North American banks have difficulty keeping the evolutionary pace of payments.
Technological innovation transforms commercial payments across North America, considerably affecting major financial institutions in the United States and Canada. Celent, a Fintech research and advice company which is part of the GlobalData data analysis company, shared a report on this subject at Sibos on Tuesday, with some unexpected conclusions.
The survey, carried out in the summer with a majority of the first 20 banks in the United States and Canada, revealed that no single bank excels in all areas of payment. In addition, the definition of “best” varies depending on the customer and the context. What has become more important than trying to do “everything” in payments is to focus on what matters most for customers.
The pace and extent of changes in the payment space are so intense that some banks have described themselves as a “change of change”. However, this environment also has important opportunities. As the authors of the report point out, what matters most is not the size of a bank, but its attitude. Small banks, in particular, often surpass their larger counterparts simply because they are more willing to adopt the change.
Each bank interviewed said that it had adopted a unique approach to payments, differentiation becoming a key competitive factor. Many respondents noted that only the biggest banks had the resources – human and financial – to innovate on a large scale. However, even the deep pockets do not guarantee success.
Celent analysts argue that banks must differentiate their payment offers or risk for irreversibly delay. The desire for change prevails over available budgets – innovation comes more from mentality than money. A unified and focused objective on the customer must generate all decisions in the field of payments.
In practice, this led some institutions to pass from the construction of products first and to market them later, starting with research on customers and industry, then to design solutions to meet these needs. This represents an important change in product management, placing the customer at the center of the innovation process. The objective is not only to become a service provider, but a partner and an advisor – edifying what is best for the customer, not only for the bank.
For the future, while significant changes are expected in fields such as CBDC, stablescoins, ACH systems and payment infrastructure, the survey has identified fraud and risk management such as absolute priority for 43% of banks interviewed. This is followed by 29% which focuses on the improvement of operations and the processing of processing infrastructure. In addition, around 50% of banks provide for a complete replacement of the system in areas such as payment centers, cross -border payments, payment operations and the prevention of financial crime.