Convenience, not #trust, is why people choose to pay their bills #online, according to Fiserv’s quarterly report on consumer payment trends. The report, titled “Expectations & Experiences: Consumer Payments,” was released last week. It revealed that while 59% of #consumers surveyed paid bills online, more than half of them said they did not trust the […]
Bank Innovation
Fueled by innovation, the US #banking market is undergoing tectonic shifts. Many players are looking to #payments as a crucial #battlefield for #change. Incumbents—#banks and established fintechs, such as networks and card processors—have transformed the transactions environment over decades for the benefit of end users. New generations of #fintech players, both partners and competitors, have used digital business models to enhance the customer experience and open the door to new segments and revenue sources. Now, with the growing influence of Amazon, Apple, Google, Facebook and other similar big #technology (bigtech) firms, along with increasing customer sophistication and ongoing overseas disruption, the fundamental aspects of revenue drivers and share are in question.
Accenture examined potential trajectories of current trends, which could present revenue challenges for US banks in payments. Our analysis indicates that incremental revenues are projected to accrue primarily to non-banks over the next few years. The beneficiaries include players already in the value chain (those less exposed to customer demands, such as rewards, and with more direct access to key platform levers, like processing) and new forms of fintech, bigtech and other third parties phasing into the market.
US disruption is anticipated to differ from that faced in Asia, Europe or other markets where the external impetus—competitive or regulatory—is accelerated and often direct. At least initially, established players may be situated to benefit financially; as evidenced by ApplePay, it can take years for new, disruptive platforms to scale. For those who are unprepared, gradual pricing pressure and value leakage may begin to erode many existing business models.
Of course, a wide range of scenarios are possible for the future of US payments with several factors much #broader than payments (including artificial intelligence, #blockchain, cross-border transactions, major geopolitical movements, Open Banking, privacy, regulation and security) at play. Recognizing the range of potential outcomes, US payments players have the ability to position themselves for success.
Incumbents have already begun moving to protect their revenue base by introducing innovative solutions, such as Zelle. Going forward, technology deployment needs to happen faster with more agile adoption and monetization of technologies, such as data analytics, blockchain, and AI/machine learning, that can rewrite the payments equation. These new technologies offer a pathway to optimize the go-to-market model, breaking down silos to improve revenue and efficiencies internally and value chain orchestration externally.
Banks and other payments players can increase relevance by focusing on the customer journey and use cases to add value. Amazon Go, a new kind of technology-based retail store from Amazon, is just one example of looking in and beyond the existing value chain to rethink the customer experience. If incumbents view the customer as the North Star and are open to all that is possible, then they, too, can be disruptors, instead of the disrupted.
Change can be challenging. However, payments players are in the fortunate position to be able to write their own story. Now is the time to do so.
I invite you to read our report, Driving the Future of Payments
Special thanks to Tom Skomba, who contributed to this blog.
The post Payments: The first key battlefield signaling broader change in US banking appeared #first on Accenture Banking Blog.
A majority of U.S. business leaders (owners, managers, and executives) prefer using digital #banking, and yet less than half of them have plans of increasing their use of online banking products and services, that’s according to a JPMorgan Chase survey. The survey, which was released last week, showed that the primary #reason for businesses for […]
Bank Innovation
#Banking #consumers take a middling view of today’s #mobile banking applications, according to a study by #Bank #Innovation. In the survey conducted this month by Bank Innovation, banking consumers gave mobile banking a net #promoter #score of 12, which is in the bottom 25% to 50% of all NPS scores. NPS scores range #from -100 to […]
Bank Innovation
#JPMorgan #Chase leads the #race for the most #mobile #users among the top three largest consumer #banks in the U.S. — still. With 31.6 million active mobile users, JPMorgan Chase is well ahead of Bank of America’s 25.3 million active mobile users for 2Q18. In the same period, Wells Fargo reported 22 million and Citigroup 10 million. Chase’s […]
Bank Innovation
Payment processor #Square has withdrawn its application to become a deposit-taking bank, a move similar to online lender Social Finance or SoFi, which withdrew its application #last fall. However, unlike SoFI, Square plans to refile its application, attributing Thursday’s #withdrawal to mere procedural issues. It plans to #reapply with the #FDIC, but did not reveal […]
Bank Innovation
It’s no secret #distributed #ledger technologies (DLT) have been front-of-mind for financial institutions examining solutions to existing problems in institutional and retail #banking. While #blockchain #technology is still a greenhorn in the wilderness of capital markets, the underlying concept should be heralded as a catalyst for innovation. Blockchain has been the inspiration for solutions like […]
Bank Innovation
#Blockchain‘s future in #banking is bright, but right now, the industry is not prepared to take advantage of what the #technology offers, according to a new #McKinsey report on blockchain’s viability across various industries. The report, released last week, describes blockchain&8217;s suitability for financial services in this way: Financial services’ core functions of verifying and transferring […]
Bank Innovation
Should #fintech companies with #banking ambition get a #license or partner with a bank for one? This is an important distinction for a challenger bank, almost an existential question. Berlin, Germany-based challenger bank N26, which has a banking license in Europe, has decided to go with the partnership route for the license in the U.S., […]
Bank Innovation
Customers expect clear communications, good web sites and mobile functionality from their financial firms. They want respect and help with their financial lives, and most U.S. #banks don’t rank high in those areas.
Financial Technology
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