NEWS
IBS Journal January 2018
09
NA retail banks pushing real-time payments to AI and analytics
N
orth American commercial banks are continuing to increase their investment in real-time payments (RTP), according to new research from Ovum.
The report, titled “The rise of real-time payments in North America”, and commissioned by Icon Solutions shows that though late to the game, US and Canadian institutions looking to go beyond simple implementation of RTP, investing on AI and mobile banking based on real-time account data.
According to the research, North American commercial bank IT spending set to increase by $3.3 billion growing to $17.1 billion per year by 2021, with 50% of US and 40% of Canadian banks planning to increase RTP investment yearly.
A quarter of US banks and a fifth of Canadians see RTP in the top three of priorities. It is predicted that the investment in ACH and wholesale payment platforms will increase 40% in the US and 20% in Canada. Alongside this, banks also investing heavily in AI, mobile banking and open APIs, underpinned by RTP infrastructure, in preparation for open banking.
“The move to RTP infrastructures has its roots in consumer banking, but commercial banks will also be affected by the changes,” David Bannister, principal analyst at Ovum and author
of the report. “Many have undertaken significant investment to be able to comply – 28% of US commercial banks are increasing their spending on this area by more than 6% in 2018 - but the more far-sighted are also looking beyond basic compliance towards what product and service enhancements they will be able to develop for their corporate customers.”
“They also recognise that real-time infrastructures are part of wider structural changes in the sector and are investing in APIs to address the gathering momentum of the move to open banking.”
Cash management, real-time data and open banking
A
ccording to Ovum, the top areas for IT investment - cash management services, liquidity risk management, mobile banking and on-line banking - are all underpinned by
RTP, and consequently, cash management for corporates has also become top in the queue. 44% of US institutions citing it in the top three, along with direct integration with clients’ ERP or treasury systems. Similar numbers are seen in Canada.
While US institutions tend to steer towards access to real-time information and analytics based around transaction data, in Canada, the focus is on providing access to RTP,
along with enhanced services via digital interfaces.
When it comes to open banking, all Canadian, and 56% of US institutions are embracing an API strategy, with 80% and 56% respectively planning to integrate third party services into their propositions.
“The strategic investment in the deployment of advanced RTP capabilities beyond core payments systems provides an opportunity for banks to widen their service offering to corporate clients,” commented James Methe, senior vice president, North America at Icon Solutions. “This research also highlights how adoption of real-time payments is imperative in the face of a rapidly changing landscape that requires banks to be more agile to in the face of widespread systemic change.”
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