A new study released by Tietoevry has found that 79% of banks in Europe are currently in the process of modernizing away from legacy card platforms. This is up from 60% two years before, reflecting the acknowledgment that banks must update their systems in order to meet the demands for faster, smoother, and safer payments experiences. 

The majority of the surveyed banks preferred a gradual implementation of a new cards platform (56%), as opposed to a “big bang” full systems replacement (37.5%). 55% reported that they planned to use internal resources to manage the migration, while 45% are working with external partners, primarily in order to gain help with certification from card schemes (53%), advice on the migration process (47%) building the business case for migration (44%), and capacity planning for customized solutions (37.5%).

The leading reasons driving card platform migration were found to be:

• 60% – existing legacy systems were no longer fit for the purpose

• 59% – the rising costs of compliance 

• 50% – manual processes that need to be replaced with digital ones

This reflects the growing complexity of the modern payments landscape. In addition to familiar card payment methods such as credit and debit, modern-day payments such as A2A (account-to-account), instant payments, Request to Pay (R2P), e- and m-Commerce have created new demands on legacy systems, which often can't hold up. At the same time, regulations such as SCT-Inst and PSD3 add urgency to the need to upgrade systems to facilitate flexibility in the evolving payments landscape.

Olexander Osadchuk of the Ukrainian Processing Center (UPC) confirmed that compliance and fast-rising business volumes had driven their decision to migrate to new card systems: “We needed a system that is fully PCI DSS compliant and also compliant with the requirements of international payment systems. That, together with the complexity of our legacy systems and growing business volumes, persuaded us of the need to change two years ago.”

Banks are feeling the pressure to begin migration processes, as the cost of migration is expected to rise as time passes. A study by McKinsey found that some banks are already spending up to 70% of their IT budget on the maintenance of legacy platforms. 

“Consultants and analysts have been pointing out for some time that legacy systems are too expensive and time-consuming to maintain – now it looks as though the speed and scope of change in the payments market have driven banks to the same conclusion. At Tietoevry Banking, we combine market-leading systems and technical knowledge with decades of deep experience of managing migration projects. We are therefore ideally positioned to structure and develop banks’ migration timelines, manage the implementation and “go-live” of their projects and advise them on their approaches to clients, senior management and internal and external partners – including regulators.” – Valdis Janovs, Head of Instant, Retail Payments and Cards at Tietoevry Banking

This is the 4th annual card migration report developed by Tietoevry, and records the highest-ever rates of planned and ongoing card migration projects. The study consists of responses from 48 senior banking professionals from European banks.