Digital Transformation Consulting

The client, a bank struggling with legacy payments IT systems, faced significant challenges in delivering innovative payment solutions quickly and cost-effectively. Commercial clients specifically highlighted the lack of value-added services as their primary pain point with their payment provider, with 33% citing this issue. Additionally, the bank's outdated infrastructure hampered its ability to meet rapidly evolving customer expectations, particularly as consumers increasingly favored digital wallets—85% of consumers now use digital wallets for everyday transactions, up from 56% in 2022. The bank also found itself behind fintech competitors, with 2 out of 5 commercial payment clients preferring fintechs or bigtechs for innovative services.

To address these issues, the bank implemented a comprehensive payments modernization strategy centered on building a strong digital core. This included focusing on all three core components: a digital platform capable of supporting various payment types, a data and AI backbone for personalized and efficient payments, and a robust digital foundation with secure, seamless integration across systems. Leading banks in the study benefit from such a mature digital core, enabling swift deployment of new payment features, rapid response to market and regulatory demands, and ongoing incremental investments rather than one-off large projects. They also emphasize dynamic application integration with 85% adopting AI, automation, and orchestration, surpassing other banks' 18%—a critical factor in enhancing agility.

Quantifiable results from these strategic efforts include a potential to unlock $55 billion in efficiencies and new revenue streams through a reinvention of their payments capabilities. Banks that adopt continuous modernization approaches and invest in reducing technical debt, especially in application integration and core platform layers, see improved operational efficiencies. For instance, leading banks have reported a 2% increase in their ‘payments operating jaws’—the margin between revenue growth and operational costs—between 2023 and 2025, translating into benefits of approximately $14 billion. Additionally, leveraging generative AI for automation and personalization has already resulted in automating 40% of manual tasks and augmenting 39% of human efforts, opening avenues for hyper-personalized payment experiences, revenue growth, and enhanced fraud detection.