Banks and Fintechs Are Global Leaders in Payments Innovation, Study by ACI Worldwide and Ovum Reveals
ACI Worldwideand Ovum global Culture of Innovation Index explores approach to innovation and business transformation across banking, merchant, intermediary and corporate sectors globally
- Real-time innovation, new payment options and move into public cloud infrastructure are priorities for trailblazing firms across payments ecosystem
The research, based on a global survey of almost 1,200 enterprises, reveals that retail banking and fintechs are the leading sectors when it comes to payments innovation, with regulation playing a key part in forcing industry change. The merchants and corporates that are their customers are less successful in balancing cultural, organizational and technology drivers to achieve digital transformation.
According to the Index, real-time payments are a significant driver of innovation among financial institutions, while merchants and corporates are focused on new payment options (especially mobile), with payment security a continuing concern. In addition, trailblazers across the sectors plan to move mission-critical workloads into public cloud infrastructure either this year or into 2020.
“The pace of change in the payments ecosystem continues to be relentless,” said
“The aim of the Index is to identify not only the factors that separate the most innovative businesses from the laggards, but also what this means in terms of product innovation,” commented
Banks and Intermediaries
Real-time is a key driver of and enabler for innovation
- 96 percent of retail banks, 94 percent of corporate banks and 92 percent of intermediaries globally report that they will develop new and innovative services on top of their investment in RTP in 2019/20
Mission-critical workloads, including payments, can and should move to the cloud
- 82 percent of corporate banks, 74 percent of retail banks and 79 percent of intermediaries (84% of fintechs) globally plan to move mission-critical workloads into public cloud infrastructure in 2019/20
Capitalizing on potential of open payments is the biggest competitive differentiator
- 91 percent state that the move to open banking has helped change the way they approach delivering new products and services, with 89 percent actively exploring a platform strategy
The merchant segments (telecoms, retail, digital goods and hospitality) featured in the Culture of Innovation Index are spread across the Laggard, Emerging and Tech-led categories, placing them behind fintech, retail and corporate banking in the overall ranking.
There are significant regional differences in terms of innovation
Europe, 35 percent of all merchants are classified as Laggards, compared to 30 percent globally. European retailers particularly fall behind their global peers, with 43 percent in the Laggard category, reflecting the challenges that many have faced as a result of the rapid shift in customer habits toward eCommerce
In contrast, merchants in
Asiaare highly focused on investing in technology; 32 percent fall into the Tech-led group, with 26 percent in the Advanced category; only 19 percent are Laggards
- Merchants in the US are polarized, with 34 percent falling into the Laggards and 16 percent into the Trailblazers category, reflecting the growing gap between more traditional merchants and many of the more digital native businesses
Customer experience is key
- Innovation in payments is focused on areas that enhance customer experience – new payment options, a focus on mobile (especially in-store), and a stronger, more seamless cross-channel payment experience
- Security initiatives like PSD2 and SCA are driving the need for technology innovation in order to balance fraud prevention with maximizing conversion rates; regulatory requirements may drive merchants to close the innovation gap relative to banks
Most corporates are Laggards, with higher education, healthcare and utilities leading the sector
- Security remains a top concern for corporates with 50 percent experiencing theft of payment data (up from 22 percent in last year’s study)
- Investments in value-added services like mobile-optimized billing and digital customer experience will improve customer loyalty while driving innovation; 60 percent of Advanced and Trailblazer corporates already offer mobile-optimized billing and 57 percent currently offer personalized communications to collect payments
- Among the corporates segment (consumer finance, government, healthcare, higher education, insurance and utilities), 18 percent are in the Advanced and 4 percent qualify as Trailblazers, while 33 percent are in the Laggard category; at the sector level, higher education is among the leaders, with 29 percent of organizations in the Advanced category
The Culture of Innovation Index, based on interviews with senior executives in close to 1,200 enterprises, scores each organization based on its plans and behaviors across a range of cultural, organizational and technology-centric factors. Interviews covered a range of topics relating to two broad themes: Inputs to the innovation process (cultural and organizational drivers of innovation, particularly the way that the organization is structured with respect to identifying changing customer needs, competitive challenges and new market opportunities) and Outputs from the innovation process (outcomes from the process, in terms of factors such as the adoption and investment in emerging technologies as well as specific product innovation relating to the business area in question). Across the study, the responses to more than 100 individual questions were scored and weighted to produce combined scores for each of the Input and Output categories.
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