• Nick Botha, Global Payments Lead at AutoRek


• 04.11.2024 01:15 pm
#FinancialEra #TransformativeTrends

The payments industry is undergoing constant transformation driven by technological advancements, regulatory changes and shifting customer demands. One of the most pressing challenges in the payments industry today is the effective utilisation of data. A staggering 86% of firms are lacking data quality required for accurate reporting, while  many organisations struggle with data interoperability, infrastructure limitations and leveraging the potential of their data. This highlights a significant gap in the industry’s understanding and management of data – this needs to change.

However, educating firms on data usage and implementing innovative technologies like AI and machine learning could greatly enhance data sharing, security and reconciliation processes. AI can streamline the reconciliation process by extracting relevant data fields, reducing complexity and operational costs. As a result, in the long term, organisations will begin to see an increase in their margins.

The transition to ISO 20022

While the transition to ISO 20022 is transforming the future of financial messaging and cross-border payments, the standard presents both opportunities and challenges for payment firms. 

According to  Capgemini’s World Payments Report 2025, industry initiatives like ISO 20022 and Swift GPI are streamlining digital domestic and cross-border transactions, making them faster, cheaper and more transparent.

However, there is a common misunderstanding that ISO 20022 will simplify reconciliations, whereas in reality, it actually introduces more data to manage. This means that for effective implementation to take place, a robust infrastructure and consistent processes are required. In addition, external vendors must also be interoperable and scalable. Only then can the real benefits of ISO 20022 be experienced.

Automating reconciliations with ISO 20022, can optimise matching processes, reduce costs, and boost profitability, provided organisations invest in scalable technology and interoperable systems. 

Keeping up with the changing needs of customers and businesses

The concept of virtual accounts offers the illusion of instant payments, but true settlement is often delayed. For accurate reporting and client satisfaction, reconciliations must evolve to match payments in real-time.

Capgemini’s World Payments Report 2025 reveals how inefficient cash management, including poor forecasting and lack of visibility, costs businesses nearly 7% of revenue annually, translating to billions of dollars in trapped liquidity.

However, instant payments and open finance can revolutionise accounts payable and receivable processes, providing real-time cash visibility and driving operational efficiencies.

Therefore, to thrive in the evolving landscape, pacesetters must embrace open finance and instant payments to create innovative value propositions that meet the changing needs of customers and businesses. 

Open banking and API challenges 

While open banking has made it easier for financial institutions and external parties to interact more seamlessly, corporate banking Application Programming Interface (APIs) are still not as advanced as those in retail.  Even though corporate banking APIs are becoming more available and accessible, they still need greater global presence and coverage for reconciliation as a service to become more widespread. Until this happens, corporate banking APIs will continue to lag behind those in other industries.

Undeniably, the impact of open banking on the payments space is significant as it empowers the creation and sale of new data-driven financial services, leads to better customer experiences and simplifies and modernises traditional banking processes. However, open banking also has its challenges, and these cannot be overlooked. In fact, the sort of challenges that open banking brings include, non-standardised APIs, little control over data use and sharing and the lack of incentives to share bank data with third parties.

With this in mind, further work is needed to bridge the gap between the challenges and benefits of open banking. 

The future: a unified approach to technology and collaboration

So, after a year of such rapid transformation, we now have some indication of what the future of payments will look like. The key things that businesses need to pay particular attention to are the transition to ISO 20022, instant payments and open banking and API challenges.

Ultimately, the payment landscape is unlikely to be revolutionised by one single piece of technology.  Instead, the future of payments lies in the seamless integration of diverse solutions and technologies to unlock new efficiency and security. 

By adopting a unified approach which combines the use of technology, regulatory framework and advanced data analytics, payment providers can leverage strengths to streamline reconciliation processes and improve the overall customer experience.