Eighty-seven percent of respondents to the American Bankers Association first-time payments survey indicated that their bank does not have a formal payments strategy. Of those, only 46 percent have plans to develop a formal payments strategy. The survey results were released on the first day of ABA’s inaugural Payments Forum in Washington, D.C.
“While we’re concerned that many banks don’t have a formal payments strategy in place, we’re not entirely surprised,” said Steve Kenneally, vice president, payments and cybersecurity policy. “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 to where they need to be.”
The survey of more than 200 banks found that responsibility for setting payments strategy varies greatly among institutions. At many banks (35 percent) the chief financial officer or the chief operating officer is responsible for setting the payments strategy. Only 7 percent have an enterprise-level payments officer and 14 percent have a payments committee.
Thirty-six percent of respondents characterize their bank’s approach to payments strategy as “fast follower,” while 54 percent said their bank takes a “wait and see” approach. Only 3 percent consider their bank a “first mover/experimenter.”
“The survey results show that community banks have a lot of work to do here,” said Christopher McClinton, senior vice president, payments and operations, ABA Endorsed Solutions. “The good news is ABA offers payments solutions and opportunities to partner with fintechs to help banks keep up with customer expectations.”
Thirty percent of respondents indicated that their bank has partnered with a fintech company. The survey also found that more than 40 percent of banks offer same-day payment processing and mobile person-to-person payments. Only a small minority offer e-wallet capabilities.
According to the survey, the greatest impediments banks face to implementing their payments strategies are their reliance on a third-party core system provider, technical integration issues and limited resources.
Respondents agreed that the top challenge when competing in payments today is data security and privacy. Identity theft and data breaches are ranked as the highest threat to payments security.
ABA, through its subsidiary the Corporation for American Banking, has a suite of endorsed payments and cybersecurity solutions to help banks across the country compete in the payments space.
The ABA Payments Forum, happening June 22-23 at the Ronald Reagan Building in Washington, D.C., features Rep. Randy Hultgren (R-IL), co-chairman of the bipartisan Congressional Fintech and Payments Caucus and a member of the House Financial Services Committee, ABA President and CEO Rob Nichols and other payment experts. The event will explore the future of the payments system and a range of technological solutions.
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The American Bankers Association is the voice of the nation’s $17 trillion banking industry, which is composed of small, regional and large banks that together employ more than 2 million people, safeguard $13 trillion in deposits and extend more than $9 trillion in loans.