The Great Realignment: Rethinking payment processing in financial institutions

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As the world of payment processing evolves, financial institutions are finding themselves at a crossroads, balancing the decline of traditional methods with the rise of digital solutions.

April 18, 20257 mins
Woman reviewing documents

Financial institutions are grappling with the “Great Realignment” — a period defined by the conflicting pressures of declining overall check volumes versus the persistent reliance on checks in critical segments, especially B2B and high-value payments.

Checks comprise around 40% of B2B payments in the US. So while digital payments surge, the endurance of check payments remains, forcing banking leaders to make tough strategic choices about technology, operations, and investment. Do you invest heavily in declining check infrastructure or prioritize purely digital futures? A recent poll shows how this pressure is evident throughout the industry: Financial leaders are most concerned with mitigating fraud (25%), combating aging technology (23%), and managing rising operational costs (14%).

Manual reconciliation processes, often intertwined with these older systems, represent a significant operational drag. They are inherently slow, drive up labor costs, and are highly susceptible to human error, creating potential financial discrepancies and compliance risks. Finding and retaining staff who are skilled in managing increasingly niche and manual check processing workflows is challenging and limits an institution’s ability to scale operations or adapt efficiently to changing needs.

Checks are not going away, even though—anecdotally—we’d like to continue saying they are. You can’t control how people pay you.
Lynn DufraneExecutive Director of Sales, CheckAlt

Here’s the bottom line:

Institutions will need solutions that accommodate various payment methods, such as checks, ACH, cards, and digital, well into the future. They often cannot dictate how their customers (especially businesses) choose to pay. Even with declining usage, the monetary value of checks is substantial, with over $8 trillion processed in 2024 alone.

price in format of check
Businesses appreciate checks for their straightforward transaction records.
price in format of coin
The average high-value transaction is still frequently processed via check. You often can’t control how customers pay.
cog wheels
Despite predictions, checks have not disappeared due to their entrenched role in business operations.

The Great Realignment: How financial institutions are rethinking payment processing

Leveraging technology for payment efficiency

Artificial Intelligence (AI) is actively transforming current payment operations. Intelligent document processing (IDP) is a key application, offering capabilities far beyond simple check scanning. Often, the most significant challenge in payment processing isn’t the check itself but the efficient handling of the complex remittance documents that accompany it. By leveraging AI, IDP intelligently automates the processing of these crucial documents. This technology changes payment processing significantly by:

  • Automating classification and extraction: IDP automatically identifies document types (like checks vs. Explanation of Benefits) and extracts critical data points, even from varied formats. Streamlining reconciliation: It speeds up the crucial process of matching payments to remittance information and instructions.
  • Reducing manual errors: Automating data entry minimizes costly mistakes often referred to as “fat fingering.”
  • Enhancing efficiency: By tackling the manual burden of document review and data entry, IDP frees up valuable staff time for more complex or customer-facing activities, as seen in examples within the healthcare sector.

Unlocking the power of AI and automation in check processing

Do you buy, do you build, do you partner? 90% of the time, the best solution is to partner.
Lynn DufraneExecutive Director of Sales, CheckAlt

Outsourcing as a strategic move for efficiency

The strategic decision between building capabilities in-house, buying technology, or partnering with an external provider for payment processing is critical. Increasingly, partnering or outsourcing is viewed not merely as a cost-saving measure but as a strategic maneuver for enhanced efficiency and agility. This approach allows financial institutions to shed non-core, often capital-intensive operational tasks—like mailroom management, PO box handling, scanning, and equipment upkeep—and refocus resources squarely on essential banking services and deepening customer relationships.

Outsourcing also provides crucial flexibility to handle fluctuating payment volumes, offering the scalability needed to adapt efficiently. This is especially important with declining check usage as a more variable cost model.

Beyond operational focus and scalability, partnership grants access to valuable external capabilities without direct capital outlay. This includes leveraging a provider’s specialized knowledge, modern automation technology, and secure, compliant facilities, potentially encompassing a national operational footprint.

Iron Mountain financial services: Payments and receivables

What’s next for payment processing?

Navigating the Great Realignment requires a clear-eyed approach. Financial institutions must acknowledge the ongoing, paradoxical role of checks while decisively tackling fraud risks and modernizing legacy systems. It is now critical to embrace automation, especially AI-driven tools like IDP, for complex remittance data. Critically evaluating the total costs and risks of in-house operations versus strategic partnerships is also important.

The end goal remains unchanged: Achieve operational excellence to deliver seamless, secure payment processing, regardless of the method customers choose today and into the future.

Watch the full webinar

Want to learn more? Watch the complete recording of The Great Realignment: How financial institutions are rethinking payment processing to discover how to reinvent your payment operations and balance cost efficiency, operational resilience, and strategic growth.