Instant payments ‘a key revenue driver’ for banks

Financial institutions will already be aware of the significance of instant payments, but new research has underlined just how crucial these services are as a source of revenue.

The 2017 Global Payments Insight Survey: Retail Banking from ACI Worldwide and Ovum found that two-thirds (66 percent) of banks in markets with instant payment schemes view this channel as a key revenue driver.

European institutions are taking the lead when it comes to investing in this area, with 62 percent of these firms increasing their budgets for payments-related IT projects.

Six out of ten banks around the world (61 percent) believe instant payments will strengthen their service and proposition to customers, the survey found.

A similar proportion (57 percent) said they were stepping up their IT investments in 2017, up from 53 percent in 2016.

Almost all banks (91 percent) said boosting operational efficiency is one of their top three IT priorities, while 68 percent had invested in fraud detection and prevention.

The research also looked into the subject of open APIs, which will become an increasingly important component of the payments industry when PSD2 takes effect in January 2018.

Around two-thirds of institutions (65 percent) said open APIs will benefit their customer-facing proposition. Nearly six out of ten (59 percent) had a clear strategy for using this technology, while 45 percent were adopting a ‘wait and see’ approach.

Mandy Killam, executive vice president of ACI Worldwide, said: “Immediate payments and open API capabilities are increasingly viewed by banks as key drivers of revenue, customer satisfaction and cost reduction.

“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.”

Kieran Hines, head of industries at Ovum, said institutions that “proactively shape strategies” around open APIs, fraud prevention and instant payments will “reap the benefits when it comes to both customer experience and revenue”.

Written by Jack Dougal

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