By John Ginovsky
ABA
Banking Journal asked a number of analysts their opinions of what banks
need to do to not only cope with the rapidly changing payments environment, but
figure out how to best participate.
John Jones, president, DCI: "That whole side of the industry is
changing so rapidly. There are a lot of things coming up. It looks like
something that is going to last a long time, and then it flashes and it's gone.
Banks are really struggling, trying to decide where they want to invest. Where
do they believe the payment industry is going?...
They have to understand that in
some cases they may just become a conduit. It comes back on them as to what is
the future of banking, what will your bank look like? Where does your revenue
stream come from? It's not going to come from the traditional types of loans
that you've provided in the past. So where is it going to come from? How are
you going to continue to participate? That's really what is key."
Randy Roth, CEO, Vitex: "Bankers used to control the payment
system. They don't any more. They've lost control over it. Now, to some degree,
that's not quite as strategically important as people may think. It's much more
important that we understand the relationship that we have with the customer.
Know when they want to move money. Know when they want to invest. Know when
they want to borrow. Having the relationship with the customer is much more
important than the actual payment transaction...
"We're going to have a lot of people
trying to compete for the payment business and charge fees for it, because that
happens to be one of the areas that we can charge fees for. So we do need to
have our vendors provide tools for us, to provide those services. From a
strategy standpoint, I don't get too hung up over it other than the fact that
we can't get too far behind. We have to stay pretty close to what's happening
in the prepaid market, the custom credit cards, and the smart cards, all that
kind of stuff."
Andrew Tilbury, chief marketing officer, Bluepoint Solutions:
"[Banks] are in danger of being leapfrogged out of the payment stream. But the
biggest asset that banks have with customers is the level of trust people have
with their financial institution that they don't necessarily have with a mobile
wallet provider that maybe started in business last year. That's the biggest
area where they can focus on...They need to be very aggressive about partnering
with wallet providers.
Nicholas Brewer, senior analyst, Aite Group: "Banks are always
involved in payments. People still need to make payments through their bank.
People still keep most of their money in their checking account. That's where
it comes from and largely where it goes. Banks have to keep a presence. People
forget that however much you do in all these other payment channels, underneath it is a set of bank
accounts...Maybe banks understand they don't own the front end channel of
payments, but there's still quite a large role to be played in providing the
underlying wholesale transaction processes."
Next week: More observations
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About the Author
John Ginovsky is contributing editor of ABA Banking Journal and editor of the publication's TechTopics e-newsletter.
For more than two decades he has written about the commercial
banking industry. In particular, he's specialized in the
technological side of banking and how it relates to the
actual business of banking. He previously was senior editor
for Community Banker magazine (which merged with ABA Banking Journal) and was a staff writer for ABA's Bankers News. You can email him at
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[This article was posted on March 12, 2013, on the website of ABA Banking Journal, www.ababj.com.]
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