For the first part of this two-part blog series, we highlighted the growing urgency around ACH modernization in the U.S. banking sector, as well as the key components of a successfully modernized platform as outlined in Volante’s recent white paper. However, while the necessity and benefits of transformation have become clear, taking action to achieve these new capabilities can be intimidating, particularly if your strategy involves stripping and replacing your entire ACH system all at once.

In part two, we’ll explore how pivoting to a multi-phased approach is critical for streamlining the development of an actionable roadmap for ACH evolution, and why the future of ACH systems will be increasingly defined by collaboration with leading payments-as-a-service (PaaS) providers.

Phasing ACH capabilities based on individualized needs and demand

As mentioned in our previous blog, replacing an entire legacy ACH system comes with the significant disadvantage of being both incredibly costly and time-consuming to undertake. But beyond the issues of cost and efficiency, this strategy also assumes that successful modernization can be achieved with a one-size-fits-all solution, as opposed to a highly targeted integration of advanced capabilities, and one that speaks directly to what your customers want and what your organization needs to remain competitive and compliant in today’s rapidly evolving financial ecosystem.

In other words, ACH modernization is infinitely easier and more rewarding when you’ve taken the time to understand exactly what it means in the context of your operation, which will lead to a more measured, incremental, and cost-effective adoption of new features. The best way to begin this process is by asking a series of somewhat obvious yet critical questions about what such a transformation will (or won’t) require.

For example, how reliant is your operation on manual approval processes, and where might there be opportunities for intelligent automation? Have you achieved comprehensive visibility around transaction data and taken the appropriate steps to meet ISO 20022 messaging standards? Are there capabilities your customers are asking for that you’ve been unable to deliver, and can your system and/or configurations be adjusted to meet these demands without needing to contact multiple vendors?

By continuously asking and answering these questions, you no longer need to consider addressing the myriad operational and compliance risks of migrating data to a new platform. Instead, you can focus exclusively on adding new features to your existing tech stack whenever a new demand arises, preserving operational continuity while gaining the flexibility needed to adapt to shifting standards, regulations, and customer preferences.

Finding a PaaS partner to support ACH transformation

Of course, while leveraging an individualized, multi-phased approach can help streamline the ACH modernization process, it also requires finding an industry partner that is reliable, trustworthy, and most importantly, capable of providing the kind of modular, forward-looking payment solutions needed to support your ongoing evolution.

In fact, the financial services sector in the U.S. and around the world is becoming increasingly defined by strategic collaboration between banks and emerging PaaS providers, the latter of which represents a rapidly growing market segment expected to reach a global valuation of more than $25 billion in less than two years. And this is because banking leaders today are finally beginning to recognize that, with their unique and superior capacity for payments innovation, PaaS vendors should be viewed less as competitors and more as allies and critical assets toward achieving their ACH modernization goals.

Moreover, industry leaders are also coming to understand that ACH capabilities can no longer exist in silos and instead must be treated as flexible configurations within one unified and constantly adaptable platform—something that’s most easily achieved and maintained through collaboration with a qualified PaaS provider. For example, at Volante, we specialize in empowering banks to combine the core payments functions of their legacy systems into a single, cloud-native foundation. Additionally, our Payments Platform can be utilized to support the phasing in of advanced ACH capabilities throughout your modernization journey.

More specifically, Volante’s Embedded Preprocessing tool allows financial institutions to validate, enrich, and intelligently route payments, while providing pre-integrated clearing connectivity across all major domestic and international payment rails. Additionally, through a combination of low-code, API-based configuration tools, ISO 20022-native functionality, and access to intuitive real-time analytics dashboards, banks gain the visibility and agility needed to innovate and accelerate time to market for new services, offer operational transparency to customers and regulatory institutions, and support the intelligent automation of everything from proactive compliance and data structuring initiatives.

Overall, while specific requirements will vary depending on the operation, virtually all banks share the same need to not merely upgrade their legacy payments systems to meet today’s most pressing demands, but to foster long-term resilience against a market that evolves more quickly and consistently than ever before. In other words, ACH modernization is as much about adaptability as it is about gaining one capability or another, and with the right PaaS partner, banks can begin to establish a future-ready payments architecture that allows new features to be seamlessly phased in and scaled alongside demand, and above all provides their own teams and business customers with a new and unprecedented capacity for growth and innovation in the digital age.

To learn more about the state of ACH modernization in the U.S., as well as how Volante can help your organization implement a multi-phased approach to transformation, click here for free access to our white paper, The Update Urgency: Why banks should prioritize modernizing their ACH systems.