Two part series Examines Evolving Consumer Payments
and the Impact on Bank Delivery Channels
Abstract
In a two part series Evolving US Payment Systems and Bank Delivery Channels:
Death of the Teller... Again? - Mercator Advisory Group' s Bob Landry, vice
president, Banking Group Advisory Services provides a comprehensive overview
of the growth and trends over almost three decades detailing the various
market drivers impacting consumer payment products and bank delivery channels.
The research series evaluates how major shifts in consumer payments have
reordered the structure and roles of bank delivery channels. Within the series
Mercator Advisory Group projects the impact of payment trends on consumer
payment transaction and dollar volume and models delivery channel capacity to
predict how channels will change from 2010 out to 2015.
Highlights of the series include:
The move toward electronic based payments will continued unabated and will
constitute 68% of consumer payments by dollar volume in 2012 and almost 75% by
2017. Checks are the big loser while cards will become the leading form of
non-cash payment in 2012.
Branches will be the focal point for significant change as check related
transaction volume slows and sales and service capacity is expanded to meet
the needs of retiring baby boomers and cement relationships with profitable
customers.
Online banking will show strong growth and matures into the primary customer
interaction channel. Mobile banking will grow at over 50% CAGR as smart phone
adoption accelerates and security concerns are addressed.
Cash usage is holding steady as a result of the recession but the convenience
of card payments and the increasing acceptance of cards for low dollar amounts
will result in a slow decline.
Contact center agent capacity will increase to support front line sales and
service as well as support other channels including chat and email for online
banking and provide product expertise to branches and online banking using
teleconference and video collaboration.
"Although cash and checks remain widely used in the US, other forms of payment
continue to gain market share, with businesses and consumers adopting more
convenient and potentially less costly electronic-based payment products. The
movement from paper based payments to electronics accelerated over the past
decade resulting in a dramatic reversal of roles. Cash and checks fell off
their perch tumbling from 60% of dollar volume in 2002 to a projected 32% in
2012 while electronic payments zoomed by them to capture 68% of dollar volume.
With this dramatic swing in volume you would expect the transaction capacity
of the primary bank channels supporting checks and cash to decline." Bob
Landry, vice president, Banking Group Advisory Services comments. "But banks
added almost 17,000 branches and 74,000 additional ATMs and cash dispensers
were deployed - a 17% increase in delivery capacity since 2002. And banks plan
to add more. Are we over branched? Can we encourage our customers to use
electronic channels and reduce the number of branches and ATMs? How do we
balance cost reduction with customer experience quality and satisfaction? This
report addresses these questions from a fresh perspective, provides
alternative solutions and offers an integrated multi-channel approach to a key
strategic issue."
The first report in the series Payment Trends Driving Bank Delivery Channel
Change tracks the development of consumer payment products, identifies growth
trends, estimates future volume and transaction growth to 2017 and identifies
how bank delivery channels support payment transaction execution, sales and
customer support.
One of the exhibits included in the Payment Trends Driving Bank Delivery Channel Change report:
The second report in the series, Bank Delivery Channels Evolve to Support
Electronic Payments provides an analysis of how delivery channels have
evolved, defines their role in consumer payments, estimates present and future
channel capacity, and evaluates how each channel' s capabilities and capacity
will change by 2015 in response to payment changes.
One of the exhibits included in the Bank Delivery Channels Evolve to Support Electronic Payments report:
Payment Trends Driving Bank Delivery Channel Change report contains 36 pages
and 19 exhibits.
Bank Delivery Channels Evolve to Support Electronic Payments contains 42 pages
and 20 exhibits.
Companies covered in this series include: Western Union, PayPal, Wal-Mart,
Diners Club, MasterCard, Visa, American Express, Discover, Blockbuster,
SunTrust, Wells Fargo, Wachovia, AOL, Apple Inc., Commerce Bankcorp, TD Bank,
Bank of America, Merrill Lynch, Prudential Securities, Edward Jones
Investments, USAA, Umpqua, WAMU/JP Morgan Chase, Barclays and Smarty Pig.
