THE GREAT

PAYMENTS DISRUPTION
TABLE OF CON T E N TS The Great Payments Disruption 21

Introduction
2
The dawn of a new banking landscape

Section 1
3
Banking is emphatically digital-first, but omnichannel touchpoints are still key

Section 2
5
Fee structures and flexible payments can provide the edge in the race for customers

Section 3
7
Contactless payments could see greater growth with more digitally issued cards

Section 4
10 Bank customers are security-conscious — and it’s on banks to demonstrate
how accounts and payments are secure

Conclusion
13
Break through with secure digital excellence
I NTRODU C TION The Great Payments Disruption 2

THE DAWN OF A NEW

BANKING LANDSCAPE
Take a look around: We’re living in the Great Payments Disruption.

The disruption for banks and credit unions is coming from multiple angles, with
contactless payments becoming more common and cryptocurrencies surging in
popularity. New fintech players emerge every day and competition is heating up as
more challenger banks enter the fray. The banking industry has barely had time to
keep up with these changes as the foundation of the payments landscape transforms.

This raises the issue: How has this disruption impacted consumers?

To answer this question, Entrust surveyed 1,350 consumers from nine countries
who have made or received digital payments in the past 12 months to understand
their sentiment, preferences and habits during this disruption of payments1. The
report assesses where the banking industry stands in 2022 and uncovers future
considerations as the Great Payments Disruption continues.

1
See Methodology section for further information on the survey audience.
S ECTION 01 The Great Payments Disruption 3

BANKING IS EMPHATICALLY
DIGITAL-FIRST, BUT OMNICHANNEL
TOUCHPOINTS ARE STILL KEY
Digital is the consumer banking standard — and it’s not even close.

Eighty-eight percent (88%) of respondents said they ONLINE BANKING

prefer to do their banking online in some form. But
REIGNS SUPREME
“online” doesn’t tell the entire story — the vast majority
of consumers are using their bank’s app and barely 88% OF CONSUMERS
anyone is going to the branch. Fifty-nine percent of all
PREFER TO DO THEIR
respondents prefer to bank online while 29% prefer to
bank online on their desktop web browser (Figure 1).
BANKING ONLINE

Figure 1. Where do you most often do your banking?

Online on Online on your In-person In-person at an On a phone call

your desktop bank’s mobile at a branch interactive teller with your bank
web browser phone or tablet app machine (ITM)

Overall 29% 59% 8% 3% 1%

United States 22% 63% 11% 3% 1%

Canada 53% 41% 3% 3% 1%

United Kingdom 27% 59% 10% 4% 0%

Germany 39% 48% 11% 2% 1%

Saudi Arabia 29% 60% 5% 5% 1%

United Arab Emirates 29% 61% 7% 1% 1%

Singapore 23% 65% 8% 3% 1%

Australia 31% 62% 7% 0% 0%

Indonesia 9% 71% 9% 6% 5%
SECTION 01 The Great Payments Disruption 4

Although consumers globally prefer Ways consumers 61%

online banking tools, that doesn’t mean prefer to open Digitally
bank accounts
they aren’t engaging with their banks
25%
via physical footprints: Seventy percent
In-person at a branch
(70%) of respondents said they’ve used
an interactive teller machine (ITM) in the 14%
past year. No preference

WHAT DO WE THINK?
Even accounting for geographical differences, banks that aren’t prioritizing
digital-first experiences will not resonate with today’s consumers. As more
fintech players enter the space, competition will only raise the standard for
how good your digital offerings must be.

This is just as true for remote banking as in the branch — consumers expect
seamless digital integration and instant service when they interact with the
bank at an ITM or the desktop web portal.

Our survey also showed this shift to digital mediums rapidly changing on
a generational level — Gen Z, millennials and Gen X bank most often on
mobile apps while baby boomers and the silent generation most often bank
on desktop — and these preferences will continue to evolve as younger
generations gain more purchasing power.
S ECTION 02 The Great Payments Disruption 5

FEE STRUCTURES AND FLEXIBLE

PAYMENTS CAN PROVIDE THE EDGE
IN THE RACE FOR CUSTOMERS
The top five most important factors that respondents consider when choosing
a bank and the top five factors that would make respondents consider changing
their banks came down to lower fees, digital solutions and security — which are
all made possible by digital transformation (Figure 2).

