Banks Will Revamp Payment Infrastructures

Transformation of payment infrastructures is under way, spurred by payment convergence trends (e.g., checks being converted to ACH and debit cards with credit card-like reward programs) and competitive efforts to stave off commoditization. Banks realize that if they do not begin revamping their payment infrastructures to accommodate market demands and take advantage of technological advancements (e.g., payment gateways), their margins will continue to erode, severely limiting funds for investment in innovation.

To fund payment innovation, banks increasingly will turn to a shared-services model in 2008, undertaking service-oriented architecture projects. Because service-oriented architecture projects cut across lines of business and operations, they require a new project-management structure, one that encourages cooperation across all payment stakeholders while simultaneously allowing executive decisions to be made when cooperation stalls.

In 2008, financial institutions will increasingly test payment architecture committees and seed enterprise-level information technology budgets.