
82% Access to real-time or intraday

liquidity top pain point in Europe
The cost of payment processing is also a slightly higher pain point in Europe, 21
23 with 57% ranking it in the top two on the scale, compared to the global

figure of 56% ranking it in the top two.
North America deviates again, and the cost of payment processing is the number
one pain point here by far, with 41% listing it the highest rank (the highest figure
by some way); 59% listing it in the top two ranks; 78% in the top three.
Cost of payment processing is

78% greatest pain point in North America
Access to real-time or intraday liquidity management is listed in the top rank

by 25%; the top two ranks by 54%, and in the top three by 76%. Cost is a
burning issue for many in North America.
Across all regions, the top two pain points stand quite a way above all the others.
Integration with bank systems, while the fourth pain point across all regions,
is much less of an issue- 19% globally; 19% Europe-wide; and 17% in North
America ranking it in the top two pain point grades.
And ISO 20022 messaging and the final three pain points have very low
numbers ranking it in the top two grades- all under 11%. At least it’s clear
where organisations need to step in and step up their efforts to shape the most
effective payments modernisation services.
GLOBAL RESPONSE
Question 8
WHICH OF THE FOLLOWING ARE LEADING OR WOULD

LEAD YOUR ORGANISATION TO INVEST IN PAYMENTS
SYSTEM MODERNISATION?
22
Please rank in order of importance:
Most Important 1 2 3 4 5 6 7 8 9 10 11 12 Least Important
1 Reducing cost 48% 24% 7% 6% 5% 3% 1% 1% 1% 1% 1% 2%
2 Limiting system risk 26% 31% 19% 8% 7% 4% 2% 1% 1% 0% 0% 1%
3 Improvement and 9% 20% 33% 17% 12% 4% 3% 2% 0% 0% 0% 0%
diversification of
value added services
4 Ability to handle 3% 8% 16% 32% 15% 11% 5% 3% 3% 1% 2% 1%
ISO 20022
5 Keeping up with 3% 6% 11% 15% 32% 12% 7% 7% 2% 3% 1% 1%
competitor offerings
6 Increased client 4% 4% 5% 9% 17% 37% 11% 7% 3% 2% 0% 1%
demand for new

products and services
7 Staying ahead 1% 2% 2% 5% 5% 11% 39% 14% 11% 6% 2% 2%
of broader
regulatory change
8 API economy and 1% 2% 3% 2% 3% 5% 15% 38% 14% 9% 5% 3%
banking as a service
9 Improving the 1% 1% 1% 1% 2% 6% 4% 15% 42% 16% 7% 4%
cross-border
payments experience
10 Improving the 2% 1% 3% 1% 2% 4% 5% 5% 11% 43% 15% 8%
real-time / instant
payment suite
11 Simplifying the 1% 0% 1% 1% 1% 2% 5% 3% 7% 12% 47% 20%
complexity and
effort of adopting
new payment rails
12 Adaptability to new 1% 1% 0% 1% 2% 1% 1% 5% 5% 7% 19% 57%
clearing and settlement

mechanisms, e.g. CBDCs
Closely tied to customer pain points are internal drivers that would lead to
investment into payment modernisation.
Reducing cost is far and above the greatest driver for investment, globally and
in Europe as well. Almost half- 48% globally rank this the number one with
the greatest of importance, and 72% including the second most important
ranking. (79% top three.)
EUROPEAN RESPONSE
23
80% 78%

Reducing cost & Limiting system risk
Far and above the greatest drivers for
payments investment in Europe
In Europe this is even higher- over half, 51% ranked it the most important; 74%
including the second most important ranking, and 80% including the third
most important ranking. It paints an even starker picture of how organisations
are grappling to maintain and diversify their payments systems while delivering
the best suite of products and services possible for their clients.
This is particularly so if project plans have been delayed in the last year,
creating a bottleneck and extra pressure on the purse strings. Myriad systems,
real-time domestic and cross border networks, regulatory compliance, customer
demand, adverse climate factors are mushrooming, and even if budgets are
loosened to deal with this, as we will explore next, it won’t mitigate the current
accumulation of pressure.
Furthermore, in 2020, ‘reducing maintenance cost and complexity’ was the

