US Financial Institutions and Digital Payments: Digital Research Panel Series Part 3

by Zilvinas Bareisis,  Jean-Marie Ubigau, January 22, 2016
North America


This is the third of a series of reports based on Celent's Digital Research Panel. Celent surveyed 42 panelists about their priorities and experience to date in digital payments.

In Celent’s first Digital Panel, banks and credit unions prioritized digital payments as a key area for further exploration. Furthermore, October 2015 had two important milestones in US payments: the one-year anniversary for Apple Pay, and the liability shift deadline for EMV. As a result, our third Digital Panel focuses on digital payments. The survey was administered in November 2015.

Selected key findings of the report include:

  • Most participants recognize the importance of digital payments, but invest only to be fast followers and to stay on par with the competition.
  • Becoming and staying top of wallet dominates the participants’ concerns about digital payments. The participants are also worried about Apple and other technology giants changing strategy and taking on a more dominant role in digital payments.
  • Most financial institutions believe they should offer digital payments under their own brand. Yet, in practice, they are more likely to engage around third party wallets than explore their own Host Card Emulation (HCE) wallets. However, they do push forward with peer-to-peer (P2P) solutions, with 51% having an offering in production.
  • Visa Checkout and MasterPass have seen limited traction among the survey participants so far, but as many as 31% of respondents consider participating in CurrentC.
  • Only the most optimistic 6% expect more than 20% of in-store transactions initiated via mobile in three years, but 42% expect to get there in five years.
  • 29% of survey participants finished migrating all credit cards to EMV, while 17% are done with debit. However, many others are just starting with debit and prepaid: 71% of respondents migrated less than 20% of their debit and prepaid cards.
  • 63% of the responding credit unions replaced their credit cards as “big bang” (i.e., all at once), compared to 35% of banks. Accelerated migration is the dominant EMV strategy for debit cards, while prepaid cards tend to be replaced at expiry.

“It is clear that digital payments are very important to many financial institutions,” says Zilvinas Bareisis, a senior analyst with Celent’s Banking group and coauthor of the report. “However, it appears to be an area in which many are struggling to determine how much and where to invest. Banks and credit unions should look where customers are experiencing most friction today, as it is an area where the financial institutions will be most vulnerable to attack from third parties. They should also accelerate EMV migration, especially for debit cards, to free up resources for digital payments.”

This 36-page report contains 20 figures.

Celent created the Research Panel to examine financial institutions’ attitudes, progress, objectives, and priorities around Digital. We recruited panelists from our client base and from industry contacts (respondents do not have to be Celent clients to participate). Celent is accepting additional requests for membership in the panel and expects to field ongoing research through 2016 with surveys roughly every other month. If you’re a banker and would like to participate in future Digital Panels, please click here to fill out a short application.

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned operating unit of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
Tel: +1 212 345 1366

Europe (London)
Chris Williams
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
Tel.: +81 3 3500 3023

Table of Contents

Executive Summary



Key Research Questions





Digital Payments in Context



Importance of Digital Payments



Investment Approach



Competing Priorities



Expected Benefits



Key Concerns



Vision for FI Role in Digital Payments


Experiencing Digital Payments



Experience with Apple Pay



Experience in Digital Payments More Broadly



Expectations Regarding Pace of Consumer Adoption


EMV Migration Update



EMV Migration Process, Strategies, and Expectations



Use of Contactless and Offline PIN



Attitudes to EMV


Observations and Recommendations


Next Steps



How to Use This



Recruiting More Panelists


Appendix I: Panel Demographics


Appendix II: Survey Instrument



Digital Research Panel #3


Leveraging Celent’s Expertise



Support for Financial Institutions



Support for Vendors


Related Celent Research


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