1、2017 PAYMENTS STRATEGY SURVEY 2017 Payments Strategy Survey | 2 Table of Contents Executive Summary .3 Forces of Change .4 Call to Action .9 Major Survey Findings .10 Major Differences Among Institutions .29 Preparedness Assessment .34 Recommendations .35 Conclusion .36 2017 Capital Performance Grou

2、p and American Bankers Association 2017 Payments Strategy Survey | 3 Executive Summary New technologies, changing customer expectations, and new competitors are combining to make consumer and commercial payments one of the most dynamic areas of financial services. The field is one that banks have hi

3、storically dominated even as threats to the industrys control were visible 20 years ago; however, the threats are even more apparent and real today. The magnitude of change occurring in payments means that payments must be a top strategic priority if banks are to maintain their leadership in this sp

4、ace. An assessment of the banking industrys preparedness to respond to the transformational changes that are occurring in payments presents a mixed picture. Collectively, the industry has taken some major steps to address these challenges and segments of the industry have also taken important steps

5、to adapt to the new environment. Yet many institutions are insufficiently prepared. The ability of banks to compete successfully in the rapidly evolving world of digital payments is characterized by several shortcomings. These include a lack of formalized strategic plans, complicated governance appr

6、oaches to payments, failure to adopt new technologies or to establish partnerships with nonbank competitors that offer new payments services that customers desire. These challenges must be addressed if banks are to retain their central roles in the evolving world of digital payments. 2017 Payments S

7、trategy Survey | 4 Forces of Change Continued Growth in Electronic Payments There has been a long-term shift away from traditional payments such as cash and checks toward electronic payments. This trend has continued as evidenced by the most recent payments data from the Federal Reserve System. In t

8、erms of the number of transactions, the composition of noncash payments by consumers and businesses is dominated by cards. Automated Clearing House (“ACH”) payments are the predominant form of payment in terms of dollar value. Checks, once the predominant type of noncash payment in the United States

9、, have been surpassed by non-prepaid debit cards, credit cards, and ACH payments. More specifically, the Federal Reserve data show that during the period 2012-2015: Card payments, including credit and non-prepaid debit, comprised 60 percent of payment transactions; non-prepaid debit cards accounted

10、for 40 percent of noncash transactions; Card payments, both credit and debit, exhibited the fastest growth rate among payment types; ACH transfers also grew and represented 80 percent of dollar transactions; and, Check payments continued to decline both in the number transactions and the dollar valu

11、e. Composition of Payments by Type and Rate of Change 20122015 Number of Transactions (billions)Dollar of Transactions ($ Trillions) Payment type20122015ChangeCAGR20122015ChangeCAGR Debit cards (non-prepaid)47.359.612.38.0%2.12.60.56.8% Pre-paid cards9.39.90.62.1%0.20.30.05.5% Total Debit Card56.569

12、.513.07.1%4.75.71.17.1% Credit Cards26.833.87.08.0%2.63.20.67.4% Total Card 83.3103.320.015.2%7.28.91.714.6% Total ACH20.423.53.14.8%129.0145.316.34.0% Check Payments19.717.3-2.4-4.2%27.226.8-0.38-0.5% Total All Payment Types123.4144.120.715.8%163.4181.017.618.1% Source: Federal Reserve Payments Stu

13、dy 2016. 2017 Payments Strategy Survey | 5 These trends will continue. Debit cards have become the preferred consumer payment type for many smaller, everyday purchases. Credit card payments will continue to increase due to the growth in e-commerce activity and mobile payments because consumers prefe

14、r to use credit cards in those channels.1 The use of ACH will continue to grow, especially in B2B payments, as same day settlement takes hold and initiatives to standardize and enhance electronic remittance information are implemented and adopted. While checks remain among the preferred payment choi

15、ces of consumers when paying bills and making payments to individuals,2 check usage will likely continue to decline further as person-to-person payment capabilities become more widely accepted and other digital payment options become faster and more convenient. Growth in Consumer Mobile Payments Whi

