Competitive Advantage in Banking & Payments Report Touts SaaS, ISO, Real-Time B2B

It’s a familiar Q4 ritual. The punditry lets fly with opinions about payments in the new year and reflections on the year end. Reading between the lines of early predictions, there’s an underlying theme: it’s getting harder to gain a competitive edge. What to do?

The fourth annual Future of Competitive Advantage in Banking & Payments Global Report (2024 edition), published by Bottomline examines that question in microscopic detail.

The extensive, one-of-a-kind analysis is based on an interactive survey of roughly 400 banks and FI finance leaders globally, along with Point of Views from top executives at Visa, Swift, Zanders, EBA CLEARING, Payments Canada, Pay.UK and Banque Cantonale de Genève.

The report pulls the reader in immediately, and it’s easy to go wandering in the rich multi-source details. At the risk of being reductive, respondents to this latest sounding appear most concerned about:

• What Financial Institutions (FIs) will prioritise for 2025, and if it aligns with client expectations
• The importance of SaaS to the immediate future of banking and B2B payments
• How ISO 20022 implementation ties these and other critical elements together

Whether or not these factors figure prominently in 2025, modernisation and innovation roadmaps will greatly impact the success of many financial institutions and businesses.

FI Priorities for 2025

Cash management came in as the topper at 66%. It’s a hot topic as CFOs and Treasurers look for better visibility and control for business payments frequently involving cross-border and foreign exchange (FX) issues, as well as complex accounts payable (AP) and accounts receivable (AR) functions needing an upgrade.

But considering rampant digital and paper check fraud now afflicting payments – and mounting industry and regulatory impatience with industry handling of the problem – it’s no surprise that 40% of executives said fraud mitigation is their top priority for 2025.

“The focus on fraud and compliance is understandable given the current challenges, but the real question is whether these priorities are enough. To truly stay competitive, FIs must go beyond meeting regulatory requirements and focus on modernising their infrastructure to deliver more innovative, scalable, and customer-centric solutions,” the report says.

At the same time, adopting new payment rails—particularly real-time payments—is a key focus for 32% of institutions. Despite the promise of faster, more efficient transactions, the widespread adoption of these new payment systems remains hampered by legacy infrastructure, which 30% of respondents confirm is a significant barrier.

Since 2008, the UK has had the Faster Payment Service (FPS), managing real-time payments up to a transaction value of £1 million. The US Federal Reserve’s FedNow service went live in July 2023, but that rollout is far from complete. RTP® from The Clearing House has been live since 2017.

Meanwhile, automated clearing house (ACH) volumes continue to eclipse instant rails. Governing body Nacha said in October that “Same Day ACH volume soared 67.5% in the third quarter of 2024, and total ACH Network payment volume rose 7.4% from a year earlier,” adding that there were 355.2 million Same Day ACH payments in Q3, valued at $844 billion, for a 38.8% increase.

Scalable SaaS is Perfect for Payments

The growing importance of Software-as-a-Service (SaaS) technology is evident in how financial institutions approach their infrastructure needs. As 40% of FIs acknowledge, legacy systems are a significant obstacle in adapting quickly to industry changes and evolving regulations. SaaS offers a solution to this, enabling FIs to modernise their systems without the burden of maintaining outdated infrastructure.

The survey found that 72% of North American banks plan to make additional system investments of $500k in the next 12 months, compared to only 51% of European banks. Many (30%) favour proven third-party solutions as a win for “buy” over “build.”

SaaS solutions offer scalability, which 44% of FIs find crucial. As financial institutions continue to expand their offerings and customer bases, they need systems to grow with them. Beyond scalability, end-to-end operational efficiency (41%) and speed to market (39%) are essential benefits of SaaS, allowing FIs to quickly implement new payment services and stay competitive in a fast-paced market.

ISO 20022 to Rule Them All

In terms of urgency, deadlines loom that will change payment messages in major ways.

FIs are scrambling to meet the growing number of compliance and regulatory target dates, particularly those related to standards like ISO 20022, Swift CSP, and SEPA Instant.

Compliance challenges are significant, evidenced by only 7% of FIs admitting they will meet these mandates without breaking a sweat. In fact, 85% of FIs said that it will be very challenging or somewhat challenging to remain compliant with industry mandates over the next 12 months.

However, 52% of FI respondents will prioritise service accessibility, reliability, and security, and confirm digital transformation as an important milestone to complete in the changeover to ISO 20022.

The end of the coexistence period for financial institutions that are members of Swift is November 2025 – corporates have not yet been mandated. Many financial institutions and enterprises are adopting the new messaging standard ahead of schedule. By doing so, they gain insights into its strengths and can use ISO 20022 digital financial messaging as a competitive advantage, driving innovation after successful implementation.

“Ultimately, the key to competitive advantage for banks and financial institutions is keeping their corporate customers happy and meeting their top three requirements,” says The Future of Competitive Advantage in Banking & Payments Global Report (2024 edition).

The Future of Competitive Advantage in Banking & Payments Global Report (2024 edition) is free and sent to business email addresses only. DOWNLOAD YOUR COPY.