Efma and Oliver Wyman conducted a survey of over 150 institutions to look into the banking industry’s approach to alternative payment methods. The survey uncovered that more than 80% of banks offer Internet payments and services and over 50% offer mobile banking services. However, the survey uncovered that when it comes to alternative payment methods, banks are lagging behind.
Currently, only 30% of banks offer contactless credit or debit card capabilities, dropping to 20% for payments using NFC technology. Despite an increase in investment in alternative payment methods, only 30% say they are investing as it essential to their future business. 50% of banks say they are only investing in order to keep pace or catch up with their competitors. According to the two consulting firms, this approach is not enough in an environment where new, non-bank competitors are gaining ground.
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“Banks believe that merchants are reluctant to adopt the new technology because they fear consumers will not use it, and vice versa,” says James Sherwin-Smith, a senior manager within the Payments practice at Oliver Wyman, and author of the report. “The risk for banks is that new competitors will invest enough in both the technology and the marketing to overcome these barriers. This will weaken the role that banks play in fulfilling their customers’ everyday transactional needs, with an associated loss of the valuable information it provides,” he added.
Patrick Desmarès, Efma’s secretary general, added that, “Banks no longer have the payments field to themselves and have to fight against retailers, mobile phone providers, tech firms and new start-ups to position for a share of the market. Even if banks decide not to push hard in the alternative payments space, this should be a considered, strategic decision”
Read the full report here.
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