Market Fundamentals: Payment Hubs, 2024–25

Summary

Catalyst

The payments sector is evolving rapidly with real-time payment rails, ISO 20022 adoption, cryptocurrencies, applications of generative artificial intelligence (AI), and modern messaging technologies. This is pushing banks to urgently upgrade their payment systems to align with new market infrastructure. Financial institutions need a common approach to support payment innovation, with a shift occurring to central platforms that can support multiple payment types rather than siloed engines. The demand for instant payments is growing from both a consumer and business perspective, with settlement expected to occur in real time. With an increasingly crowded vendor marketplace and every bank’s requirement being unique, selecting the right solution is a lengthy process that requires careful consideration. This report evaluates current technology trends, provider approaches, and future requirements to primarily assist banks in understanding the key features required when choosing a payment hub solution.

Omdia view

Financial institutions are increasingly turning to software vendors to support their payments transformation journey to keep up with rapidly evolving market and regulatory requirements. Traditionally, a payment hub was seen as a way of integrating siloed bank payment systems into a consistent architecture but was typically only deployed by large corporate banks, with corporate clients demanding more integrated payments across an array of types. Today, it is evident that banks across all tiers—including smaller domestic banks—deploy payment hubs for a multitude of reasons, from targeted modernization projects to comprehensive end-to-end payment processing solutions. Modern payment hubs, therefore, need to be complemented by flexibility and adaptability across all tiers and segments (e.g., corporate, retail, and insurance), as well as have the ability to drive a strong customer experience while being cost-effective to deploy.