Reimagining the payments function

Deepa Anikhindi: Have you tapped into the revenue-generating potential of your payments function yet? 

Right now, there’s a huge opportunity for banks to transform payments from a cost line item into a valuable new revenue stream. And banks could stand to capture a larger share of the global payments market, which is projected to grow from $2.85 trillion in 2024 to an anticipated $4.78 trillion in 2029. 

Elliot Spencer: It’s also an excellent opportunity to deliver greater value to consumers and business customers, while better competing against new players in the financial services market.  

And with high interest rates and decreasing deposits exerting financial pressure, the time is ripe for transforming payments. 

Deepa Anikhindi: To seize this opportunity, banks must first answer two questions: 

How can we transform payments from a middle-office utility function into a front-office revenue driver? How do we shore up working capital to invest in payments, without the external funding enjoyed by competitors, such as FinTech’s, neo banks and big tech companies? 

We believe the answers lie in reimagining the payments function. By focusing on three change levers, banks can deliver sustained growth and long-term value creation.

Elliot Spencer: The first lever? Enterprise value creation. It’s a bold approach that focuses on driving sustainable efficiencies, then uses those savings to invest in growth opportunities. In a payments context, it means banks can generate efficiencies through margin and liquidity optimisation, automation, offshoring and more, and then use those funds to invest in leading-edge payments capabilities that truly meet customer needs.  

Deepa Anikhindi: Secondly, banks will need to evolve their operating models. Today, the payments functions within banks are set up as middle-office utilities. To become revenue-generation powerhouses, they’ll need to engage much more closely with other front-office functions and align on strategic, revenue-driving priorities. 

Elliot Spencer: Thirdly, banks must build the leaders of the future. Payments leaders are seeing and spearheading more change than ever. And they’re tasked with defining, building, and then sustaining the payments teams and functions of tomorrow. It’s imperative that those leaders have the skills and capabilities required to successfully drive this change throughout their organisations. 

Deepa Anikhindi: Here at Baringa, we’re on an exciting mission to transform payments to deliver greater value for financial services institutions and customers alike. To discover more about reimagining your payments function, visit our future-proofing payments webpage where we dive into these levers in more detail.