Most FIs Think Real-Time Payments Will Boost Customer Service
A recent study also finds most respondents expect real-time payments to help cut operating costs.
The research, gathered by Naples, Fla.-based ACI Worldwide and market research firm Ovum, from more then 1,000 executives of retail banks, billing organizations and merchants, found that 86%, 82% and 78% of those organizations, respectively, anticipated that their customer service will get better thanks to real-time payments. Most respondents also said they expected real-time payments to help cut operating costs.
In addition, 51% of the respondents said they will increase their IT budgets for payments-related projects in 2018.
One reason financial institutions in particular were so optimistic about service and costs may be that nearly all of them (87%) had clear strategies for developing open APIs — application programming interfaces that give developers the code and tools they need to create apps that attract users. Last year, that number of was just 59%.
“Open banking and real-time payments are set to shape the payments industry in a big way, and the potential upside to both consumers and businesses is enormous,” ACI Worldwide Senior Vice President Alex Hoffmann said.
There are serious implications for the physical card industry, though, the study noted.
“At a global level, 78% of banks, 72% of billing organizations, and 68% of merchants believe that the combination of real-time payments and open banking will see the reliance on payment cards decline over time,” it said.
Personalization and making payments a more integrated party of the purchase journey were also important to respondents, with over 90% of billing organizations and merchants stating that they will invest in projects in those areas.
“For many institutions, this will require investments to remove friction from the customer experience, particularly the authentication process and the integration with third-party payment services,” it noted.
Using off-the-shelf tools to accomplish that also seems to be the most effective way to cut payment operating costs, the study noted.
“Organizations, that have seen their costs fall by 5% or more, report that 36% of their core payment applications are off-the-shelf vendor products (including where customized in deployment), and 35% are in-house developed. Among those that have seen the highest cost growth - internally developed software accounts for 41% of their infrastructure,” it said.
About three-quarters of billing organizations and merchants also have a clear strategy to leverage the data they get from open-banking initiatives, the study said. Accordingly, data security projects understandably received high priority from financial institutions in the study.
A full 61% of merchants said they believe they’re at a greater risk for a breach than a year ago, and almost a quarter (22%) said they experienced a theft of payment data in the last year. According to the study, 22% of billing organizations experienced payment-data theft in the last year as well, but only 36% said they felt their breach risk has increased since 2017.