TowerGroup Identifies Imperatives for Building Payments Businesses in 2004

While the payments processing arena remains a vital strategic asset for financial institutions, most bankers drastically undervalue its worth and relegate it to the role of an expensive but necessary cost-center, according to a new survey by TowerGroup. The report found that the payments franchise is often categorized as a commodity-level service with little competitive potential. This is despite the fact that payments underpin all other lines of banking business and represent the foundation of a bank’s relationship with its customers – whether those customers are consumers or major corporations. ‘The reasons for rethinking the value of the payments processing franchise are myriad,’ said David Medeiros, director of the Global Payments practice at TowerGroup. ‘Payments processing is a key element of customer support and satisfaction. It drives the sale of other banking products and services, it generates an enormous amount of revenue, and it represents a crucial factor for competitive market differentiation.’

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