Legacy systems threaten payment sector efficiency, study says

A recent study conducted by AutoRek highlights the need for the payments sector to upgrade its systems to address inefficiencies and risks associated with outdated technology.

The survey reveals that a significant portion of the payments sector remains reliant on legacy systems, creating bottlenecks for companies working to maintain efficiency and compliance. AutoRek's annual payments survey indicates that 90% of organisations still use spreadsheets as a core component of financial operations, signifying a continued reliance on what many consider an outdated method.

Further insights from the survey show that 81% of organisations receive payment data in real time or on a daily basis, while 83% process and report this data with similar frequency. The use of spreadsheets, while familiar, involves manual processing which can lead to errors, delays, and scaling challenges given the volume of payment data that must be managed.

Sixty-four percent of organisations still process and report data at a transaction level, which can result in bottlenecks and delays. The absence of automation compounds these bottlenecks, complicating efforts to respond to customer demands and scale operations efficiently.

"Legacy systems and manual processes pose a direct threat to operational efficiency. In turn, this threatens compliance and market competitiveness. Organisations relying on outdated methods are not only incurring rising costs but also risking regulatory penalties and falling behind in a fast-paced industry," expressed Nick Botha, Payment's Lead at AutoRek.

The findings reflect a clear industry trend towards digital transformation, with automation and artificial intelligence poised to assist companies of all sizes in modernising their payment data processing approaches. The survey indicates that 82% of respondents stated automation features on their organisation's roadmap, with 43% planning implementation within six to twelve months, and 20% aiming to do so within 18 months.

Despite this commitment to transformation, many organisations require support to overcome the challenges associated with implementing new systems and processes. Overcoming difficulties linked with legacy systems, fragmented standards, and manual procedures necessitates an approach focused on modernisation, standardisation, and automation. The findings underscore the pressing need for organisations to modernise their approach to payment data management, increasing accuracy, compliance, and cost-efficiency.

Nick Botha further commented, "Our research shows a worrying disparity between how payments are made and how they are processed. Payment methods have become more sophisticated, yet the industry is still heavily reliant on legacy solutions to process transactions. This needn't be the case when automation tools are now primed for mass, widescale, adoption."