Interchange Fees Forum

But Regulation and Risk Management Will Remain the Big Drivers of IT Spending Decision-Making

 

 NEW YORK, NY, Feb 21, 2012 (MARKETWIRE via COMTEX) — Bankers increasingly see mobile technology as a must-have component of their retail offerings, but say that regulatory and risk-management concerns will dominate IT spending initiatives in 2012, according to a recent American Banker Research survey conducted in partnership with bank technology and payment systems specialists Tata Consultancy Services, TSYS, and Jack Henry and Associates.

Bankers overwhelmingly expect regulation to adversely impact their businesses in 2012, and a significant majority says that curbs on debit card interchange fees will lead the industry to minimize or eliminate debit card reward programs, increase ATM interchange fees, minimize credit card rewards and discontinue free checking in the near future. However, one in four bankers expects regulations to facilitate additional technology spending.

“The banking sector has become an industry torn between its need to respond to new regulatory pressures while striving to embrace innovative ways to strengthen retail customer relationships,” said Richard Melville, Group Editorial Director of Banking & Capital Markets at SourceMedia. Banks of all sizes face similar challenges in rebuilding revenues in the post-crisis era, but small community banks lag behind their larger competitors in adopting innovative technology solutions, according to the study.

Other key findings from the survey include:

        --  Less than one-third of all respondents deem their current risk
            management technology solutions to be effective in managing their
            bank's credit, market and liquidity risk. Among the smallest banks,
            only 9% believe their risk management technology solutions are
            effective. While the largest banks plan to increase spending on these
            solutions by at least 10% of their current levels, the majority of
            small banks plan to increase their current risk management spending by
            less than 10%.

        --  Among all banks, 42% currently offer mobile banking or mobile payments
            to their customers, while an additional 40% plan to offer it in the
            next 12 months. However, the largest institutions offer mobile banking
            at more than double the rate of the smallest banks -- 76% of large
            banks versus 36% of small banks. For 77% of respondents, security
            remains the top inhibitor in the growth of mobile banking, regardless
            of bank size.

        --  Mobile banking developments are currently driven by the need for banks
            to deepen existing customer relationships (versus acquiring new
            customers) and, to a lesser extent, perceived competitive pressures.
            Most banks report that the two most important mobile applications for
            retail customers are non-transactional -- information reporting and
            alert messaging.

The findings of this study are presented in full detail in the whitepaper “Flashpoints: Issues and Opportunities Confronting Bank Executives.”

Research Methodology

The study is based on a survey of 303 bank executives from the American Banker Executive Forum, a community of senior banking and payments executives who regularly share their opinions and perspectives with American Banker’s editorial and research staff and research clients. Fielded in August and September 2011, the study is the first in a series of quarterly studies on the issues, practices, and trends driving technology and payment trends in the banking sector.

About American Banker Research

American Banker Research is a unit of American Banker, the flagship information brand of the diversified B-to-B media company SourceMedia. American Banker Research brings a full range of professional research capabilities to companies and executives in banking and payments. The unit manages the American Banker Executive Forum, a community of senior banking and payments executives who are committed to regularly sharing opinions and insights with the editorial and research groups at American Banker. Members include qualified professionals who read American Banker and its sister brands Bank Technology News and PaymentsSource, and attend their professional conferences. These include C-level executives and other senior professionals employed at commercial and community banks, bank holding companies and other financial companies across all asset classes.