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|70% of banks are increasing investment in payments security technology in 2016|
|Wednesday, 04 May 2016|
New global research conducted by analyst house* Ovum, reveals the payments market is continuing to drive high amounts of investment and development. Security remains top of the agenda for banks, but is not the only driver behind payments investment. Emerging technologies, such as immediate payments, blockchain/distributed ledger technology, analytics, and open-platform architecture software environments, alongside emerging security threats and new global risks, are creating an environment in which the key challenges of retail banks are identifying which will have the most impact in 2016.
Security technologies are seeing the biggest increase in payments investment, but banks are also looking at ways to grow their payments business. Digital channels in the mobile and online space will be the key focal points of development, with a view to enhancing established payment tools with added value benefits and services, rather than investing in brand new platforms. Online payments is the highest overall development priority for retail banks, with close to 46% of surveyed organisations listing it as one of their top three priorities. Of these, 18% ranked it as their top overall priority, the highest of any product category.
Gilles Ubaghs, Senior Analyst, Financial Services Technology, comments: “Payments will remain an extremely competitive space in the near future. In fact, this fierce competition is only going to increase. Investment in payments will continue at the high rate of recent years and the number of start-ups and high-profile acquisitions will still grow. Old assumptions are dying off and it is increasingly clear that no one has a guaranteed dominant position in the market.”
He continued: “What we called ‘grand narrative rollouts’ in payments - such as the advent of Apple Pay - have failed to live up to their initial hype, giving way to more experimentation in product design. Banks are the biggest beneficiaries from this scenario; free now to focus on their own payment developments, which is a major driver for the increase in payments investment forecast for 2016.”
Gilles Ubaghs concludes: “Blockchain in particular is something enterprises need to understand, as previous experimentation is now moving towards practical uses - linking networks and driving transactions, for example. Major emerging protocols such as Ripple, Interledger and Ethereum, alongside the R3 and Hyperledger consortiums amongst others , will see further development in the financial services space in 2016.
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