Survey results released during the American Bankers Association’s (ABA) inaugural “Payments Forum” in Washington, D.C. revealed that only 13 percent of all banks have a formalized payments strategy in place.
Forty-six percent of the 200 respondents surveyed indicated that they planned to adopt a formalized payments strategy. However, 41 percent said they had no such plans.
The executive summary of the survey, produced by the ABA and Capital Performance Group, stresses the importance of implementing and maintaining dynamic payments systems.
“New technologies, changing customer expectations and new competitors are combining to make consumer and commercial payments one of the most dynamic areas of financial services,” the summary states. “The field is one that banks have historically dominated even as threats to the industry’s control were visible 20 years ago; however, the threats are even more apparent and real today. The magnitude of change occurring in payments means that payments must be a top strategic priority if banks are to maintain their leadership in this space.”
Bankers indicated that their reliance on third-party service providers for core system functions was one of the most significant inhibitors to implementing a formal payments strategy, as well as technical integration issues and limited resources. Concerns about data security and privacy, which could expose their systems to data breaches and identity thieves, were ranked as the highest threat to payment security.
“While we’re concerned that many banks don’t have a formal payments strategy in place, we’re not entirely surprised,” ABA Vice President Steve Kenneally said in a blog post. “The point of the survey was to develop a baseline. Now that we know where things stand, we can help identify solutions and get our members where they need to be.”
Thirty-six percent of respondents said they considered themselves to be “fast followers,” when asked to characterize the payment approach used at their bank. Fifty-four percent said they were taking a “wait and see” approach and only 3 percent indicated that they consider their banks to be “first movers/experimenters.” Thirty percent said their banks partner with fintech companies in commercial or consumer payments, or both.
“The survey results show that community banks have a lot of work to do here,” ABA Senior Vice President Christopher McClinton said. “The good news is that ABA offers payments solutions and opportunities to partner with fintechs to help banks keep up with customer expectations.”
The ABA stated that it endorses a suite of payments solutions through its subsidiary, the Corporation for American Banking.