Payments present threats and opportunities for banks

Fintechs have had tremendous success in penetrating the area of ​​financial services payments — PayPal generates more than $ 20 billion in revenue annually, and is far from the only major player in the space. For Big Tech companies like Apple and Google, payments are the first access point to banking services.

Mobile payments, peer-to-peer, contactless cards and buy now, pay later — these are just a few of the innovations introduced in payments in recent years. The sector has relatively low barriers to entry compared to other areas of financial services, making it likely that new competitors with new ideas will continue to stream into the market.

For traditional banking institutions, there is a lot at stake when it comes to payments. Creating fast, secure and easy -to -use payments solutions will help banks and credit unions maintain the most important position of primacy in customer relationships.

In this month’s BAI Executive Report, we explore how some institutions are rising to the payment challenge.

In our top article, BAI contributing writer Lauri Giesen explores some of the new products that banks and credit unions are embracing in their efforts to meet customer expectations. This includes using APIs to deliver payments faster and providing visual confirmation of transactions via screenshots.

But more complicated, he wrote, is that customers often give credit for these solutions — and any accompanying loyalty — to the fintech partners of banks and credit unions, rather than to banking institutions deploying them.

And on the security side, the growth of e-commerce is somewhat weakening the protection powers of EMV chips and other credit-card fraud-resistant upgrades. One of Giesen’s industry experts advocates that U.S. financial institutions have combined their efforts to develop better authentication methods, particularly for card -free situations.

Jens Audenaert from Diebold Nixdorf focuses his article on how financial institutions struggling with the rising demands of digital banking can successfully transition to a more modern payments platform, and then future proof the that platform by preparing for the types of payments that will inevitably emerge in the coming years. .

He wrote that cloud-based technology could allow banks and credit unions to work around legacy systems while simultaneously updating essential operational elements to be more agile and reduce the risk of future obsolescence.

Tammi Shapiro from ServiceNow makes the case that financial institutions should devote more attention and spending to bringing center- and back-office operations — often a lower priority for resource allocation — to the point. of their smooth customer dealing ability.

“To stay relevant and remain competitive, financial institutions must deliver superior experiences through end-to-end customer journeys,” he wrote. “Banks also need to invest back by empowering employees with the connected tools and information they need to be more effective in serving customers when there are issues, such as failed or disputed payments.”

Also in this month’s Executive Report:

Tomorrow in the future: BAI contributing writer Dawn Wotapka writes about a new peer-to-peer payment initiative led by a group of community banks working together to create cheaper and more open options in more established P2P providers. Only a handful of institutions are currently on board, but expansion plans are in place for 2022.

More transparency on buying now, pay later: My interview with Greg Wright from Experian highlights his company’s plans for a new credit bureau that will focus on buying now, pay later transactions. The rapid growth of BNPL, particularly among younger Americans, increases the need for credit -related insights for lenders who want to participate in the market while managing their risk.

End of pulp friction: Chris Clausen from Deluxe writes that checks as a payment solution won’t disappear any time soon, but he said there are ways to make them faster in delivering funds and cheaper to issue and to process. One way to do this is by modifying the lockbox network to eliminate paper and make everything electronic from end to end.

From plastic to simply amazing: Nicole Machado from Vericast researched how financial institutions can deliver effective customer engagement through card programs. He said emerging technologies are allowing innovative marketers to redefine the value proposition of cards: from the energetic but mostly generic PVC rectangles to powerful brand variations.

BAI looks at the payments landscape and shares valuable intel on emerging methods, technologies and competition in “Payments: Increasing competition in the fast lane.”

Terry Badger, CFAis the managing editor at BAI.

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