Modernizing payments

The pressure on financial institutions (FIs) and retailers to modernize payment systems and infrastructure is immense. The payments environment is evolving rapidly with a range of new payment alternatives and channels competing for market share; new technologies like contactless payments and QR payments are gaining traction (particularly in emerging markets); and new ancillary services like Buy Now, Pay Later (BNPL) are growing in popularity.

Modernizing payments: Global perspectives from financial and retail executives on payment modernization strategies and trends, presents findings based on a survey of 810 financial institutions and 690 retailers, conducted by KPMG International in September 2024, to assess current payment modernization programs and progress.

Explore global perspectives, regional analysis and country spotlights, and the challenges and opportunities shaping payment modernization around the world.

Findings at a glance

Financial institutions

Retailers

Key takeaways

Urgency

The vast majority — 93 percent of financial institutions and 87 percent of retailers — are either currently modernizing their payments infrastructure or are planning to do so (on average, they will begin within the next six to eight months).

Motivation

Changing customer expectations ranks as the top driver for Fis and retail organizations. FIs are motivated by regulatory requirements and the need to update legacy systems, while retailers are motivated by competitive pressures and cost considerations. 

Resources

FIs and retailers are allocating significant resources towards modernization. Survey respondents indicated that on average, FIs plan to spend around US$18 million and allocate 36 people to their programs. Retailers expect to spend an average of US$4.1 million and allocate 23 people to their programs.

Benefits

Respondents (both Fis and retailers) agree that payment modernization will deliver improved customer experiences, faster transaction processing and long-term cost savings. Retailers’ top expected benefit is customer experience improvements, while FIs are primarily anticipating cost savings.

Challenges

FIs and retailers are concerned about the cost and potential disruption of implementing new payment systems. Retailers are also worried about training staff to manage the transition, while FIs are concerned about the complexities of integrating new platforms across multiple systems.