Small to mid-size US banks continue to represent a solid market
for technology vendors, confirms the findings of a survey conducted
on behalf of transaction banking technology vendor Fundtech.
The survey of 70 payments professionals from
smaller banks revealed that 60 percent were seeing increasing
revenue from automated clearing house (ACH) transactions over the
past 12 months while 48 percent see a potential for revenue growth
and gaining a competitive advantage over larger banks. The majority
of respondents represented banks with assets of under $3
billion.
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“This is the time for small to mid-size
banks,” stressed George Ravich, Fundtech’s chief marketing officer.
“With larger banks simply fighting for survival in these difficult
times, their smaller counterparts must move quickly to seize market
advantage.”
However, to seize the opportunity effectively
many smaller banks will have to give serious consideration to
renewing or upgrading their ACH systems. Based on the survey’s
findings, 40 percent of small-to mid-size banks are dissatisfied
with their current ACH system.
The main areas of dissatisfaction are
inadequate reporting and insufficient automation, cited by 50
percent and 27 percent of respondents, respectively. In addition,
the survey revealed that almost a third of respondents are not yet
ready for the September 2009 International ACH Transaction (IAT)
rule deadline.
Under the new IAT rule laid down by the
National Automated Clearing House Association, US banks will be
required to identify all international ACH transactions so that
they can be screened for unlawful entries.
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By GlobalDataEmphasising the need for optimum ACH
performance, consultancy TowerGroup’s research director, global
payments, Andy Schmidt commented: “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.”
Schmidt noted that TowerGroup forecasts that
ACH transactions will grow at a CAGR of 7 percent between 2009 and
2012.
