Over the past two decades, retail banks have contributed to a radical change in the payments industry of many developed economies, making payment cards, ATMs and Point of Sale (POS) devices part of the daily life of most consumers. This has resulted in a significant shift in the mix of payments: from heavily paper-based (cash or check) to increasingly electronic. Such a dramatic shift has had many impacts on banks’ businesses – depending on the bank’s focus, payments can represent 10-40% of total revenues. Furthermore, new payment options, technologies, and business models are creating new market opportunities – for traditional as well as non-traditional payments providers. The adoption of emerging payment technologies has been receiving significant press and market attention over the past year, including EMV, 3-D Secure, micropayments, P2P payments, mobile payments, contactless cards and biometrics.
Against this backdrop, technology innovation is one of the key drivers of change that will impact the retail bank payment business. To better understand current bank perspectives on, and planned investments in, these new payment technologies, EDC and EFMA recently completed a survey among payment executives from more than 40 banks in 14 countries.
The global technology evolution is impacting every aspect of our world – our businesses, our customers, our lives. One of the most dynamic realms within this evolution is payments. Whether we are paying for services using our mobile, buying goods with the tap of a chip-based smart card, or authenticating payment transactions with our voice print, developments in emerging payments-related services are announced daily – some with profound implications for our businesses, and the way our customers conduct their business.
Many of these significant developments in payments-based technologies are vying for focus and investment funding of major financial institutions worldwide. To understand banks’ perspectives regarding growth opportunities that are driven by new technologies in the payments industry, the European Financial Management & Marketing Association (EFMA) and Edgar, Dunn & Company (EDC) completed an international survey of retail banks, the results of which are reported in this paper, “Technology-Driven Growth Opportunities in the Payments Industry, An International Survey of Retail Banks”. More than 40 payments executives at banks across four continents (with primary focus in Europe) provided their perspectives on emerging payments-related technologies, and their bank’s plans to implement the solution.
The focus of this study was new and emerging payment-related technologies. As shown in the chart below, these selected technologies range from payment options to end-user interfaces and authentication technologies. The seven emerging payments technologies addressed in this paper are: EMV, 3-D Secure, Micropayments, P2P Payments, Mobile Payments, Contactless Cards, and Biometrics.