16、le consumers still rely primarily on check, cash, and card payments today, the use of mobile payments has exhibited a modest increase, led by younger consumers, ethnic minorities, and well-educated and more affluent consumers. Consumer survey data from the Board of Governors of the Federal Reserve s

17、hows that 24 percent of all mobile phone owners reported having made a mobile payment in the 12 months prior to the survey, which is well above the level from four years previously.3 There remains a significant number of consumers who have not adopted mobile payments for a number of reasons, includi

18、ng security concerns, lack of perceived benefit, and ease of use of other payment methods. However, there are forces that will likely spur further growth in mobile payments. For merchants and retailers, payments are no longer merely a means for accepting money and finalizing a transaction. Rather, p

19、ayments are a critical component in creating new ways for merchants to engage with their customers and are a key driver of consumer loyalty and satisfaction.4 Leading retailers have introduced mobile wallets which combine payment functionality with loyalty cards in an effort to improve customer conv

20、enience, enhance loyalty, and encourage shoppers to spend. Merchants and retailers continue to invest in more sophisticated point-of-sale technology that will make mobile point- of-sales transactions easier and more reliable. Security is being improved through biometric authentication and tokenizati

21、on. Also, credit card issuers are launching rewards programs that incent mobile payments in an effort to attain top-of-wallet position for their credit card. According to eMarketer, the transaction value of mobile payments will more than double in 2017 in the U.S., to $62.5 billion, and such payment

22、s will exceed $314.0 billion by 2020.5 1. TSYS, 2016 U.S. Consumer Payments Study. 2. TSYS, 2016 U.S. Consumer Payments Study. 3. Board of Governors of the Federal Reserve System, Consumers and Mobile Financial Services, March 2016. 4. Ovum 2016 Global Payments Insight Survey: Merchants and Retailer

23、s. 5. eMarketer Report, US Mobile Payments Outlook: Strong Growth Forecast for Proximity, Peer-to-Peer Payments in 2017 and Beyond, November 14, 2016. 2017 Payments Strategy Survey | 6 New Expectations in Commercial Payments New payments capabilities in consumer banking have implications for commerc

24、ial payments. The emergence of digital-savvy consumers and corporate treasurers has brought new expectations to all aspects of the payments industry. As customers become accustomed to faster and more convenient payments on the retail side, they will demand similar service in commercial transactions.

25、 Given the impact of nonbanks and fintechs in consumer payments, bank executives in commercial payments must invest in digital capabilities or risk being left behind. Importance of Payments-Related Information Information is integral to the emerging value propositions in consumer and commercial paym

26、ents. Information underpins important functionality that consumers rely on to control and monitor their accounts and transactions, such as mobile alerts, stopping unauthorized transactions, or instantly viewing transactions made with a debit or credit card. New solutions continue to be developed bas

27、ed on payments information. One fintech startup has designed a voice-activated app that enables consumers to understand their spending-related information and suggests ways to save money. New analytical solutions allow financial institutions to capture and analyze data on buying behaviors to enable

28、merchants to extend instant, customized offers and coupons to consumers. In the realm of commercial payments, many businesses continue to use checks to make and receive business-to-business (B2B) transactions and rely on manual, paper intensive processes to reconcile associated remittance data. In p

29、art this is because electronic remittance information has varied in both detail and format and has been provided separately from the electronic payments. Payments solution providers are adopting software solutions that provide businesses with electronic remittance data that are more structured, stan

30、dardized, and detailed, and that arrives at the same time as the payment. Among other benefits, this enables businesses to more fully automate their accounts payable and receivable processes and will further spur adoption of e-payments in the B2B space. The integration of information with payments s

31、ervices will be a critical point of competitive differentiation in the digital payments landscape. New Competitors Thousands of new nonbank digital competitors have emerged with the goal of applying new technology to capitalize upon and in some cases shape the rapidly evolving payments expectations

