Partnering with Fintechs and Simplifying Payments Key Drivers to Banks’ Modernization Plans, Global Study Reveals

Rhea-AI Summary

A new global report reveals that 65% of banks view Open APIs as essential for modernizing payment systems, allowing access to diverse fintechs and consolidating payment types. A third of banks now generate over half their income from payment processing, with 86% of large banks deriving over 30% of revenues from this channel. The report also highlights that over 90% of financial institutions consider payment hubs critical for addressing payment-related challenges, with 45% planning to implement a hub in the next five years.

Positive

• 65% of banks see Open APIs as key for modernizing payment systems.
• A third of banks generate over half their income from payment processing.
• Over 90% of financial institutions view payment hubs as vital for tackling payment challenges.

Negative

• 48% of banks believe legacy systems do not meet business needs.
• Over half of the banks experience a siloed approach to payments.

• An increasing number of banks are looking to implement a modern payment hub – with 77 percent of respondents saying that ‘faster adoption of new payment methods’ would be the critical feature required from such a solution

MIAMI & LONDON--(BUSINESS WIRE)-- Almost two-thirds of banks globally (65 percent) say Open APIs that enable access to a broad range of fintechs and consolidation of different payment types are the key drivers behind their plans to modernize payments systems, according to a new global report, Defining and Building the Next Generation Payment Hub, from ACI Worldwide (NASDAQ: ACIW) and Edgar, Dunn and Company (EDC).

“Financial institutions are keener than ever to connect to the new opportunities provided by the widening catalogue of fintechs,” commented Mark Beresford, director, Edgar, Dunn and Company. “By having Open APIs, the connectivity between historic financial institutions and new players dramatically improves. And, in a world where both quantity and quality of alternative payment methods is rising exponentially, it is no surprise to see that banks are trying to simplify their approach to these offerings.”

Further findings of the report:

• A third of financial institutions now generate over half of their income via payment processing, with 86 percent of large banks generating more than 30 percent of their revenues through this channel
• 48 percent said current legacy systems no longer meet business or customer needs and are not flexible enough to keep up with the pace of change coming from the modern payments world
• Over half said they experience a siloed approach to support different payments processes and systems within their institution

To meet the challenges of modernizing their payments infrastructure – be it connecting to new vendors, consolidating different payment types, or processing large volumes of payments quickly and efficiently – an increasing number of banks are looking to invest in a modern payment hub. This offering combats each challenge in a cohesive and centralized way that is easy to manage for a financial institution.

• Over 90 percent of financial institutions view payment hubs as pivotal in tackling unseen payments-related challenges
• 40 percent said their bank already has a payment hub solution
• 45 percent of financial institutions that do not currently have a payments hub today say they are likely to implement one in the next five years
• 77 percent said ‘faster and smoother adoption of new payment methods’ would be the key feature required from a payments hub solution

“Overall, the outlook for the payment hub is very promising. With rising revenue dependencies on payments, the need for a solid payment infrastructure has never been greater,” commented Dean Wallace, head of consumer payments modernization, ACI Worldwide. “Once seen as expensive and an ‘easier said than done’ enhancement, new technological efficiencies and the pressure on financial institutions to compete in a radically new environment have changed that view. Payment hubs are now viewed as a vital solution to relieve the pressure from many of today’s challenges and to prepare banks to successfully compete in the future.”

Notes to editor:

The paper was written as a collaboration between Edgar, Dunn & Company (EDC) and ACI Worldwide. The primary research for the report was designed and executed by EDC, and open to all interested parties, during September and October 2021. Overall, nearly 100 banking executives and key decision makers from across the globe took part in the online survey.

About ACI Worldwide

ACI Worldwide is a global software company that provides mission-critical real-time payment solutions to corporations. Customers use our proven, scalable and secure solutions to process and manage digital payments, enable omni-commerce payments, present and process bill payments, and manage fraud and risk. We combine our global footprint with local presence to drive the real-time digital transformation of payments and commerce.

© Copyright ACI Worldwide, Inc. 2022
ACI, ACI Worldwide, ACI Payments, Inc., ACI Pay, Speedpay and all ACI product/solution names are trademarks or registered trademarks of ACI Worldwide, Inc., or one of its subsidiaries, in the United States, other countries or both. Other parties’ trademarks referenced are the property of their respective owners.

View source version on businesswire.com: https://www.businesswire.com/news/home/20220125005085/en/

Media:

Dan Ring

dan.ring@aciworldwide.com

Katrin Boettger

katrin.boettger@aciworldwide.com

Source: ACI Worldwide

FAQ

What percentage of banks are focusing on Open APIs for payment modernization?

65% of banks are focusing on Open APIs to modernize their payment systems.

How much income do a third of banks generate from payment processing?

A third of banks generate over half of their income from payment processing.

What is the outlook for payment hubs according to the report?

The outlook for payment hubs is very promising, with over 90% of institutions considering them vital.

What challenges do financial institutions face with their legacy systems?

48% of banks reported that legacy systems no longer meet business or customer needs.

What percentage of banks plans to implement a payment hub in the next five years?

45% of financial institutions that do not have a payments hub plan to implement one in the next five years.