Payments processing is often entwined with other areas of a bank that superficially appear unrelated. As a result, payments outsourcing has always been something much discussed, but little done.
However, environmental factors are driving a change in this situation. For example, the EU regulation on cross-border charging for euro payments has created a cost/revenue gap that the Single Euro Payment Area (SEPA) will further widen. Figures from the Boston Consulting Group (BCG) show bank payment costs expected to increase 4% per annum versus a 2% increase in payment revenues. Nevertheless, BCG estimates that the top 75 banks in Europe will need to invest $6-9 billion in their payment systems over the next five years.
