More than two-thirds of global banks will invest in technologies such as digital wallets and near-field communication (NFC) technologies to update their payment systems, as demand becomes impossible to ignore.
But banks will need to invest in the core IT that underpin payments if it is to work, such as settlement and authorisation systems.
Research of 6,500 senior IT decision-makers, including those at banks, said demand for different ways to pay and the increasing use of mobiles to make payments is making banks invest in payment technology.
The Ovum ICT Enterprise Insights study said many banks that had a conservative approach to payment system upgrades “are set to finally make their moves into the digital-wallet space.”
Some 23% of respondents in banking are making mobile-wallet technology their top investment priority, according to the research. Mobile proximity payments, incorporating NFC and quick response (QR) codes held the second-highest priority level at 17.6%, it revealed.
The report said technology that enables immediate payments is a top-three priority for almost half (48%) of banks.
More on alternative payments
To cope with the more complex and diverse ways of making payments, banks are investing in the underlying switching, clearing and settlement systems.
A total of 42.2% of banks said payment switching and authorisation technology investments are a priority, while 21.1% said they are top priorities among infrastructure projects.
When it comes to clearing and settlement, 49.2% said investing in technology is a priority and 18.4% said it is top priority.
Ovum analyst Gilles Ubaghs said payment has now reached a critical inflection point, regardless of region.
“Banks realise the importance of enabling payments innovation and diversification, which in turn is driving much-needed infrastructure that is both flexible and configurable," he said.
"Vendors themselves should now focus on implementation and modernisation strategies for their own critical payments infrastructure with flexibility in mind, given the diverse range of payments technologies now emerging.”
Mobile banking on the rise
The fact banks have accepted they need to invest is not surprising given the rise in mobile devices being used to bank.
About 214 million people in Europe will use mobile devices to do their banking by 2018, according to a study by Forrester Research.
Some 99 million people in Europe will bank on mobiles, while 115 million will use tablet devices.
It is not only the number of users that is increasing, but also the services being accessed. As familiarity with mobile banking apps grows, people are expected to complete more transactions via their devices, said Forrester.
A recent report from Juniper Research said consumers will be making up to 195 billion mobile payments each year by 2019. The firm predicts purchases on tablets and mobiles will increase steadily over the next few years, after 72 billion mobile transactions were made in 2014.