Figure 2. Most important factors consumers consider when choosing a bank vs. Factors
that would make consumers consider changing banks

What are the most important factors Which of the following factors would
you consider when choosing a bank? make you consider changing your bank?

64% 44%
Online banking capabilities Lower/no recurring fees

54% 41%
Mobile app availability More flexible payment options

44% 40%
Flexible payment options Access to a mobile app or a better mobile app

36% 39%
Account security More advanced online banking capabilities

34% 26%
The amount of recurring fees Better account security measures

The decision-making factors from respondents And the conditions are prime for this to happen:
highlight that consumers want high-quality
digital banking at a fair price, which is good • 72% of global respondents2 said they
news for challenger banks. would consider using a branchless online
banking service/challenger bank for their
With challenger banks like Chime and Revolut banking (Figure 3).
offering hundreds of dollars in fee-free overdraft
protection and unlimited foreign exchange with • The global market size of challenger banks is
no added fees, these banks could further their projected to grow at an average annual rate of
current disruption by encroaching on traditional nearly 48% until 2028 to 722.6 billion U.S. dollars.
banks’ market share.
S ECTION 02 The Great Payments Disruption 6

Figure 3. Respondents that would consider using

PAYMENTS a branchless online banking service/challenger
WITH CRYPTO? bank for their banking, broken down by country3

52% of respondents said they

United States 86%
would consider using digital
currencies like Bitcoin, Ethereum
Canada 53%
or central bank digital currency
(CDBC) for payments.
United Kingdom 87%
Banks should continue to adapt
their offerings as more customers Germany 71%
look to add cryptocurrencies to
their payments options. Blockchain Singapore 69%
technology also offers fast payment
processing and 27% of respondents Australia 66%
said digital money transfer capabilities
were one of their most important
Indonesia 75%
factors when choosing a bank.

WHAT DO WE THINK?
Respondents’ top factors for choosing a bank and changing their bank illustrate
the game of inches and centimeters that banks must play in today’s market.

Challenger banks are resonating with customers. And while the worldwide market
size of large banks dwarfs that of the challenger bank sector, the willingness of
customers to consider challenger banks can’t be ignored. The average lifetime value
of a banking customer is around $4,500 U.S. dollars, so the loss of customers to
fintech disruptors could add up over time. Additionally, Open Banking regulation
is gaining global traction, which could level the playing field among banks as
customers consider switching to new banks that offer better data privacy rules.

The bottom line: Expect traditional banks to compete with each other and other
challenger banks by investing in digital and security offerings that speak to the
factors that matter most to customers, including seamless omnichannel experiences
and secure and flexible payment options. We also anticipate banks to take inventory
on creative ways to generate revenue outside of fees. For example, digital banking
opens up the opportunity for new non-fee-based revenue strategies like advertising.

2
Saudi Arabia and the United Arab Emirates were not included in this question as the countries don’t
have any significant challenger bank offerings
3
Canada likely saw lower willingness to use a challenger bank because the country is limited in its banking
choices, digital-based Canadian banks similar to challenger banks are still run by large bank corporations
S ECTION 03 The Great Payments Disruption 7

CONTACTLESS PAYMENTS COULD

SEE GREATER GROWTH WITH MORE
DIGITALLY ISSUED CARDS
Respondents listed credit/debit cards with contact chips as their top preferred
payment method, but contactless credit/debit cards were a close second. While
respondents indicated a strong preference for contactless cards, contactless
mobile pay was significantly less popular (Figure 4).

However, this lack of contactless mobile pay Furthermore, Canada had the highest use
uptake could be because only a slight majority of cash out of every country surveyed at 41%
of respondents (53%) said they’ve received a of respondents. This is likely because most
digitally issued debit or credit card from their people in Canada use cash on transactions to
bank or credit union. avoid sales tax and sellers prefer cash to avoid
paying taxes on revenue (one poll found that
On a geographic level, preferred payments only 84% of Canadian shoppers admitted they pay
become more nuanced (Figure 5). in cash for this reason).

