Banks need to protect themselves in the new world of payments

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"In the new world of payments, today's banks need to explore new avenues very quickly," says a report from Efma, the non-profit retail banking association, and Sopra Banking, a financial services software company.

The report, titled 'Banks faced with PSD2: around payments and beyond, digital wallets and new services', which was released at Efma Retail Payments Week (22-26 September 2014) , says that, in order to protect their income flow and continue to create added value, banks need to create a new offering and new services for their retail customers and merchants; pursue collaborative community initiatives between banks to create innovative payment services; and share value with third party providers by designing services that they can sell to them.

The success of these new approaches will involve banks entering a new era of opening up their systems; cooperating with players involved in the field of payment services; and putting in place genuine innovative ecosystems focused on the end customer.

"Like many other business sectors, the banking industry is undergoing far-reaching changes, mainly driven by new technologies, changing consumer behavior, regulatory changes and the need to cut costs," explains Bernard Ramé, Head of Payments and Cards at Sopra Banking Software. "While payments are critical for their direct and indirect income, banks, the incumbent players on this market, are seeing their margins cut by the arrival of new, specialized market entrants. The time is right for banks to take initiatives in response to these disruptors and adapt or reinvent their models to protect their place in this new world of payments."

"It is not that easy to break with old business models, but banks are equipped to meet these challenges," says Patrick Desmarès, Efma's CEO. "They will have to adapt their offering to find growth drivers in this new world of payments, for example by relying on digital wallets and new services."

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