top answer, with 62.5% ranking it with the most important and second most
important tag. It had increased by roughly ten percentage points from the
2021 survey as well.
Improving ability to meet customer demand for value added services was the
second biggest driver for modernisation investment last year (55%), and has been
overtaken by ‘limiting system risk’ this year (57%), which last year was fifth. This
speaks to the upward trend towards the use of cloud infrastructure and cloud-based
payments service providers and the renewed awareness of and commitment to
overall system resilience, in light of proliferated services having entered the market.
Keeping up with competitor offerings was second place overall in 2021. It’s
clear the top drivers show the shift towards fundamental and now urgent
operational and existential issues that have come to the fore this year.
The significant level of importance of the top two answers globally make this
all the more emphatic: the most important ranking for the third place driver
here (Improvement and diversification of value-added services) is a mere 9%-
29% when combined with the second most important rank. Compare this to
the 48% for reducing cost and the 26% for limiting system risk and it becomes
all the more palpable.
The same story emerges in Europe, where the most important ranking for the
24 third top driver, ‘improvement and diversification of value-added services’
is a paltry 7%, in comparison with 51% and 28% respectively, for the top two
drivers- Reducing cost and Limiting system risk.
And the perceived importance of the rest of the objectives also pales in comparison
to these top two answers. From there on the average value of the most important
ranking for all eight of the remaining options is less than 2% (1.8%).
In North America the top driver for modernisation is limiting system risk-
33% pegged this with the most important ranking; 60% first and second. This
was followed by reducing cost- 39%, and improvement and diversification of
value-added services.
TOP THREE DRIVERS FOR PAYMENTS

INVESTMENT IN NORTH AMERICA, ALMOST PAR
2nd 1st 3rd
Reducing Limiting Improved

cost system risk value-added
services
From here on, for the remaining nine options, the importance becomes
very minor, all single digits less than 5%. Current plans involve making
more efficient and streamlined (in every sense) the current stack of systems,
accommodating the FedNow network, with everything else being simply bells
and whistles at this point. Keeping up with competitor offerings is deemed
slightly more important in North America than in Europe or the rest of
the world. But as far as the customer demands or pain points go, financial
organisations seem only willing, or able, to respond currently to cost reduction.
Happily, therefore, budgets have indeed increased, everywhere. Over the next
twelve months budgets are set to increase to the tune of 72%. Only 1% say they
will decrease, and 26% will not change.
GLOBAL RESPONSE
Question 6a
REGARDING YOUR ORGANISATION’S SPENDING

PRIORITIES FOR THE NEXT TWELVE MONTHS,
HAVE BUDGET PROPORTIONS / ALLOCATIONS FOR
PAYMENTS MODERNISATION: 25

Please choose the statement that is the best description:
Increased 72%
Stayed the same 26%
Decreased 1%
0% 10 % 20 % 30 % 40 % 50 % 60 % 70 % 80 %
Question 6b
REGARDING YOUR ORGANISATION’S PAYMENTS

MODERNISATION BUDGET PRIORITIES:
Please rank the following in order of importance:
1 - Most important 2 3 - Least Imporant
1 Deployment of new 47% 32% 21%

technology or
significant upgrades
of current systems
2 Innovation and new 27% 37% 36%
customer value
propositions to expand
customer roadmap
3 Maintenance/upgrade 26% 31% 43%
of existing systems
and processes
Question 6a

Increased 79%
26 Stayed the same 20%

Decreased 1%
0% 10 % 20 % 30 % 40 % 50 % 60 % 70 % 80 %
Question 6b


technology or
of current systems
of existing systems
and processes
customer value
customer roadmap
North America has loosened its belt a little more: 79% will see increased
spending allocations for payments modernisation over the next year, with
20% remaining static and 1% decreasing.
EUROPEAN RESPONSE
Question 6a

Increased 64%
Stayed the same 34% 27

Decreased 2%
0% 10 % 20 % 30 % 40 % 50 % 60 % 70 %
Question 6b


technology or
of current systems
of existing systems
and processes
customer value
customer roadmap
And in Europe, 64% will enjoy increased spending power to address the
issues, while 34% will stay the sam and 2% will have to weather a decrease.
Major work is underway and set to continue, as allocations are put towards
deployment of new technology or significant upgrades of current systems,
which is the clear priority, according to responses- 57% in North America;
42% in Europe and 47% globally.
There is greater parity in terms of priority between innovation and new
customer value, and maintenance of existing systems and processes, albeit the
latter is placed second in both Europe and North America, and third across
the rest of the world.
It is heartening to see such gumption across the industry, organisations

staking such a strident claim on their own future. True, the healthy spend
forecasts may simply be a result of budgets having been reallocated or
tightened over the last year but even so, it remains clear that the industry is in
no doubt about its modernisation trajectory and it is on course to deliver.
Further definition of spending plans and projects become clear when looking
28 at implementation plans regarding real-time domestic, cross-regional and
cross-border networks, as follows:
GLOBAL RESPONSE
Question 9a
HOW MANY DOMESTIC REAL-TIME NETWORKS DOES

