Banks hold payments advantage—for now

An international payments survey revealed that although 80% of respondents understand they are at risk of customer attrition, only four in ten are focused on improving the customer experience.

The study was conducted by ACI Worldwide and Ovum. The organizations polled more than 1,100 executives representing leading banks, retailers, and billing organizations across the Americas, Asia-Pacific, and Europe-Middle East-Africa regions.

Principle findings of the survey:

• Security hindrances—More than 50% of respondents cite security risks as the top issue preventing payments investment.

The organizations observed that this will only increase the inefficiencies and risk in payment systems.

• Customer experience is key—Banks are viewed as the best provider of payment technologies (more than 50%).

However, study analysts believe that if they don’t deliver the customer experience, they are at risk of losing market to third-party payment specialists (e.g. PayPal), telecom providers, and large software entities making inroads into mobile wallets (e.g. Apple and Google).

• Advantage, banks—In many payment product categories such as contactless cards and real-time clearing and settlement, banks hold an advantage, with ratings of 68% and 66%, respectively. However, even in less obvious banking-related fields, such as mobile apps (46%) and mobile QR codes (48%), banks are still regarded as the most capable providers of these payment services.

• Attitudes of retailers and billing organizations—Partnership is in the air. They say that they want to work directly with banks. And banks want to reach out as well.

Surprisingly, given the recent years of legislation across the world, retailers and billing organizations want to work together to provide a richer consumer experience and to slash costs by cutting out intermediaries, study analysts observe. Forty-four percent of organizations claim they are already taking steps to, or would like to eventually, reduce the number of intermediaries in the payments value chain. The feeling is mutual on the other side of the often hostile payments table, with up to 90% of banks wanting to work directly with retailers and billing organizations.

“The payments industry is in the midst of a rapid evolution. Where payments were traditionally given little attention up until a few years ago, the changes taking place just on a daily basis are significant, to say the least—from new providers to new platforms to new payment tools,” says Gilles Ubaghs, senior analyst, Financial Services Technology, Ovum. “As payments become smarter, this evolution has the power to transform the payments experience; and, as such, the needs, experiences and expectations of all of the players in the payments value chain is more critical than ever.”

“For banks, retailers and billing organizations, the key takeaway is that the customer experience is the primary imperative and this will not change. All of these players must satisfy shifting consumer demand and enhance their payment capabilities,” says Paul Thomalla, senior vice-president, ACI Worldwide. “This means lowering payment costs, offering new value-enhancing services and, most importantly, ensuring that security measures are being taken.”