The vast majority (94 per cent) of bank executives say that payments have become a “technology arms race,” but 84 per cent of them say their legacy infrastructure is restricting them and making it “almost impossible”to innovate, according to research.

Card issuing platform Marqeta commissioned research among 200 European banking executives at traditional and challenger banks in the UK, France, Germany, Italy and Spain, about the challenges they are facing when trying to respond to the greater need for payments innovation in the wake of the COVID-19 pandemic.

The study showed 85 per cent believed overhauling existing payments infrastructure is “a must” if they are to innovate at pace and deliver the types of new payment experiences made increasingly essential by the global pandemic.

Further to this, over a third (36 per cent) admitted they are frequently delayed when delivering new payments services and features to the market, often due to a reliance on legacy technology.

Also, 22 per cent find it “extremely frustrating” that they are delayed by legacy payment platform providers when delivering new payments services.

Bank executives say they face difficulties launching modern debit card programmes (29 per cent), point-of-sale financing (26 per cent) and digital wallets (24 per cent). Banks also face problems adding features to existing services, such as digital wallets (42 per cent), modern business lending programmes (36 per cent) and modern debit card programmes (22 per cent).

Key technology challenges indicated include difficulties integrating legacy technologies with modern systems (62 per cent), disjointed and siloed payment platforms that make introducing new features or services inefficient (55 per cent) and a lack of customisation options that involve large up-front costs to introduce new features or services (46 per cent).

Cultural challenges across organisations are also hindering progress, including constantly having to address new regulations, leaving little time for innovation (66 per cent); being unwilling to take a risk on the unknown and favouring the status quo (58 per cent); and a lack of trust because of poor previous experiences trying something new (44 per cent).

Ian Johnson, managing director for Europe at Marqeta, said: “The likes of Uber, Amazon and Deliveroo have set the bar when it comes to expectations around payments - having a slick and convenient way to pay has become a fundamental part of the customer experience.

“COVID-19 has greatly shifted behaviours and led to a surge in adoption of new payments technologies. Banks are vying with each other to rapidly develop and launch new payments experiences to stay relevant.”

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