5 major payment challenges of banks, PSPs, and financial institutions

The financial services industry is becoming more complex, creating both new opportunities and operational challenges. Payment processing is one of the biggest pressure points, especially for businesses managing transactions across multiple countries, currencies, and payment methods.

At the same time, new technologies, stricter security requirements, and rising customer expectations are adding even more complexity for banks, PSPs, and other financial institutions.

In this article, we'll explore five key payment challenges financial service companies face today and how to overcome them.

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1. Data security & cyber incidents

As data breaches become prevalent, the security of customers' payment data and transaction processing has become a major concern worldwide. Traditional banks implement reliable safety measures offline – such as safe vaults, security guards, and bulletproof doors. But with virtual security, things are more complicated. Virtual threats jeopardise not only money but also clients' personal data, with account takeovers becoming a major online security threat in digital payments.

What can be done?

To cope with this challenge and combat fraud, banks, PSPs, and financial institutions should pay attention to the implementation of the following measures:

• Two-factor authorisation;
• Biometric authentication;
• Data encryption;
• Real-time alerts and notifications;
• Behaviour analysis.

2. Regulatory compliance & changes in legislation

The financial sector is among the most regulated, requiring strict compliance with numerous government regulations. Adhering to these standards and compliance requirements is crucial for financial institutions, banks, and payment service providers to ensure secure, compliant financial transactions and customer services. This challenge becomes acute when expanding to new countries.

What can be done?

Ensure the software and applications you use are legally compliant. You may hire legal counsellors to help you solve such issues, but be sure they know the latest rules and policies to implement them immediately. Also, you can partner with a modern white-label solution that complies with all industry standards and offer payment services to your clients via a white-label payment gateway.

3. Cross-border payments

Providing smooth cross-border payment services is a challenge for both banks and PSPs. The reasons lie in the number of intermediaries and in the payment processing fees they charge for their services and for currency conversion during the transaction. As a result, cross-border and international transactions may be slow and expensive, causing delays and inefficiencies that disrupt cash flow and business operations and may even result in financial losses.

What can be done?

Good news – you can transform this challenge into a potential for your business expansion. All you need is to partner with a reliable payment gateway that offers smart routing and dynamic currency conversion capabilities. It will increase the efficiency of each transaction and broaden your audience.

Check how smart payment routing benefits your business 👇

4. Mobile & tech expertise

More and more users are becoming digital-savvy, displaying a shift in payment preferences to online methods. Moreover, users don't want just the opportunity to use digital payment services; they look for a seamless, secure user experience. As a counterbalance, some banks and financial companies still can't offer convenient, user-friendly mobile banking services. Non-user-friendly apps and services lead to lost clients and revenue.

What can be done?

To meet these expectations, supporting flexible card payments, including debit cards and digital wallets, has become essential, while moving away from traditional paper checks helps eliminate inefficiencies and delays. Also, you can hire a team of experienced developers to create a high-end solution that meets customers' needs, or you can rely on ready-made solutions provided for you to use under a white-label business model.

5. Personalisation of services

This aspect is a core value for banking services. Modern personalised banking services are like a personal financial wellness coach who interacts with you when needed via the channel you want and offers solutions that meet your needs. People demand convenience from modern products and service providers.

What can be done?

The only way to implement personalisation is to understand your customers' behaviour and trends. You can use payment reconciliation and transactional data analysis to get deeper insights into your audience's habits and preferences. Such tools allow you to peek into users' preferred payment methods, payment times, etc.

Conclusion

Digital transformation is attainable for every financial services company — bank, PSP, or financial institution — with sufficient time and resources. Some businesses want to be in charge of everything, but such a path is quite rocky and time-consuming.

There is a way to save you tons of time, manual effort, and financial resources. Corefy's payment orchestration platform offers a set of smart tools that help address most of the challenges in the current payments landscape.

We meet the strictest requirements of the highest PCI DSS level and closely monitor each transaction to protect businesses and customers from identity theft and fraud. Entrusting us with processing your transactions eliminates the need to pursue PCI compliance because you already have a fully protected payment processing system at your disposal. Integrating Corefy, businesses get access to 600+ ready-made integrations. Moreover, our platform enables clients to manage payments and reconcile them via a convenient Payment dashboard.

Check our solution with your very eyes on a live demo of our product. Contact us to learn more and see how your business can benefit from Corefy.