New benchmark study from ACI Worldwide and Ovum reveals both real-time payments and open banking as major competitive differentiators in the future of banking

The expansion of real-time schemes globally is driving a marked change in attitudes among financial institutions, with 85 percent of banks globally now viewing instant payments as the foundation for growth and new product enhancements, according to the “2018 Global Payments Insight Survey: Retail Banking,” from ACI Worldwide (NASDAQ: ACIW) and Ovum. The report reveals that 92 percent of European banks (and 88 percent globally) are delivering enhanced retail customer propositions because of real-time infrastructure. The majority of banks also expect improved customer service, new services for SMEs and long-term cost savings.

Alongside real-time payments, open banking is a top issue on the agenda of financial institutions. European banks are at the forefront when it comes to implementing an open banking strategy, with 92 percent saying they have defined one, followed by 86 percent in Asia, and 82 percent in the Americas.

“The dramatic change in attitudes toward both open banking and real-time payments in just one year is telling,” said Craig Ramsey, head of real-time payments at ACI Worldwide. “The big takeaway here is that real-time payments and open banking are set to reshape the competitive landscape, and banks should stay open to the potential new revenue streams and deepened relationships that will be brought to both consumers and merchants.”

“The results of the study highlight important steps that all retail banks should consider to ensure that they are prepared for current challenges and future opportunities,” said Kieran Hines, head of industries, Ovum. “Real-time payments and open banking initiatives have the potential to bring fundamental change to the retail banking value chain and must be viewed as true opportunities for service enhancement and transformation.”

Other findings from the study include:

Open Banking

• Over 70 percent of banks are willing to open up their APIs to third-party developers. With 79 percent, European banks had the most proactive mindset, followed by Asia at 74 percent, and the Americas at 66 percent

Security/Compliance

• As banks prepare for the new payments ecosystem, they’re looking to balance security and compliance alongside innovation
• Security is a chief area of concern around open banking, increasing in Europe by 29 percent, and Asia by 16 percent between 2017 and 2018. However, banks in the Americas with security concerns declined by 25 percent

Online payment capabilities

• Holding steady at 68 percent globally are banks that currently or recently invested in this area, with many enhancing support for third-party wallet offerings and tokenization

Payment Cards

• Real-time is becoming a reality with nearly 80 percent (78) of banks and almost 70 percent (68) of merchants globally stating that the combination of immediate payments and open banking will drive a decline in the importance of payment cards

To read the full report visit: 2018 Global Payments Insight Survey: Retail Banking

Join ACI and Ovum for a further discussion on the findings of the report on May 24th in Europe and North America.

Methodology:

For the 2018 Global Payment Information Survey, Ovum and ACI Worldwide partnered to run a 22-question survey across a global panel of executives, with a focus on retail banks, billing organizations and merchants. The main topics of focus for the survey include: IT investment plans around payment services, core business objectives and priorities, attitudes toward fraud and security, payment systems and architecture and plans and experiences around open banking and real-time payments. The survey was conducted between December 2017 and January 2018 and provides insight into current thinking in the industry across financial institutions, merchants and billing organizations such as higher education, consumer finance and insurance. Overall, it included a total of 1,032 executive respondents across 13 industry sub verticals in 10 countries, resulting in 225,000 separate data points on current perceptions and investment plans around payments technology on a global basis.

This paper focuses on the survey findings for banks and is one of a four-part series based on Ovum’s 2018 survey.