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Thursday May 20, 05:36
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Banks Need Payment Volume To Retain Revenues
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As e-payments eat into the share held by paper payments, banks have to react on behalf of the entire institution, and offset lost revenues by identifying new businesses such as cash forecasting, liquidity or risk management, according to Treasury Strategies. Banks need to grow their payment volume by 6 per cent a year to keep their ‘business as usual’ revenues constant as declining paper volumes cause a drop in float and revenue from checking services. Of the 24 banks surveyed in the report, "How Much Smoke, How Much Fire? Bank Adoption of New Payment Types", 35 per cent reckoned their institution would be a leader in e-payments, while 26 per cent did not expect to become a leader.
Over 40 per cent of the responding banks had multiple product or market areas that are responsible for payments initiatives, Treasury Strategies reports, with a similar number having appointed a task force with representation from multiple areas. About 5 per cent of responding banks had given one individual full responsibility for consumer payments, and a different individual, responsibility for commercial payments. Interestingly, 75 per cent of the banks considered themselves “well-positioned” for emerging payments solutions, with just 12 per cent indicating that they were “very” well positioned to use e-payment solutions.
Banks are uncertain how e-payments will impact their positioning, however, Treasury Strategies notes, with new payment structures triggering challenges in new fraud types and the potential loss of revenues. Despite this, almost 40 per cent of responding banks had Web and telephone payments projects under way, with 27 per cent developing such payments. Sixty per cent believe e-payments will increase their market share, with 20 per cent confident of increasing their profitability. Bottom line, while larger banks are investing in and delivering e-payments, smaller banks need to devise and implement their strategy.
(Treasury Strategies)
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