The overwhelming majority of banks, retailers and billing organisations worldwide are currently investing or planning to invest within the next two years into new payment technologies and infrastructure, a global survey by payments provider ACI and Ovum has revealed.
Investment is driven by changing consumer behaviour as well as new market entrants threatening to disintermediate the existing payments supply chain. However, concerns over security as well as increasing choice and complexity are major hurdles when it comes to making investment choices, the research has found.
The four-part Global Payments Insight study surveyed more than 1,100 executives representing leading banks, retailers and billing organisations across the Americas, Asia-Pacific and EMEA and asked about experiences, perceptions and expectations of payments and how payments are shaping their behaviours today.
Investment plans: The overwhelming majority of financial institutions and retailers are currently investing or planning to invest into new technologies within the next 18 to 24 months. Online (86%) and mobile payment technologies top the list (84%), followed by fraud prevention (86%) and anti-money-laundering (79%). Investment plans are slightly higher across EMEA, followed by the Americas and Asia-Pacific.
Consumers want a broader choice of payment tools: The majority of respondents (80%) agree that consumers want a broader choice of payment tools and that this is one of the main reasons which drive investment. The survey offers an interesting insight into different consumer behaviours across the world. According to the research, credit and debit cards (87% and 82% respectively) are the most widely accepted payment tools globally, followed by cash (74%). EMEA and Asia lead the way when it comes to acceptance of contactless payments (39% and 37% respectively). While the acceptance of cheques is relatively low in EMEA and Asia (42% and 52%), they are still widely accepted in the Americas (62%). And despite the hype around mobile payments, acceptance is still relatively low globally (18% on average).
Banks are here to stay: Banks are seen as the most capable providers of helping to offer new payment technologies such as real time clearing and settlement (65%), contactless cards (67%), mobile apps (45%) and mobile QR codes (48%). In EMEA and Asia-Pacific the vote of confidence for banks seems to be more pronounced than in the Americas. However, the survey also suggests that banks are at risk of losing market to third-party payment specialists (e.g. PayPal), telecom providers and large software companies making inroads into mobile wallets (e.g. Apple and Google). This trend is most pronounced in the Americas.
Main obstacles to investment: Security remains the major stumbling block to investment into new payments infrastructure (Asia-Pacific 62%, EMEA 51% and Americas 47%). Other reasons for not investing into new payments infrastructure are high costs of maintaining existing legacy systems and customer protection requirements.
Lack of security awareness: Despite high levels of concern over payments security, actual awareness and interest in dedicated payment security technology remains surprisingly low across the payments landscape. For banks and payment service providers, this highlights the need for educating the market. And even with the recent publicity around tokenization, 22% of respondents stated they have never heard of it, while 37% percent state they have no plans to deploy it.
Banks and retailers want to work together: Surprisingly, given the recent years of legislation across the world, retailers and banks want to work together to provide a richer consumer experience and to slash costs by cutting out intermediaries. 44% of organisations claim they are already taking steps to, or would like to eventually, reduce the number of intermediaries in the payments value chain.
Gilles Ubaghs, Senior Analyst, Financial Services Technology, Ovum comments:
“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. 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 are more critical than ever.”
Paul Thomalla, Senior Vice President, ACI Worldwide EMEA comments:
“The survey shows clearly that banks still play a major part in the payments ecosystem. The majority of consumers still trust banks as the key enablers and providers of payments. However, time is of essence. There are many new entrants waiting to get off the block. In order to emerge as winners in the new payments world banks must not only embrace new technologies. They must understand that the requirements and interactions with consumers and businesses are changing. New technology will only become a competitive advantage when it goes hand in hand with a change in culture at our high street banks.
“The findings also reveal that much of the focus today is on mobile and online payment capabilities, however, retailers and banks need to take a look at their core IT infrastructure and ask themselves if it will enable them to compete in this brave new payments world. Does it support all the things customers want today: Multi-channel shopping, mobile payment options, security, speed of transaction, the list goes on. In short, developing a holistic strategy when it comes to payments should be on top of the list.
“For banks, retailers and billers the key takeaway must be 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. This means lowering payment costs, offering new service for free, and, most importantly, ensuring that security measures are being taken.”