OREANDA-NEWS. July 13, 2015. “Over the past few years, banks have witnessed a number of challenges impacting their payments business. Regulations such as SEPA and Payment Service Directive have led to increased competition and greater cost pressure,” says Sriniketh Chakravarthi. Excerpts:

“The Netherlands was the quickest growing contactless country in Europe during the last quarter of 2014, reaching one million transactions per month, eight times more than in the second quarter of the same year.

In order to understand how Dutch banks have weathered these challenges, Cognizant conducted a series of interviews with senior business and IT subject matter experts from the top four banks (in terms of market share) in the Netherlands.

Around 86% of the Dutch banking executives we spoke to indicate that dealing with regulatory requirements is the biggest challenge affecting making changes payments processing and 57% of the respondents indicate that more than 50% of their bank’s IT spend is being allocated to projects on regulatory compliance.

As most Dutch banks still rely on several legacy systems for payments processing, maintaining and supporting these systems is an expensive proposition.

Dutch banks are apprehensive about using external providers to manage all aspects of the payments process. While an overwhelming 72% of respondents advocate managing payments in-house, 80% of them believe that payments should be overhauled and that costs need to be rationalized in the current operating model.

More than 90% of the banks are hobbled by aging IT applications in payments processing. Of the respondents, 43% believed that the technological challenges of inflexibility, non-adaptability and non-scalability were the biggest hurdles to achieving stability in payments processing and greater client satisfaction.

Most Dutch banks realize the need to prioritize transformations and changes to their payments operating models given the growing focus on client-centricity and superior customer experience. This way they can differentiate and gain competitive advantage.”