Payments
Pacesetters
Community banks are
strategic and innovative
in pursuing electronic
payments services, ICBA
survey shows
Call community banks the pac-
esetters of the financial- ser-
vices payments world. Guided
by a need to attract and retain
low-cost deposits as much as by
a desire to improve efficiencies
and create new revenue streams,
ICBA members have remained
highly responsive and adaptive
to continual change in their
payments operations during the
past two years, even during bad
economic times. That’s a big-
picture finding from the
2009 ICBA Community Bank
Payments Survey, a biennial
nationwide survey of commu-
nity bank payments operations.
By Nicole Leigh Swann
www.icba.org ICBA IndependentBanker 35
This year’s ICBA Community fraud,” he notes. “At the end of lion in assets offer merchant RDC
Bank Payments Survey shows that the day, the value of payments versus 32 percent of those with
even in this challenging economy, should include the customer rela- less than $100 million in assets.
community banks are increasing tionships that are obtained or pre- “Many community banks now
their investment in payments served by offering the product.” offer merchant RDC to strengthen
products and services,” says Case in point is the rapid their relationship with existing
Viveca Ware, ICBA senior vice adoption of merchant remote business customers,” he says. “But
president of payments and tech- deposit capture (RDC), he says. RDC is also an opportunity to
nology policy. “It’s evident that According to the survey, 62 per- acquire new customers.”
most community banks now cent of community banks offer
understand the benefits their merchant RDC—up 41 percent The fraud component. Despite
investments in payment technol- debit’s popularity, outside fraud
ogy bring to operational efficiency “Card-based transactions associated with it is a pain point
for both the bank and the have an interchange revenue for community banks. Debit cards
customer.” component, which more than have been hit particularly hard,
Specifically, 52 percent of com- offsets processing costs.” according to the survey, with
munity banks surveyed increased 91 percent of surveyed banks
their payments-related spending since 2007, with another 16 per- having had to reissue debit cards
during the past two years, and cent planning to do so by 2011. to their customers due to fraud
only 11 percent decreased spend- RDC adoption rates are strongest during the past two years and
ing. “The environment today is among the largest community with 78 percent of those banks
such that interest-rate margins banks, Whaley says; 97 percent of suffering a monetary loss. Check
are squeezed,” says Bruce Paitz, banks with more than $500 mil- fraud is also a concern, with 56
director of eBanking, Pinnacle
Data Services, a data-process-
ing affiliate of Pinnacle Bank in
Lincoln, Neb. Pinnacle Bank has Addressing Payments Risk/Fraud
issued 16,625 credit cards and
70
89,570 debit cards to customers.
“Banks are looking for nonin-
terest income, and there’s still a
Percentage of Surveyed Banks
60
16%
Significantly
97%
significant amount of money to
be made with debit-card transac-
89%
84%
87%
50
82%
tions, for example.”
80%
80%
Card-based transactions have
76%
49%
72%
an interchange revenue compo-