Orbograph 2017 Predictions for Check Payments

Within the first months of 2017, there will be a number of important market studies released related to check volumes via FED research, fraud losses (ABA Deposit Account paper), and retail banking (BAI).  As OrboGraph looks to the future in check payment innovation, we believe the following trends will feed market innovations.

• Check volume declines will decelerate: The overall market 6-8% decline in check volumes is going to slow to a rate more like 3-4%, or half of what it was. This was originally modeled out by Global Concepts about 8 years ago as they predicted that businesses would be the late adopters of electronic payments, and per the AFP report of 2016, they were exactly right. So P2P checks have bottomed out and B2B will drive up the dollar value of checks, validating that checks are again, not going away.
  • Note that there might even be an interesting “uptick” in volume. Sources in the industry indicate that actual volumes may have been underestimated. If we are indeed still at 16-18B check payments per year, this means that there are actually more like 33B transactions which are processed by FI’s when you consider the depository institution and the paying bank. Big numbers and big opportunities still exists for innovation!
• Check fraud will see a small uptick in the 2016 numbers. Why? Because EMV was just starting to be implemented when the 2016 survey was launched.  We’ve heard from a number of sources including banks that check fraud attempts are increasing due to EMV implementations.  Fraudsters are cherry picking FI’s which don’t have good controls in place.  So aggregately, the impact will probably be small, but there will be more instances of check fraud occurring. BTW, because financial institutions have done such a good job at changing their deposit agreements, many of the losses are pushed to corporate customer scenarios.
• Look for financial institutions to finally get to real-time check fraud prevention! Today most systems involve day-two processing! New technologies can help innovating banks address check cashing, split deposits and deposit fraud. Finally!
• BAI just released their Executive Report for “A Look Ahead to US Retail Banking in 2017”.  BAI is pretty protective of their information, so we can’t disclose the numbers, but it’s a very interesting perspective as they interview many consumers as a baseline for their conclusions. Interestingly, younger consumers visit bank branches more than one would think. Sure, savvy mobile users will do most of their business online, but in major metro areas, even in Las Vegas, branches are still very busy at key times.