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7 Key Elements to Consider When Developing a Modern Payments Strategy

Dennis Jones, Senior Marketing Manager, Jack Henry

Jack Henry

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Considering the state of the payments industry and the importance of payments to your business model and revenue goals, it’s clear every credit union needs a modern payments strategy that supports today’s industry-wide threats and opportunities.

With this in mind, there are two distinct approaches to developing your payments strategy:

  1. The proactive, offensive strategy, which leaves little to chance with dynamic, detailed plans that are rich in what-if scenarios and regularly updated with data-driven insights.

  2. The reactive, defensive strategy that takes a “we’ll cross that bridge when we come to it” approach.

Financial institutions that continue to rely on defensive strategies are creating self-inflicted disadvantages and material performance and operational risks, while those with offensive strategies now have an array of complex considerations that didn’t exist a few short years ago.

Whether your team is proactive or reactive, here are seven key questions to carefully consider when developing your payments strategy:


1.     Are you supporting the incredible demand for real-time payments? Payment innovators have evolved real-time payments from a competitive distinction into a competitive necessity – with consumers and businesses alike now expecting to move money in their exact moments of need. In today’s convenience-driven world, the demand for real-time payments can’t be ignored. Empowering your members with solutions to expedite funds availability and improve cash flow will help you compete successfully and differentiate strategically.

2.     Are you open to open banking? A recent Jack Henry™ survey found 75% of financial institution CEOs indicate payments-focused fintechs like Square, PayPal, and Venmo are their biggest competitors. As the world of payments and technology evolves, it’s important you evolve with them. Embracing open banking can help you unbundle legacy technology stacks and develop platforms that leverage software development toolkits (SDKs) and APIs to build proprietary applications or integrate apps and solutions provided by fintechs and third parties.

3.     Is Banking as a Service (BaaS) your friend or foe? As BaaS threatens traditional banking by enabling virtually any company in any industry to embed financial services into a curated customer experience, BaaS also provides new growth and recurring revenue opportunities for financial institutions that embrace it. Developing supporting strategies and implementing the modern technologies that enable you to capitalize on BaaS will set you apart from your competition, help you innovate faster, and meet your members in their moments of need.

4.     Are you confident in your payments fraud strategy and solutions? Payments fraud is evolving from transaction-centric schemes to channel-centric schemes and real-time payments inherently provide much less time to stop fraudulent transactions. Successfully combating payments fraud requires a multi-layered approach to protect your members, assets, brand, and reputation. While the fear of fraud is real and evolving, it has also evolved into an ironic competitive advantage for financial institutions, as most consumers and businesses believe your credit union will be more accessible and willing to resolve fraud-related issues. Having fortress fraud solutions to capitalize on that trust before it erodes is critical to your success, especially in today’s world.

5.     Do you have a payments data strategy? Most payments data is channel-specific, siloed, and extremely difficult to use and share in meaningful ways. You need the tools to seamlessly access, efficiently aggregate, and continually analyze payments-related data. Advanced data analytics and the actionable insights it generates are how you innovate in the digital era and will help you survive, grow, and successfully compete near- and long-term.


6.     Is SMB banking important to your performance and growth? Historically, the SMB market has been underserved by many banks and credit unions – with fintechs filling the void. After beating financial institutions at the real-time, P2P payments game, fintechs are now laser-focused on reinventing B2B payments and SMB banking. To capitalize on SMB opportunities, it’s important to understand what financial services SMBs need in this new environment that’s been reshaped by digital innovations and the pandemic. You also need to strategically bundle and competitively price those services. You can successfully compete in the significant SMB market with an offensive strategy that leverages existing account relationships and provides modern B2B payments and financial management solutions like integrated receivables.


7.     Are your payment channels future-ready? It’s a new world in payments – digital innovators built channel-stealing solutions that set and continually raise the bar for what consumers and businesses expect from the payment experience. The pandemic indelibly changed spending patterns and how payments are made, and there are new payments channels, types and even currencies. Payments are being reinvented with technologies that didn’t exist a few short years ago – modern APIs, modern SDKs, AI, ML, tokenization, digital issuance, biometric and RFID cards, to name a few. Payments are being delivered with new operational infrastructures – open platform banking, payment hubs, cloud solutions, blockchain, BaaS/PaaS, and more.

The impact of payments on your business and bottom line is undeniable.

Considering payments are the most common money moments and part of everyday life for consumers and businesses, there is no end in sight for disruptive and opportunistic innovation.

By investing the time and resources it takes to modernize your payments strategy, you can innovate faster, compete successfully, and differentiate strategically.

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