System replacement is a dirty phrase in the payments industry: the risk, the cost, the internal politics and the inconvenience are all huge deterrents. However, in a world that is increasingly embracing alternative payments and modern technological principles, running a business on a platform built for yesterday’s payment methods is undeniably illogical. You wouldn’t use a Nokia 8110 as a SoftPOS, so why use a card-based platform to run today’s payments business?

In the last 20 years, the payments landscape has significantly evolved to pave the way for non-card-based payments. The sector is ruled by ‘generation now’ and digital natives, who often forego the face-to-face banking experiences of previous generations, instead preferring convenience and speed over security and personal interaction.

As such digital-only banks, or neobanks, are one of the success stories of the previous decade – not to mention Non-bank Financial Institutions (NBFIs), telecom companies, tech giants and many others crowding the market. Not only are these new competitors not burdened by running on card-based technology stacks of the past, they are running the backbone of their payments business on future-ready platforms that take full advantage of modern technological breakthroughs.

Despite this, not only are banks continuing to operate on legacy card-based platforms, but when they do decide to modernise, many replace their underlying technology with newer platforms that are still based on cards. If banks continue operating their businesses on no longer fit-for-purpose payments systems adopted in the 1990s or sometimes even earlier, they risk becoming irrelevant.