32、of consumers and businesses. These new competitors have sought to enter the payments arena by leveraging new technology to address inefficiencies in the existing payments process. For instance, cross-border payments are expensive for customers and are typically characterized by a lack of transparenc

33、y and slow settlement. Blockchain technology is still in its infancy and its large scale commercial application is likely some years away, but it holds the promise for real-time, peer-to-peer transactions without a central counterparty. By employing such technology, non-bank companies can speed sett

34、lement, lower costs and threaten to displace banks from an area in which they have long been dominant. 2017 Payments Strategy Survey | 7 These nonbank competitors are diverse, running the gamut from e-commerce companies to technology giants to start-ups. Their competitive models also vary. Some seek

35、 to directly challenge incumbent financial institutions while many others seek to enter into partnerships with banks. Through these partnerships, fintechs aim to accelerate payments and improve convenience, transparency, and other aspects of the customer experience. Their goal is to generally enhanc

36、e the payments solutions offered by banks. In turn, fintechs gain access to banks customers. Industry sponsored accelerator programs and the draft rules issued by the Office of the Comptroller of the Currency for a special purpose bank charter for fintech companies are manifestations of an evolving

37、symbiotic relationship between banking and fintechs. Regardless of the model that they pursue, these new competitors are offering new digital payments solutions that banks cannot afford to ignore if they are to remain competitive. New Technology Developments in payments technologies are also disrupt

38、ing the competitive landscape. Open Application Programming Interfaces (APIs) provide a way for software developers to communicate with the provider of a service such as a bank. Through open APIs, companies, including banks, can open their technology and data to partnerships with fintech companies a

39、nd thereby offer new payments solutions to customers. Open APIs facilitate innovation because they provide access to the actual application which enables approved partners to use the data and information to create new applications and deliver new services. The European Union has mandated that banks

40、provide open access to regulated third parties.6 While there is no such regulatory mandate in the United States, competitive pressure continues to push the industry toward more open banking platforms. Fintech companies and many others are employing open APIs to offer new solutions in various areas o

41、f payments and thereby are fundamentally altering the value proposition to end-users by offering faster, easier, and value-added services. Some third-party core vendors offer solutions that open connectivity between core and complementary solutions and third-party products. A few banks have launched

42、 developer portals and open APIs to spur innovation and have thereby signaled movement toward open banking platforms. In addition to open APIs, the growing ubiquity of smart phones, as well as the growth in cloud services, high-speed data networks and more powerful computers means that information i

43、s more accessible and can often be processed in real time. Technological improvements now support the storage and manipulation of much larger data sets. Blockchain technology will allow digital information to be distributed but not copied, and may transform how banks maintain money balances and tran

44、sfers. Collectively, these innovations are changing the expectations of end-users regarding the speed, convenience, information, and cost of payments services. 6. European Unions Directive on Payment Services (PSD2). Members have until 2018 to comply. 2017 Payments Strategy Survey | 8 Improved Infra

45、structure Progress is also being made to address issues that have impeded digital payments, such as concerns related to fraud and data security. Software and hardware firms are exploring new methods of verifying user identity. One such method is biometric authentication. U.S. smartphone makers are r

46、apidly integrating biometrics-based features, such as fingerprint scanners, into their devices. Tokenization, the process of protecting sensitive data by replacing it with an algorithmically generated number called a token, adds an extra level of security to sensitive credit card data and other stor

47、ed payment information. This protects consumers and businesses in event of a data breach. Among other benefits, tokenization enables users to store credit card information in mobile wallets, ecommerce solutions and POS terminals. This allows the card to be recharged without exposing the original card information. Under the aegis of the Federal Reserve and leading industry payments groups modernization of the domestic and international payments infrastructures is underway. Initiatives are being pursued to improve payments infrastructure in the form of real- time or near real-time