40% of small-to mid-size banks in North America are not happy with their current ACH system according to a survey by Fundtech. In the survey of 70 payments professionals, the respondents cite inadequate reporting (50%) and insufficient automation (27%) as the two main areas for improvement.
The survey identifies the reasons why ACH system upgrade is an area of focus for small to mid-size North American banks in 2009. Revenues are increasing – 60% of banks have seen an increase in revenue over the last 12 months – and 48% of respondents recognise the potential of ACH systems as a source of revenue and competitive advantage. However, the need to meet market, regulatory and economic demands, and therefore the need for more sophisticated reporting and functionality, is putting pressure on banks’ existing ACH systems.
Risk management is the most popular top consideration when selecting or upgrading ACH systems, with 28% of respondents making this their only priority, followed by reducing operating costs (23%), increasing automation (21%), and increasing service fee revenue (16%). The survey also found that almost 30% of respondents are not yet ready for the International ACH Transaction (IAT) deadline in September 2009.
Andy Schmidt, research director, global payments at TowerGroup said: “TowerGroup believes ACH transactions will grow at a compound annual rate of 7% through 2012 as payers continue their migration towards electronic payment types. Competition and regulation will also increase as banks search for revenue and regulators demand greater transparency. Therefore, North American small to mid-size banks looking to compete with top-tier institutions and increase their commercial client base must focus on providing robust treasury management solutions leveraging sophisticated ACH technology focused on risk management and expanded reporting services.”
The survey, conducted by an independent firm between November 2008 and February 2009, surveyed 70 respondents with job titles related to either ACH or payments processing within small to mid-size banks in North America. The majority of respondent organisations own under US$3bn in assets.
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