Banks across the globe make investment in payment technologies a top priority

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KUALA LUMPUR (Dec 4): The payments industry is set to be a key area of focus for banks across the globe in 2015, according to Australia-based independent telecom analyst firm Ovum.

In a survey report entitled ICT Entgerprise Insights released Thursday, Ovum said the shift in payments modernisation, brought on by diversification and mobile channels in particular, was a truly global phenomenon.

It said that in most instances, less than a third of surveyed respondents claimed that they will be maintaining their payments technology in its current state.

Ovum said banks that had so far been reluctant to foray into the digital payments space were set to finally make their moves into the digital wallet space, with 23% of respondents placing the technology as their top investment priority.

“Mobile proximity payments, incorporating NFC and QR codes held the second highest priority level at 17.6%,” it said.

Alongside these new areas, the report said immediate payments technologies were quickly emerging as the next wave of global payment innovation, with products in this area being a top 3 investment priority for nearly 48% of respondents, although this investment is being driven in many instances by regulatory demands.

Underpinning this is a high appetite for payments modernisation particularly for critical payment functions such as switching, clearing and settlement, said Ovum.

“As payments has become a lot more complex and diversified, Banks are reacting to this with strong investment in the payments space which in turn is driving infrastructure investment.

“Chief amongst infrastructure priorities are payment switching and authorisation (42.2% citing it as a priority, and 21.8% as a top priority), clearing and settlement (49.2% citing it as a priority, and 18.4% as a top priority) and payment operations (45.4% citing it as a priority and 17.1% as a top priority),” it said.

Ovum Financial Services Technology senior analyst Gilles Ubaghs said payments had now reached a critical inflection point, with banks almost regardless of region choosing to make investment in this area a top priority.

“Banks realise the importance of enabling payment innovation and diversification, which in turn is driving much needed infrastructure that is both flexible and configurable.

“Vendors themselves should now focus on implementation and modernisation strategies for their own critical payments infrastructure - with flexibility in mind given the diverse range of payments technologies now emerging,” said Ubaghs.