Digital transformation and automation in payments: Addressing the challenges

Digital transformation has long been an objective in the banking industry, but the great migration to online and digital, driven by COVID, and the increasing interest in automation among bank clients, have only reinforced its importance.

Automation can mean different things, like moving away from manual tasks such as logging into an internet banking system, to enter payments and download transaction reports. It can also mean automating end-to-end processes, from receipt of invoice with payment, to payment tracking, and on to reconciliation. And it can mean adoption of common payment processes and formats in a shared service centre, to reduce risk and achieve scale economies, in place of silo’ed operations that rely on a variety of different legacy processes and formats.

These drivers of payments automation require banks to support digital services based on well-defined messaging and API formats. ISO 20022 is important in this context. Quite apart from the fact that it is a well-established global standard in the payments domain, it is also an important enabler for digital adoption and a digital economy. You can read more about the reasons why in our blog “What Has ISO 20022 Ever Done For Me?”

Digital transformation at banks requires investment in a modern technology stack. This is far easier for Digital Challenger banks than for traditional banks that have a large footprint in inflexible legacy systems. But Digital Challenger banks face the difficult problem of acquiring new customers - this is a costly and risky business, and stands in contrast to traditional banks, who on the other hand have a competitive advantage due to their established customer base and trusted relationships. The key, once a bank has established digital services, is to provide its existing customers with a clear, efficient path towards adoption of those digital services.

Digital services with limited take-up represent an under-utilised asset. The great advantage of digital services, built on a modern technology stack, is scalability. Encouraging adoption of digital services among clients and implementing efficient processes that enable mass migration in a short time window, allows a bank to make best use of its investment.
How do you address the challenges of digital transformation and automation in payments? The answer, simply put, is to invest in a modern technology stack, and promote fast adoption of ISO 20022 and API-based digital services with your clients through efficient digital onboarding and testing processes. So … no pressure!