Current wholesale payments landscape in banking (Market Focus)

Current wholesale payments landscape in banking (Market Focus)

Introduction

As payments margins continue to be squeezed and wholesale payments products and services continue their trend of commoditization, this industry is currently faced with the issue of finding innovative ways of remaining profitable in such a highly competitive environment.

Scope

*Payments processing is moving at different speeds in Europe and North America.

*The wholesale payments market is still comprised of highly fragmented systems.

*Falling margins and regulations are increasing pressure on banks to improve efficiency.

Highlights

Payments have been the 'problem child' in wholesale banking for some time. The significant cost burden of payments functions, combined with increasing commoditization of related products and declining margins, have gradually changed the status of payments within banks.

Once the foundation of the wholesale banking industry, payments are now in the position of being viewed as still essential, yet at the same time a weight on overall profitability.

This circumstance, together with the now strengthened focus on achieving long-term operational efficiency and improved profitability in the wholesale banking industry, has in recent years given rise to targeted efforts to address and re-engineer payment operations globally.

Reasons to Purchase

*Vendors can view the wholesale payments marketplace from a top-level perspective.

*Vendors can view and understand what key issues this industry is faced with at present.

DATAMONITOR VIEW 1
CATALYST 1
SUMMARY 1
ANALYSIS 2
Payments processing is moving at different speeds in Europe and North America 2
The external environment - clearing and settlement systems in Europe and North America 2
Real-time gross settlement (RTGS) 2
Deferred net settlement systems (DNS) 3
Automated Clearing Houses (ACH) 3
The wholesale payments market is still comprised of highly fragmented systems 4
Domestic payments require the debiting/crediting of accounts in the same currency 4
Cross-border payments are increasingly becoming 'domestic' transactions inside the EU 5
Falling margins and regulations are increasing pressure on banks to improve efficiency 6
Product innovation is critical if banks are to remain competitive 8
Recent and ongoing changes in the external payments infrastructure are creating more opportunity for banks 9
APPENDIX 10
Definitions 10
EURO1 10
STEP1 / STEP2 10
SWIFT 10
TARGET / TARGET2 10
TWIST 10
METHODOLOGY 11
Further reading 11
Ask the analyst 11
List of Figures
Figure 1: Segmenting wholesale payments processing 4
Figure 2: Fragmentation of processing platforms in banks 6