CHAPS turns 40. How can banks’ technology keep up with the demand for instant payments?

The 9th of February marked the 40th anniversary of the establishment of the Clearing House Automated Payment System (CHAPS). CHAPS – one of the UK’s first real-time payment systems – facilitates secure and instant high value transactions between financial institutions.

Martin Bradbury, UK&I Regional Director, Financial Services at Dynatrace explains how the growing demand and rising expectations of instant payments is placing banks’ IT infrastructure under pressure.

As a vital component of the financial ecosystem over the past 40 years, CHAPS played a key role in transforming UK banking to the point where instant payments have become the status quo. However, as business and consumer demands for more bespoke digital banking solutions grow, banks have to ensure they are able to juggle their ability to deliver seamless experiences whilst managing increasingly complex technology infrastructures.

Meeting modern expectations

In the 40 years since CHAPS was established, the way in which payment systems have evolved is remarkable. When it was first introduced, real-time processing was exclusively intended for high-value transactions. Now, consumers and enterprises alike have come to expect all of their payments be instantaneous, regardless of the value. Payment delays open the door for fraud and other financial crime. This can be especially damaging with high value financial transactions, which require significant oversight, and in which trust plays a key role.

Even a slight delay between a payment being sent and showing up on the recipient’s balance can damage the reputation of banks and weaken consumer trust. Banks must therefore do all they can to ensure they don’t get caught unawares by unexpected faults or issues that delay payment processing.

Financial services complexity

However, amidst the growing complexity of modern financial services systems, banks face significant challenges in fulfilling the demand for instant transactions. Large-scale legacy banks rely on sprawling applications and distributed IT infrastructures spanning multiple cloud and on-premises platforms. While these environments create the agility and scalability banks need to keep up with the demand for faster innovation, they also create a complex web that is impossible to monitor and manage manually.

To tackle these challenges, banks need end-to-end observability across their entire technology stack, and AI that serves as a guide for pinpointing and resolving the cause of issues quickly, wherever they reside. As a result, banks can take swift action to iron out any issues before customer payments are disrupted, keeping up with skyrocketing expectations from their customers.

Of course, these challenges also exist in smaller-scale fintechs, but it is the established banks – many of which still operate with a combination of physical balance sheets and complex legacy technology – which can reap huge benefits from leveraging full stack observability.

About Lisa Baker, Editor 2308 Articles
Lisa Baker is the Editor of Always Finance, and writes about Business, Finance Technology and Healthcare. Lisa is also the owner of Need to See IT Publishing.