Survey of Banks, Retailers and Processors Spotlights Industry Views on EMV, Mobile, Fraud and Innovation
ACI Worldwide (NASDAQ: ACIW), a leading international provider of payment systems, today released the results of a new survey of banks, retailers and payment processors that sheds new light on industry trends related to EMV, mobile payments and banking, fraud and innovation.
This survey was conducted at the 2013 ACI Americas Exchange conference in Boston, MA from June 4-6, 2013.
EMV Will Drive Mobile Adoption while Reducing Physical Card Use
Among the principal findings, ACI found that those intimately involved in banking and payments believe that EMV is poised to drive the adoption of mobile technology. According to the survey, nearly half of all respondents (49 percent) believed the U.S. migration to EMV will result in consumers turning away from card-based transaction in lieu of mobile payments.
“It was interesting, and frankly a bit surprising, to see data that so strongly indicates a belief that consumers will move away from physical cards in lieu of mobile,” said Dan Heimann, consulting manager, ACI Worldwide and vice-chairman, EMV steering committee, U.S. EMV Migration Forum. “Everything I have heard during my work with the Forum and in conversations with those in the industry has led me to believe there will be dual adoption and consumers will continue to carry their physical cards. Given these findings, I’m more intrigued than ever to watch the rollout and adoption rates for EMV cards.”
Additionally, as the migration toward EMV continues in the U.S., those surveyed admitted that there are challenges to rolling out the new payment systems. When asked what specifically they felt would be the biggest challenge to EMV implementation, respondents answered as follows:
- Nearly one in three (32 percent) noted that rolling out hardware updates (like POS terminals, ATMs, etc.) would present the largest issue
- 26 percent believed the biggest challenge would be educating and training business constituents along with driving consumer awareness and adoption
- 24 percent said they were most concerned about meeting compliance and liability shift deadlines
When asked what trend will have the biggest impact on banking and retail over the next six to 12 months, only 15 percent noted that uniform EMV standards will catapult adoption and rollout.
“Mobile and contactless payments are important drivers to EMV adoption in the U.S. and the results of our latest survey certainly affirm what we’ve been speaking with our customers about over the last few years,” said Heimann. “Due to the impending deadline for the liability shift, we are seeing forward-thinking merchants and retailers take this opportunity to ensure that they have the hardware and infrastructure in place to accept contact EMV cards, contactless (NFC) EMV cards and EMV mobile payments.”
Industry Monitoring Mobile Wallet Adoption: Who Will Own the Customer?
As mobile banking and payments each continue to grow in popularity and market penetration, many within the industry are watching closely to see if and when mobile wallets will begin to gain meaningful consumer adoption.
When asked to identify which banking and payments solution is most likely to be adopted within the next year, more than 60 percent of survey respondents selected either mobile banking (35 percent) or mobile payments (27 percent). Interestingly, however, this focus on mobile did not include mobile wallets. Despite significant market coverage and awareness of mobile wallets and the push toward mobile aggregation, just one in 10 respondents of the ACI survey believed that mobile wallets will become widely adopted over the next two years.
Additionally, 14 percent believed that EMV cards will be most widely adopted, while 13 percent selected online and mobile bill pay services.
“So much time and attention have been paid to the rise of the mobile wallet,” said Matt Ellis, SVP, Online and Mobile, ACI Worldwide. “But our findings show that banks and retailers alike may not be willing to relinquish control to third-party providers just yet. Our survey is a clear affirmation that as mobile continues to evolve, you’re going to see bank and retail brands work hard to maintain ownership of their mobile channels.”
Mobile also dominated the trends that banking and payment experts believe will shape the industry over the next six to 12 months. When asked what trend would have the biggest impact on the banking and retail industries over that time horizon, respondents answered as follows:
- 19 percent believed it would be the adoption of mobile banking
- 12 percent believed more banks will offer online/mobile bill pay services
- 11 percent believed that industry and regulatory mandates will slow mobile rollout
When asked to identify the biggest obstacle for banks and retailers looking to implement mobile solutions, those surveyed selected:
- Fraud (35 percent);
- Lack of integration with core system software (27 percent);
- Implementing hardware infrastructure to support mobile (15 percent);
- Lack of consistent industry standards (13 percent);
- Lack of market interest (7 percent) and
- Competition from new entrants (4 percent).
Fraud Continues to Concern Industry
It is clear that one of the top concerns for the banking and payment industries continues to be fraud. When asked what they felt the biggest risk/security concern facing their organisation today was, surveyed experts weighed in as follows:
- Significantly, 40 percent believed fraud poses the biggest risk.
- 20 percent noted PCI data security compliance as their biggest concern.
- 14 percent cited the threat of a data breach as their top concern.
- Only one in 10 selected distributed denial of services (11 percent) and cybercrime (10 percent).
- Just five percent were most concerned with anti-money laundering.
Interestingly, 13 percent of respondents believe that increased instances of mobile fraud will be a leading trend over the next six to 12 months and, as noted, more than one third of respondents (35 percent) noted that security and the threat of fraud was the biggest obstacle for banks and retailers as they look to implement mobile solutions.
“Fraud continues to be a leading concern for all payment professionals,” said Mike Braatz, SVP, Payments Fraud Management Solutions, ACI Worldwide. “As an industry, we must be vigilant and resolute in staying one step ahead of fraudsters, which admittedly can be challenging as new technology is constantly introduced. But, with the right plan and strong partners, retailers, banks and processors can ensure the continued protection of their customers and their data.”
Obstacles to Innovation
As the banking and payment industries evolve, innovation continues to take center stage as a leading driver of growth. Unfortunately, many industry professionals continue to see obstacles to innovation. When asked to identify the biggest obstacle to meeting customer demands around innovation, more than one third (36 percent) selected the cost of implementation.
“It’s no secret or surprise that customers are demanding new and innovative solutions,” said WA Proctor, director and product line manager, ACI Worldwide. “Unfortunately, this comes at a price to banks and retailers. But cost doesn’t have to be a deterrent and doesn’t have to stifle an organisation’s desire to innovate. Offerings like ACI’s new Universal Payments Platform can help to reduce some of these implementation costs by offering banks and retailers a more efficient payments system that can add components and solutions without creating system redundancies. This idea of enterprise payments is one that is gaining traction. In fact 13 percent of our survey respondents believe the trend to watch most over the next year will be the adoption of enterprise payments by banks and retailers.”
Other obstacles impeding innovation included regulatory concerns (27 percent), internal culture not being supportive of innovation (12 percent), technology hurdles (10 percent), ongoing maintenance costs (8 percent) and the lack of business cases for new projects (6 percent).
The ACI Worldwide survey also examined key trends and opinions related to fraud and innovation within the banking and payment industries.
The survey of 201 retail, banking and processor professionals was conducted by ACI Worldwide at the 2013 ACI Exchange Americas Conference in Boston, MA from June 4-6. ACI Exchange is an annual gathering of ACI customers and partners focused on innovation in banking and payments.