The payments environment is undergoing unprecedented change, yet many banks and payment companies are saddled with aging infrastructure which makes it costly to support new products and features. Additionally, fragmented governance and siloed business units running disparate payments operations can stifle innovation.
Whats needed is C-level leadership to drive a new vision and strategy that embrace an enterprise view of payments.
All too often, different internal operations - card, retail banking, corporate banking - are effectively competing for the same enterprise investment funds. These conflicts, which also arise at insurance companies, payment processors and large corporates, create a confused, duplicative and inconsistent approach to payments.
As competitive threats from technology companies with powerful consumer brands accelerate, banks and payment companies can ill afford to continue down this path. With payments bringing in up to one-quarter of revenues for banks, this is no small matter.
In short, all institutions especially banks - should consider consolidating the leadership and governance of payments functions, skills and systems under the authority of a single office. The goal is to tear down internal legacy silos to better support the payments business, foster innovation and manage costs. Simply put, its time to bring payments to the forefront.
That office should be led by a dedicated executive, the Chief Payments Officer, who is accountable for working with stakeholders across business units, channels and geographies to envision and deliver upon the future of payments.
The role of the Chief Payments Officer should include:
Sponsoring and championing the payments agenda to the C-suite and board of directors. This would include modernizing the legacy payments architecture, ensuring technologies and operations are leveraged across the enterprise, managing cyber security issues and driving innovation such as addressing digital currencies and the shift to real-time payments.
Developing an end-to-end payments strategy. At many institutions, every business unit with a stake in payments drives their own strategy, resulting in conflicting initiatives. The Chief Payments Officer would infuse these individual approaches with a broader vision that reflects the overall enterprise payments direction.
Identifying opportunities to reduce costs through shared investment. Consider this simple but realistic example: an institutions corporate payments unit and consumer payments unit each need to upgrade their ACH and wire capabilities. Having each unit approach modernizing these capabilities independently is no longer feasible. They may even buy solutions from different vendors, ultimately leading to further technology and operational fragmentation. The Chief Payments Officer would address these inefficiencies by ensuring that both units invest optimally for the benefit of the enterprise.
Accelerating the realization of benefits. Suppose the small business unit of Bank X decides to embark on a 3-year payments modernization program. With a consolidated, enterprise-wide payments function, the unit would realize that the consumer payments unit had already undergone a similar upgrade. By stealing and simply tweaking that capability, the small business units initiative could be up and running in just one year.
Cultivating information sharing and collaboration. The chief payments officer should ensure that corporate payments, consumer payments and other entities touching payments meet regularly to exchange ideas and find ways to work together across business units and functional areas.
Payments are a core part of many institutions business. Having a centralized payments office that combines the various stakeholders under the leadership of a single individual can drive efficiencies and allow business units to focus on customers, product innovation and growth.
Matthew Friend is managing director and head of Accenture Payment Services in North America, and Justin Rucker is a manager in the Financial Services practice of Accenture Strategy.