YOUR ORGANISATION CONNECT TO CURRENTLY?
Multiple 51%
One 42%
None 7%
0% 10 % 20 % 30 % 40 % 50 % 60 %
Question 9b
IN THE NEXT 12 MONTHS HOW WILL THIS CHANGE?
Increase Decrease
73% 27%
More than half (51%) connect to more than one or multiple domestic real-time
networks but this figure will increase dramatically over the next year,
with potentially 95%+ connecting or connected to multiple because 73%
currently expect the figure to increase. If we logically ascribe the increase
to the 49% currently connecting to none or one (as an increase of multiple
remains multiple).
The increase per year may simply be one more. In 2022, 47% said they
connected to one; 46% to multiple, with 73% saying this would increase over
the next 12 months. Some plans and timeframes will have been extended into
2023/2024.
GLOBAL RESPONSE 29

Question 10a
HOW MANY INTRA-REGIONAL OR GLOBAL REAL-TIME

PAYMENT NETWORKS DOES YOUR ORGANISATION
CONNECT TO CURRENTLY?
Multiple 52%
One 38%
None 10%
0% 10 % 20 % 30 % 40 % 50 % 60 %
Question 10b
Increase Decrease
66 %
34%
The intra-regional prospects are more established, as we can see from the
52% who already connect to multiple networks, and the 66% who expect to
increase on one or none in the next year. Again, this time next year, we could
find an overwhelming majority with multiple network connections.
GLOBAL RESPONSE
Question 11a
IN ADDITION TO SWIFT, HOW MANY CROSS-BORDER

PAYMENT NETWORKS DO YOU REGULARLY OFFER
CUSTOMERS ACCESS TO?
None 10%
1 22%
30 2 40%
3+ 28%
0% 10 % 20 % 30 % 40 % 50 %
Question 11b
HOW MANY ADDITIONAL CROSS-BORDER NETWORKS

DOES YOUR ORGANISATION PLAN TO ADD IN THE NEXT:
3+ 2 1 None
6 Months 12 Months 18 Months
17% 17% 35%

17 % 16%
22% 26 %
42%
24% 22%
27%
35%
Reflecting upon the capability responses with regard to making use of cross
border payments outside of SWIFT, which had jumped up from last year,
with 78% confident and efficient in their use of these, this more granular look,
especially when compared to 2022’s answers, shows where spending priorities
have been allocated in the past twelve months, whereas the focus now is on
domestic and intra-regional.
In 2022, 16% offered access beyond SWIFT, and that figure has increased by
almost two thirds to 28%. At the other end of the scale, 23% last year did not
offer any in addition to SWIFT, and in 2023 that number has more than halved,
with 10% offering none. These may be exploratory, API-driven and blockchain
based options that some organisations may promote to be seen to be progressive
and cost-saving, however as ISO 20022 beds in further, the trajectory of
alternative options may stagnate but will be interesting to track nonetheless.
GLOBAL RESPONSE
Question 12
HOW MANY DIFFERENT PAYMENT / CLEARING

METHODS / RAILS DOES YOUR ORGANISATION PLAN
TO ADD AND/OR CHANGE IN THE NEXT:
3+ 2 1 None
13% 15% 31%

16 %
16 %
31
21% 28% 39%

23% 30%
38% 30 %
Overall, new payment methods- domestic, intra-regional and cross-border

will be added systemically over the next 18 months, as well as the clearing
rails to accommodate them.
EUROPEAN RESPONSE
Question 9a

Multiple 47%
One 43%
None 10%
0% 10 % 20 % 30 % 40 % 50 %
Question 9b
Increase Decrease
75% 25%
EUROPEAN RESPONSE
Question 10a

Multiple 44%
One 40%
32 None 16%
0% 10 % 20 % 30 % 40 % 50 %
Question 10b
Increase Decrease
65% 35%
Europe shows a similar trajectory, 47% connect to multiple domestic real-time

networks currently; 75% say this will increase in the next twelve months.
Forty-four per cent have multiple intra-regional connectivity, 40% with one,
and 16% with none. Sixty-five per cent expect this to change within the next
twelve months.
EUROPEAN RESPONSE
Question 11a

