New Study Reveals Increased Focus on Innovation in Payments as Financial Institutions Seek Competitive Edge
Comprehensive survey of how financial institutions bring to market new products and features uncovers obstacles and key drivers of success
BOSTON—(October, 24, 2017)—Released today, the PYMNTS Bank Innovation Readiness Index, an i2c collaboration, measures the intensity, focus, and ability of Financial Institutions (FIs) to bring to market new payments products and innovative features. Payments innovation remains a key focus for FIs as they fight to stay competitive and keep ahead of evolving consumer needs, and having flexible technology and payments infrastructure a key indicator of success. 70% of FIs with flexible IT infrastructure said their recent innovations were extremely successful, more than twice the average.
The Bank Innovation Readiness Index is based on analysis of a survey of 214 FIs — smaller than the top 25 FIs. The sample was divided almost evenly across commercial banks, community banks and credit unions.
The driving force behind reported innovation within these FIs is first and foremost, the customer. 63% said fulfilling customer needs as the number one motivational factor for rolling out innovative products. Budgets for implementing new product and feature innovation are robust: 54.2 % of FIs report having more funding for innovation than in other business units.
Two thirds of FIs either focused on innovations involving new products or on a combination of new products with new features. Larger FIs in the study report focusing more on rolling out new products, while smaller banks seem to be fast followers. Among smaller banks, 42.5 % say they are quick to catch up with the market and 37.9 % say they roll out new products before others.
“The failure to innovate is failure to differentiate, and the failure to differentiate means failure to garner profits,” said Amir Wain, founder and CEO of payments processing and solutions provider i2c. “Innovation works well when it is centered on discovering and solving high-value problems. Technology on its own has little standalone, distinctive value. What makes a technology or a product innovative is the ability of a bank to monetize and leverage it as a competitive advantage.”
PYMNTS Bank Innovation Readiness Index Fast Facts:
- 70% of FIs with flexible IT infrastructure said their recent innovations were extremely successful.
- 36.3% of FIs said information technology systems made innovation hard or very hard.
- 63.0% of FIs identify meeting a customer need as the main driver for innovation.
- 54.2% of innovations coming in the next three years will focus on payments technology.
- 56.5% of innovations in the last three years have focused on digital wallets.
- 40.0% of top performing FIs use a sandbox for testing innovation, while 83.6% of all respondents said their core processing systems lacked that functionality.
The Bank Innovation Readiness Index also includes an examination of the 15 “top” and 15 “bottom” performers based on the survey responses.
To access the complete Bank Innovation Readiness Index, please click here.
PYMNTS is where the best minds and the best content meet on the web to learn about “What’s Next” in payments and commerce. Our interactive platform has reinvented the way that companies in payments, commerce and retail share relevant information about initiatives that make news and shape the future. Our data and analytics team includes economists, data scientists and industry analysts who work with companies to measure and quantify the cutting-edge innovation of this new and dynamic commerce ecosystem.
About i2c Inc.
From its Silicon Valley headquarters, i2c provides smarter payments and integrated commerce solutions that financial institutions, corporations, brands, and governments around the world rely on to deliver high impact, personalized experiences today’s consumers expect. i2c’s single, global cloud-based platform supports virtually any card payment program in plastic, virtual, or mobile form. Our customers use the i2c Agile Processing platform to deliver profitable credit, debit, and prepaid solutions that meet the highly-differentiated needs of cardholders in 216 countries and territories. For more information, visit www.i2cinc.com.
Alexander Terzian, +1 774-219-6132