Banks' Payments-Driven Revenues: Why Banks Need Payments Czars
US banks are losing revenues as the check’s popularity wanes. Over the next 5 years, US banks will miss out on US$900m in revenues as a result of electronic payments and check conversion. Celent urges banks to appoint a payments czar with P&L responsibility to stay in control of these changes.
In a new report,"Bank’s Payments-Driven Revenues: Why Banks Need Payments Czars"Celent analyzes the impact of e-payments and check conversion on banks’ revenues. The report scrutinizes the consumer check value chain, reviews the segments where banks’ revenues and profits will be affected, and provides recommendations.
Banks currently derive US$4.2bn in annual fees from consumer checks. Revenues come from checkbook distribution, check deposits by merchants, retail lockbox services, and non-sufficient funds (NSF) fees. However, the lack of integration across payment units makes it very difficult for banks to develop a consistent strategy to preserve and enhance payments revenues.
"As consumers choose e-payments over checks, banks are missing out on revenues," comments Gwenn Bézard, Celent Senior Analyst and author of the report. "This trend will persist over the next few years as the check goes away, especially because US banks are overly dependent on non-sufficient funds (NSF) fees. US Banks make significant money from NSF fees. And some e-payment alternatives, such PIN-debit and bank-supplied online bill payment, are NSF foes."
Celent urges banks to appoint a payment czar with profit & loss responsibility for all payments services currently scattered across various business units.