None 12%
1 27%
2 39% 33

3+ 22%
0% 10 % 20 % 30 % 40 %
Question 11b

3+ 2 1 None
12% 13% 32%

35% 18% 40% 21%
23 %
23%
28% 24%
30%
In addition to SWIFT, the greatest number of cross-border networks offered

to customers is 2, at 40% (22% 3+; 27% 1; 12% none).
Additional cross-border networks are to be added according to European

respondents mostly in the next twelve month period, and organisations feel
they can add one per six months, getting faster at adding them as time goes on.
EUROPEAN RESPONSE
Question 12

3+ 2 1 None
13% 14% 27%

34 20% 28% 18% 20%
36%
26%
39% 32% 28%
Overall, in the next 18 months in Europe, additions and changes to payment

and/or clearing rails will level out. In the nearer-term six month period
the greatest number of additions or changes will be one (39%) and during
the next 18 months activity will level out, with fairly equal numbers adding
or changing 1,2 or 3 sets of rails. Again, what emerges is a sense of the need
for agility and flexibility in this respect as interoperability becomes all the
more important, and also as organisations become all the more adept and
agnostic in an ever-evolving regional and global marketplace.
Question 9a

One 52%
Multiple 44%
None 4%
35
0% 10 % 20 % 30 % 40 % 50 % 60 %

Question 9b
Increase Decrease
76% 24%
North America differs slightly. The greatest cohort (52%) connects to one
domestic real-time network currently; 44% to two and 4% none. More
than three quarters (76%) say this will increase in the next 12 months.
Question 10a

Multiple 52%
One 40%
36 None 8%
0% 10 % 20 % 30 % 40 % 50 % 60 %
Question 10b
Increase Decrease
70 %
30%
For intra-regional real-time network connections, the North America

responses align very closely with those of the rest of the world- just under 52%
say multiple connections; 40% say one, and 9% say none. Seventy per cent say
this will increase in the next 12 months.
Question 11a

None 9%
1 24%
2 35% 37

3+ 32%
0% 10 % 20 % 30 % 40 % 50 %
Question 11b

3+ 2 1 None
23% 12% 20% 12% 45%

18%
16% 52% 16%

12%
47%
27%
North America responses show the highest number saying they regularly offer
3+ cross-border payment networks, in addition to SWIFT.
And the stand-out figures show the greatest number of plans will add one in
the next six months (47%), two in the next 12 months (52%), and three in the
next 18 months (45%).
Question 12

3+ 2 1 None
17% 12% 22% 41%

13%
38 18%
22%
14%
43%
24%
43% 33%
In line with this, changes and additions to payment and/or clearing methods
will also be undertaken by North American organisations, with just under
half of all respondents saying there will be one in the next six months (43%),
two in the next 12 months (43%), and three in the next 18 months (41%).
06
Conclusion
While the 2023 payments modernisation process affirms and confirms the
trajectory of various priorities and approaches indicated in preceding years, it is 39
also the most clear reflection yet of the impact of global and regional events and

how they are shaping and driving payments modernisation and implementation.
There is a clear accumulation of projects and deadlines on account of priorities

over the last year having been impacted and stymied by unexpected global
geopolitical and economic events that have put pressure on budgets and
revenues. That being said, budget allocation across the board is in rude health
and illustrates the progressive and committed resolve towards implementation
and delivery of real-time and instant payments and settlement mechanisms both
domestically and globally.
There is a huge burden of the cost of processing currently, this is felt keenly by
banks and their customers and clients alike, and this is the result of projects having
had to be shelved while new deadlines and pressures continue to stack up. This
level of pressure and activity looks set to peak over the next six to 12 months after
which time the fruits of labour will yield increased value, increased transparency,
reduced cost, greater efficiency, greater operational prowess or banks, stronger
operational insights or customers and overall greater certainty and flexibility within
the movement of money.
Greater utilisation and understanding of hybrid and multicloud infrastructure

will continue to come more and more to the fore, as will a stronger reliance on
strategic partnerships, to maximise the speed, delivery and innovation around
payments that the various real-time and instant initiatives promise.
07
About
Finextra
This report is published by Finextra Research.
Finextra Research is the world’s leading specialist financial technology news

40 and information source. It offers more than 130,000 fintech news, features
and TV content items to some 800,000 monthly visitors to finextra.com.
Finextra covers all aspects of financial technology innovation involving banks,

institutions and vendor organisations within the wholesale and retail banking,
payments and cards sectors worldwide. Finextra’s unique member community
consists of over 40,000 fintech professionals and 200,000 social followers working
inside banks and financial institutions, specialist fintechs, consulting organisations
and technology providers. The Finextra community actively participates in
contributing opinions, ideas and comments on the evolution of fintech.
For more information:

