As a multiplicity of new payment capabilities come to the fore, banks need to prioritise venture capital investment, accelerator programmes and focus on the deployment of new technologies through allegiances with fintech firm to cope up with the drastic technological change in the payments industry, according to a new report from BNY Mellon.
The report titled "Innovation in Payments: the future is fintech", says technology holds significant potential to transform how consumers and clients initiate and process transactions.
It’s no longer just a case of new currencies or faster payment methods, but an entire rethinking of how transfers of any "value" might be undertaken.
According to the report, about 4,000 fintech start-ups are now active while global investment in fintech ventures has tripled in 2014 to $12bn.
The financial services sector also comprises one of the highest ratios of IT spend as a proportion of revenue, but over three quarters of this is projected to be in maintenance instead of new services, the report added. Banks need to redress this imbalance to survive in this changing landscape.
BNY Mellon treasury services business CEO Ian Stewart remarked: "While the banking industry is traditionally conservative about change, any hesitation or ambivalence here could be costly.
"In order to position themselves at the centre of the payments industry of tomorrow, banks must act today to understand, interact with, and cherry-pick from the full smorgasbord of fintech developments."