Under The Microscope

Register now

Banks Finally Switching Back To Playing Offense

BOSTON-Banks are now making offensive, rather than defensive, moves looking for ways to grow their business, according to research and consulting firm Celent.

Every year, Celent gathers its analysts across the globe to summarize the top trends in banking for the major geographies and then synthesizes key trends in each geography, gleaned from bankers and vendors, clients and non-clients, and regulators and central bankers.

Key findings of the report include:

* The practice of banking became fundamentally more difficult as a result of the global financial crisis of 2009. Banks are now subjected to increased public and regulatory scrutiny as a result of the near-collapse of the financial system.

* Over the past few years, especially in the U.S., Celent saw bankers cutting spending to the core and launching initiatives only when necessary for risk management or compliance. Today, these bankers are crawling out from their foxholes and looking to advance.

* The three most consistent themes are: 1) channels, such as social media and mobile; 2) payments; and 3) enterprise initiatives. Branch is the new alternative channel. SMS, apps, smartphones, Internet, and RDC are now mainstream.

* Payments are moving to the fore. Whether mobile payments, P2P, or prepaid, banks across the globe are looking closely at these as a key to customer loyalty and revenue generation. "He who controls the payment stream controls the customer," Celent said

* Banks are facing increasing complexity, whether across channels or lines of business. Between channel proliferation, customer profitability, and risk, many are finding that they need to take an enterprise view of architecture and have enterprise needs take a more important place in IT. Whether the discussion is around payment services hubs (PSH), enterprise service buses (ESB), service oriented architecture (SOA), or enterprise data warehouses (EDW), bankers are thinking about their business more holistically.

For info: www.celent.com


Remote Deposit Capture Poised For Mainstream

BOSTON-Competitive pressures, growth in self-service channel preferences, and relentless cost reduction demands are vaulting remote deposit capture into the consumer mainstream, according to a new report, "The Future of Consumer RDC: Going Mainstream," from Celent, a financial research and consulting firm.

Consecutive annual surveys conducted by Celent in August 2009 and September 2010 show a doubling in planned adoption of mobile RDC from 26% of surveyed FIs planning or considering a solution in August 2009 to 51% in September 2010. FIs will offer mobile RDC to both consumers and businesses. Celent expects more large bank initiatives to be announced later this year, but the bulk of activity will occur in 2011.

Image exchange adoption continues unabated, with nearly 97% of US financial institutions receiving electronic images. This growth in image exchange coupled with the decline in check usage has placed enormous pressure on paper-based check processing costs.

Celent said other factors will result in mainstream use of consumer RDC over the next few years: 1) desktop scanners will make it more affordable for small businesses and consumers; 2) consumer RDC solutions technology has been proven viable, with acceptable user experience and back office operational results; 3) most FIs have survived FFIEC RDC audits and 4) with large bank product launches, consumer awareness of RDC is on the rise, and every indication suggests it's a winner. Retail RDC appears to be finally going mainstream.

For info: www.celent.com


Consumers' Use Of Cash Declining, Not Vanishing

BOSTON-Cash use, which has been declining in U.S. payments transactions, will continue to do so through 2015, but it is far from vanishing, according to a new report from Aite Group.

The consultancy performed two surveys (one of 4,696 U.S. consumers, conducted in August 2010, and one of 1,039 U.S. consumers, conducted in October 2010) to size the use of cash as a payment method in person-to-person (P2P), bill-pay, and retail transactions in the United States. While 30% of consumers use cash less often than they did two years ago, 20% use it more often. Gen Y is the only generation more likely to use cash more often today than it did two years ago.

Aite Group said consumers' use of cash will decline by a total of 17%, or 4% per year, between 2010 and 2015, dropping to slightly more than $1 trillion.

"Despite forecasts of a cashless society, the United States is nowhere near the realization of this vision," said Ron Shevlin, senior analyst with Aite Group and author of this report. "In fact, if the use of cash were to decline by 17% every five years-our forecast for 2015-the use of cash in the United States wouldn't fall below $1 billion before the year 2205, roughly 200 years from now."

For info: www.aitegroup.com

For reprint and licensing requests for this article, click here.