The survey identifies the reasons why ACH system upgrade is an area of focus for small to mid-size North American banks in 2009. Revenues are increasing - 60% of banks have seen an increase in revenue over the last 12 months - and 48% of respondents recognize the potential of ACH systems as a source of revenue and competitive advantage. However the need to meet market, regulatory and economic demands, and therefore the need for more sophisticated reporting and functionality, is putting pressure on banksâ existing ACH systems.
Risk management is the most popular top consideration when selecting or upgrading ACH systems, with 28% of respondents making this their only priority, followed by reducing operating costs (23%), increasing automation (21%), and increasing service fee revenue (16%). The survey also found that almost 30% of respondents are not yet ready for the International ACH Transaction (IAT) deadline in September 2009.
Andy Schmidt, Research Director, Global Payments at TowerGroup said: âTowerGroup believes ACH transactions will grow at a compound annual rate of 7% through 2012 as payers continue their migration towards electronic payment types. Competition and regulation will also increase as banks search for revenue and regulators demand greater transparency. Therefore, North American small to mid-size banks looking to compete with top-tier institutions and increase their commercial client base must focus on providing robust treasury management solutions leveraging sophisticated ACH technology focused on risk management and expanded reporting services.â
George Ravich, Chief Marketing Officer of Fundtech Ltd. said: "Increased ACH volumes, anticipated regulation, calls for internal transparency and a need to increase revenue and improve competitive advantage are the main drivers for a renewed focus on ACH systems. We are saying it a lot, but this is the time for small to mid-size banks â with larger banks simply fighting for survival in these difficult times, their smaller counterparts must move quickly to seize market advantage. And lighter or outsourced technology will enable them to do this.â
The survey, conducted by an independent firm between November 2008 and February 2009, surveyed 70 respondents with job titles related to either ACH or payments processing within small to mid-size banks in North America. The majority of respondent organizations own under $3billion in assets.