In today’s rapidly changing financial landscape, payment modernization has become a critical priority for financial institutions (FIs) and retailers worldwide. Indeed, a staggering 93 percent of FIs and 87 percent of retailers are either currently involved in payment modernization programs or have plans to initiate one.
KPMG International’s “Modernizing payments: Global perspectives from financial and retail executives on payment modernization strategies and trends” report finds that FI and retail executives are acutely aware of the multiple benefits that payment modernization can bring. Customer experience improvements are front and center. But FIs and retailers also reveal their aspirations for efficiency gains, faster transaction processing and enhancing their current data and analytics capabilities. The most successful modernization programs are anticipated to deliver a substantial competitive advantage.
Financial institutions
The competition to deliver modern payment systems never ends. Half of the financial institution respondents in the survey say they completed their last significant modernization program within the last year. Yet 93 percent say they are either currently undertaking or planning another significant modernization program right now.
What is driving this breakneck pace of change? The FI respondents cite changing customer expectations, regulatory requirements and legacy systems as key drivers.
Retail
Facing changing customer expectations, stiff competitive pressures and rising costs, retailers are maintaining a continuous focus on payment modernization. Indeed, 56 percent of the retail respondents in the survey say they have completed a major payments modernization program within the past year. Yet 83 percent of retailers say they are now once again modernizing their payments infrastructure or are planning to do so in the near future.
Financial institution analysis in the Asia-Pacific
The Asia-Pacific (ASPAC) region boasts a rapidly growing financial services market. Many of the region’s economies are experiencing growth and governments are promoting financial inclusion and innovation, leading to increasing disposable incomes and greater demand for financial products and services. Improving customer experience also remains a key factor within the region, with a focus on improving turnaround time, liquidity and working capital availability.
As a result, the market is becoming increasingly competitive with both traditional and new market players vying for market share. In an overall market estimated to be worth US$9.9 trillion— China accounts for 33 percent (US$3.6 trillion) of this — the need for payments modernization is increasingly pressing.
However, legacy systems are a major challenge for banks, hindering their ability to compete with Non-Banking Financial Institutions (NBFIs) and Payment Service Providers (PSPs).
Retail analysis in the Asia-Pacific
The Asia-Pacific region is a huge market with retailers serving more than half the world’s population. E-commerce is growing fast and, by 2025, should account for more than 61 percent of total retail sales.
That has left retailers in ASPAC wrestling with changing customer demands.
A key issue for retailers is now the extent to which they can create an omnichannel experience that aligns the customer’s offline and online journeys. The good news, however, is that there is rapid adoption of technologies throughout the region, with a large and growing talent pool available to help retailers drive change and compete in their respective markets.
Interestingly, the survey reveals differences in the measures of success that will be applied; with these ranging from focusing on cost reduction, transaction speed and the ability to offer new payment methods. What is consistent though is that all of these expected benefits help those undertaking modernization programs remain competitive.
In the Philippines, the Bangko Sentral ng Pilipinas (BSP) aims to have digital payments make up 60-70% of all retail transactions in the Philippines by 2028.
To strengthen trust in digital transactions, the BSP introduced Circular No. 1195 or the Consumer Redress Mechanism Standards for Account-to-Account Electronic Fund Transfers (EFTs) under the National Retail Payment System (NPRS) framework. This framework serves as a regulatory guide for retail payment operations, ensuring a secure, efficient, and reliable payment system.
Conclusion and recommendations
As consumer expectations shift, regulation evolves and new technologies emerge, payment modernization will become increasingly key to survival in the retail and financial services sectors.
As this report reveals, FIs and retailers are keenly aware of the need for modernization. And they recognize that significant benefits — better customer experiences, more streamlined operations, long-term cost savings and enhanced security, for example — can flow to players that are able to remain competitive in the payments landscape.
Yet continuous modernization isn’t easy. And many of the executives in the survey of FIs and retailers say they face significant challenges as they strive to modernize their payment systems to meet customer expectations and regulatory requirements.
This excerpt was taken from the KPMG Thought Leadership publication: Modernizing payments
© 2025 R.G. Manabat & Co., a Philippine partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. For more information, you may reach out through ph-kpmgmla@kpmg.com, social media or visit www.home.kpmg/ph.
This article is for general information purposes only and should not be considered as professional advice to a specific issue or entity. The views and opinions expressed herein are those of the author and do not necessarily represent KPMG International or R.G. Manabat & Co.