Banks are "showing insufficient urgency" given threats from competitors in new payment methods, finds a joint Efma and Oliver Wyman report. The report cites survey results of 148 institutions from Europe, the Middle East, and Africa, and ten from the rest of the world.

Only 30% of banks are investing heavily in new payment methods.

A wide range of new ways to pay are being introduced to the consumer market. From connected devices such as mobile phones, to the increasingly wide range of everyday objects onto which consumers can preload funds, alternative payments methods are now gaining traction.

More than 80% of banks offer internet payments and servicing capabilities, while fewer than 60% offer mobile banking services via a mobile-optimized website. Only 30% currently offer contactless credit or debit card capabilities, with that number falling to less than 20% for payments using near-field communication standards.

Banks are increasing spending on alternative payment methods, with 30% saying they are investing heavily as it is essential to their future business. Half of banks are only investing in order to keep pace or catch up with their competitors. This approach is not enough in an environment where new, nonbank competitors are gaining ground.

"Banks believe that merchants are reluctant to adopt the new technology because they fear consumers will not use it, and vice versa," says James Sherwin-Smith, a senior manager within the Payments practice at Oliver Wyman, and author of the report. "The risk for banks is that new competitors will invest enough in both the technology and the marketing to overcome these barriers. This will weaken the role that banks play in fulfilling their customers' everyday transactional needs, with an associated loss of the valuable information this provides."

"Banks no longer have the payments field to themselves and have to fight against retailers, mobile phone providers, tech firms, and new start-ups to position for a share of the market," says Patrick Desmarès, Efma secretary general. "Even if banks decide not to push hard in the alternative payments space, this should be a considered, strategic decision."

http://www.celent.com/reports/advanced-and-mobile-payments-whats-stopping-you

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