Are Mid-Sized FIs Failing To Climb The Innovation Curve?

Is your financial institution ready for payment innovation? The Innovation Readiness Playbook from PYMNTS.COM surveyed US financial institutions and created a gem for strategic and tactical considerations.

Like many surveys, you can take a positive or negative spin on the data and critique the questions. For example:

  • Is this a wake-up call to mid-sized financial institutions that seem to be lagging behind in key payments technology innovation categories?
  • 54.2% of the FIs surveyed said payment innovation have more funding than other business units; seems like a great number!
  • The survey gathers perception data from respondents. One manager might see things differently than another at the same FI.

Whatever your take, here are other stats worth exploring:

  • The best-performing FIs focus on consumer engagement. 80% of top FIs say they are focused on engagement in the next three years, compared to just 40.7% of middle performers.
  • Funding won’t get FIs far without the right infrastructure – 41% of mid-sized FIs said their core systems were well-suited for innovation. Meanwhile, 73% of top performers said their core systems were suitable. 
  • Top innovation features of focus in the last 3 years: Digital wallets, P2P payments, fraud management, loyalty/rewards, real-time payments and security.

Innovation in payments has many layers. The model for a big bank is typically very different than a community bank. For example, the top banks have innovation teams and typically greater resources for research and development.  Community banks rely more heavily on their technology vendors for innovation.

We like the community bank/institution model from Jack Henry & Associates.  They have a very successful methodology of evaluating payment trends and creating strategies around these trends. Once they commit to a strategy, develop a solution and build a program for major market adoption, they are able to innovate hundreds/thousands of end-user clients with rapid deployment…like a production machine. This kind of approach enables mass market deployment of innovations in a relatively short period of time. We’ve seen how they have achieved this in teller, branch, and centralized check capture with their 4|sight™ system, all of course, running OrboGraph check recognition solutions.

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