Accenture Banking Blog

Most payments leaders who participated in our Growth in Payments research think digital payments could overtake plastic cards and cash by 2025. It’s clear that they expect a surge in payments innovation, different consumer behaviors, shifting regulations—and new payments growth. And like all payments players, middle market banks want to grab their share of it. 

I’m excited about this research because it has important takeaways for middle market banks. That’s why I went straight to the source to tease them out. Margaret Weichert is the co-author of this research report and leads our North America Payments practice. She has more than 25 years of payments experience across banks, processors and in consulting. She’s also an inventor with 14 successful payments patents.  

Here’s part of our conversation about how middle market banks can win in payments.  

Our research focuses on what banks can do to capitalize on the forces of change shaping payments today. What trends are especially relevant to middle market banks? 

Margaret: For middle market banks, that sweet spot for payments growth is in small business and consumer banking. I think the rising rate environment will influence how middle market banks think about payments value propositions in these areas. With fee income and interest income on card products, payments can be an important part of a portfolio strategy designed to manage volatility. 

But beyond the financial opportunity here, payments can be a 360° Value play for middle market banks. This means that in addition to a positive financial impact, providing payments services can help banks deliver new value in areas like sustainability, inclusion and diversity, and even talent. This holistic understanding of value tracks perfectly with the community-minded spirit of middle market banks. 

I couldn’t agree more. I’ve always viewed relationships as the cornerstone of the success of middle market banks. How does the research apply, considering these relationships?  

Margaret: Middle market banks are completely connected to Main Street. They ground product development and their service ethos in what people and businesses in their communities want and need. When designing new payments value propositions, middle market banks can (and should) leverage these relationships. But they must acknowledge expectations are different and evolving.   

During the pandemic, customers got used to spending less time in bank branches. Services like virtual assistance and electronic alerts helped them complete transactions and feel connected. We also saw small business owners adopting new point-of-sale technology so they could pivot to curbside pick-up and delivery services. If middle market banks can align their payments strategies to these customer expectations, their relationships will continue to offer a competitive advantage.  

Imagine that a small business owner has a card from a national bank and wants to get another one. As rates rise, would she want to do business with a massive institution that’s going to change policies on her or a bank that she knows—and that knows her?  

Given their strong relationships, can middle market banks ignore threats from digital disruptors?  

Margaret: No, unfortunately not. Digital disruptors are a competitive threat that no bank can ignore. However, it’s not just digital natives that are “owning” payments growth. Our research found a small group of incumbents that are growing faster than the market.  

So I tell middle market banks to track all their competitors. They should be updating their analytics and taking broader views consistently, cycling insights back into strategy and product development. If they aren’t looking at outbound to bigtech wallets and neobanks, they should be.  

I’ve said before that payments modernization is a once-in-a-lifetime opportunity for middle market banks. What successes are you seeing them have? 

Margaret: Banks are making short-term changes and planning for the long term, which I think is smart. We worked with one bank that didn’t have a centralized payments processor, which made them dependent on manual workarounds and caused a host of technical and operational issues. We created process maps for ACH and wire transfers, which had an immediate impact on ways of working. We also created a plan that prioritizes future payments improvements by business impact.  

What’s your advice for middle market leaders that are ready to expand their payments services? 

Margaret: Middle market banks should evaluate their payments product mix to determine if they have the right products to stay relevant and connected to their customers in a digital world. They should determine if their technology gives them the flexibility to add new offerings at the pace of the market. And it goes without saying that they should link their payments strategy to their overall bank relationship strategy.    

To learn more about how middle market banks can develop payments value propositions that drive new growth, please contact me here or connect with me on LinkedIn. 

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