CGI: The consequences of an open, standard, instant payments world
We are entering a period of profound restructuring of the banking value chain. The introduction of faster payments and Open Banking is reshaping the landscape of the banking industry as we know it. Big Tech, unrestricted by formal banking regulations, can take big strides into the banking arena by becoming distributors of banking product intermediaries in the value chain. FinTechs may be allies not enemies. There is a need for banks to rethink their strategies including partnering with FinTechs to bring a different point of differentiation to the table. Customer service, experience and value are the battleground. New and exciting competition could siphon away customers with the lure of innovative front-end services. This is a wake-up call for banks. They must elevate their service offerings in order to retain consumer loyalty.
At the same time, we are seeing the rapid commoditization of all transactions. For the consumer, the future of payments is completely seamless: think it, buy it, pay it – all in one breath! What does this mean for the banks? A once lucrative business, revenue growth from payments is flattening despite increases in electronic payment volumes. Payments could become free and the payments franchise is no more the prerogative of a bank. Is the payment business of traditional banks close to becoming a glorified utility service?