Visit www.finextra.com and become a member,
follow @finextra or reach us via contact@finextra.com.
Volante Technologies
Volante Technologies is the trusted cloud payments modernization partner
to financial businesses worldwide, giving them the freedom to evolve and
innovate at record speed. Volante's Payments-as-a-Service and underlying
low-code platform process millions of mission-critical transactions and
trillions in value daily, so customers can focus on growing their business, not
managing their technology. Real-time ready, API enabled, and ISO 20022
fluent, Volante’s solutions power four of the top five global corporate banks,
two of the world’s largest card networks, and 49% of U.S. commercial deposits.
Learn more at www.volantetech.com and

www.linkedin.com/company/volante-technologies.
Finextra Research Ltd All rights reserved.
77 Shaftesbury Avenue
London, No part of this publication may be reproduced
W1D 5DU or transmitted in any form or by any
United Kingdom means, electronic or mechanical, including
photocopy, recording or any information
Telephone
storage and retrieval system, without prior
+44 (0)20 3100 3670
permission in writing from the publisher.
Email
contact@finextra.com © Finextra Research Ltd 2023
Web
www.finextra.com

Payment Modernization - The Big Survey - 2023

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Payment Modernization - The Big Survey - 2023

Uploaded by

Copyright:

Available Formats

Research report by Finextra Research, in association with Volante

03 Executive Insights Summary ...................... 07

04 Current Capabilities, Implementation Plans .... 08

05 Client and Market Demand and Drivers ........ 19

| Payments Modernisation: The Big Survey 2023

In today's rapidly evolving financial landscape, staying ahead of the curve

The payment ecosystem has witnessed a revolution with the advent of

The need for payments modernisation is underscored by several critical

Against this backdrop, it is heartening to note that a staggering 72% of banks

path towards a more secure, efficient, and customer-centric payment ecosystem.

| Payments Modernisation: The Big Survey 2023

Analysis of responses will provide a comprehensive overview of the status and

The background context of shifting regulatory requirements and nonmandated

WHICH OF THE FOLLOWING BEST DESCRIBES

10% 34% Large global banks

International and national banks

WHICH OF THE FOLLOWING BEST DESCRIBES THE

SME banking Other

Consumer retail banking

IN WHAT REGION DO YOU PRIMARILY OPERATE?

Central Southern and Eastern Europe

• A resounding 90% of respondents did or will leverage a payment solution

• Globally, most new payments solution implementations are to take place

| Payments Modernisation: The Big Survey 2023

• Infrastructure deployment change is greatest in North America, where the

• The greatest bank customer pain point is access to real-time or intraday

• The top driver for investment in payments modernisation for banks is

• Efficiency of cross-border payments is more keenly felt than in 2022 for

HOW WOULD YOU RATE YOUR ORGANISATION’S

Cost-effectively delivering sophisticated products and services and managing compliance

1 (Straight-through) 36% 30% 18% 11% 3% 0% 2%

3 Making the best use 31% 29% 18% 12% 6% 3% 1%

4 Using open banking 31% 26% 19% 15% 6% 2% 1%

5 ISO 20022 compliance 31% 26% 21% 13% 5% 2% 2%

6 ISO 20022 28% 27% 21% 16% 5% 2% 1%

Straight-through integration was again the top answer, the majority of

| Payments Modernisation: The Big Survey 2023

Low Confidence in delivering

Maintaining best efforts- again, naturally- regarding open banking

NORTH AMERICAN RESPONSE

87% Domestic ISO payments migrations

After several protracted delays, SWIFT is migrating to ISO 20022, which

IN WHAT TIMESCALE CAN YOUR ORGANISATION BRING

One month 18%

Six weeks 23%

2-3 months 31%

4-6 months 16% 11

| Payments Modernisation: The Big Survey 2023

YOY there is slightly greater global collective confidence in ability to

The stronger integration and API capabilities have clearly resulted in

IN WHAT TIMESCALE CAN YOUR ORGANISATION BRING

One month 16%

Six weeks 29%

2-3 months 27%

12 4-6 months 14%

IN WHAT TIMESCALE CAN YOUR ORGANISATION BRING

One month 21%

Six weeks 22%

2-3 months 30%

4-6 months 16%

HOW HAS DEPLOYMENT INFRASTRUCTURE CHANGED

Greatest deployment change 2 3 Smallest deployment change

1 Private cloud – 41% 28% 21% 10%

| Payments Modernisation: The Big Survey 2023

04 Current Capabilities, Implementation Plans .... 08