Immediate payments key driver of banking revenue

A majority of bankers say immediate payments (IP) will drive revenue growth for their organization. Moreover, those at banks already with live IP schemes are more likely to see it as a driver of revenue growth, according to a recent retail banking survey by ACI Worldwide and Ovum.

Sixty-six percent of banks with live IP systems in place see it as a revenue driver for their institution, which compares to less than 50% for companies without IP systems in place. Moreover, for all banks 53% say that IP will drive revenue growth for their organization, 61% believe that IP will enhance their level of customer service and 60% expect IP to reduce costs.

“Immediate payments and open API capabilities are increasingly viewed by banks as key drivers of revenue, customer satisfaction and cost reduction,” explains Mandy Killam, executive vice president at ACI Worldwide. “Developing an open API strategy is essential for banks to create a friction-free customer experience – and to compete in this quickly evolving retail payments market.”

Several banks have also started looking at blockchain technology as a way to provide immediate payments services securely. In July, Japanese banks Sumitomo Mitsui Banking Corporation and Japan Post Bank partnered with Ripple, a blockchain technology provider, to allow for real-time transactions.

While 65% of surveyed institutions stated that open APIs would benefit their customer-facing proposition banks differed in their implementation strategy. The majority (55%) of banks opted for immediately creating open APIs and interfaces for developers, while a minority (45%) took a ‘wait and see’ approach.

DBS in Singapore recently worked with Xero, a cloud accounting platform, on a API-driven data feed which will aim to eliminate the need for small businesses to carry out time consuming actions such as manual data entry.

“The market is rapidly changing – banks must invest wisely in core payments platforms and infrastructure to take advantage of relevant opportunities,” says Kieran Hines, head of industries, Ovum. “Financial institutions that proactively shape strategies around open APIs, fraud prevention and immediate payments will reap the benefits when it comes to both customer experience and revenue.”

In addition, the report also found that operational efficiency remains a top priority for the vast majority (91%) of banks’ investments, as it provides the greatest return on investment, followed by investment in fraud prevention, with 68% of banks currently or recently investing in their fraud detection and prevention capabilities.


4 Aug 2017



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