Nearly two-thirds (65 per cent) of banks believe that Open APIs that enable partnerships with a broad range of FinTechs and consolidation of payments types are key drivers for the modernisation of payment systems.

A survey of nearly 100 banking executives by ACI Worldwide and Edgar, Dunn and Company also found that a third of financial institutions now generate over half of their income via payment processing, with 86 per cent of large banks generating more than 30 per cent of their revenues through this channel.

Nearly half (48 per cent) of respondents said current legacy systems no longer meet business or customer needs and are not flexible enough to keep up with the pace of change coming from the modern payments world.

Over half also said they experience a siloed approach to support different payments processes and systems within their institution.

When asked about possible solutions to these challenges, over 90 percent of financial institutions said they viewed payment hubs as pivotal in tackling unseen payments-related challenges.

A total of 40 percent said their bank already has a payment hub solution, while 45 per cent of financial institutions currently do not have one but say they are likely to implement one in the next five years.

More than 77 per cent said that “faster and smoother adoption of new payment methods” would be the key feature required from a payments hub solution.

Commenting on the findings, Mark Beresford, director, at Edgar, Dunn and Company said: “Financial institutions are keener than ever to connect to the new opportunities provided by the widening catalogue of FinTechs.”

“By having Open APIs, the connectivity between historic financial institutions and new players dramatically improves. And, in a world where both quantity and quality of alternative payment methods is rising exponentially, it is no surprise to see that banks are trying to simplify their approach to these offerings.”

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