For example, while the U.S. has made major gains Additionally, Indonesia had the highest usage
in contactless payment usage, it’s a late-stage of e-wallets, crypto wallets and prepaid digital
adopter in comparison to the rest of the world — wallets at 65% of respondents. This can be
most card carriers did not use contactless cards explained by Indonesians’ historic consumer
on a wide scale until the late 2010s, while receptivity to new offerings in the digital
U.K. cardholders have used contactless economy and the government’s rapid regulatory
cards since 2007. approval of dozens of e-wallet platforms.
S ECTION 03 The Great Payments Disruption 8

THE GLOBAL RISE OF Figure 4. Which of the following are your most preferred
CONTACTLESS CARDS payment methods to use?

Nearly half of all respondents 50%

Credit/debit card with chip
globally (48%) prefer to pay
with contactless credit or Contactless credit/debit card 48%
debit cards
Credit/debit card with magnetic stripe 32%

Contactless mobile pay 30%

Cash 24%

E-wallet/crypto wallet/prepaid digital wallet 22%

Check/cheque 2%

Figure 5. Most preferred payment method by country

Credit/debit Contactless E-wallet/crypto Peer-to-peer Credit/debit

card with chip credit/ wallet/prepaid payment apps card with
debit card digital wallet magnetic stripe

United States

Canada

United Kingdom

Germany

Saudi Arabia

United Arab Emirates

Singapore

Australia

Indonesia
SECTION 03 The Great Payments Disruption 9

WHAT DO WE THINK?
Digitally issued cards could be a significant customer growth area for banks
and credit unions considering that flexible payment options were a top factor
for respondents when both choosing a bank and considering a bank change.
This notion is especially true in the United States, where we expect contactless
payment usage to continue skyrocketing as it has over the past few years.

For banks, investing in a digital card solution could quickly meet this consumer
desire while transforming their card portfolio. This technology also provides
customers increased control, security and flexibility when monitoring spend
and managing both physical and digital cards.

A digital card solution enables customers to immediately receive payment

credentials from a bank’s mobile app, which can be an effective selling point
considering almost two-thirds of survey respondents prefer to open a bank
account digitally. This preference is especially high among Gen Z (65%),
millennial (69%) and Gen X (54%) respondents.

But banks shouldn’t neglect in-branch solutions either. A quarter (25%) of

consumers surveyed still prefer to open their bank accounts in a branch and
15% have no preference between online or in-person.

So, banks should also consider an in-branch instant card issuance tool for a total
card issuance offering customers can use when opening an account or replacing
a lost or stolen card. This gives banks the opportunity to accelerate relationships
with their customers, driving differentiation that isn’t available to challenger banks.

In the end, one thing is clear: Consumers want options.

S ECTION 04 The Great Payments Disruption 10

BANK CUSTOMERS ARE SECURITY-

CONSCIOUS — AND IT’S ON BANKS
TO DEMONSTRATE HOW ACCOUNTS
AND PAYMENTS ARE SECURE
Ninety percent (90%) of respondents said they were concerned about the
potential of banking or credit fraud as banking and credit become more digital.

Additionally, many respondents have dealt When it came to account access security,
with the real consequences of bad security: respondents listed username and password,
Forty-two percent (42%) said they’ve been security questions, two-factor authentication
notified of a personal banking or credit fraud and fingerprint recognition as the top account
incident in the past 12 months. access security methods offered.

The result of fraud? Damaged customer loyalty. However, these same choices also represented
More than two-thirds (67%) of respondents the top account access security methods
notified of fraud changed their bank or credit respondents trusted to securely validate their
union as a result. To avoid these potential losses, payments, indicating that consumers likely
it looks like banks will not only need to improve need more education on the security
their security offerings, but also communicate capabilities of more advanced features like
with customers on how advanced technology biometric authentication methods (Figure 6).
keeps their accounts secure.
S ECTION 04 The Great Payments Disruption 11

VICTIMS OF FRAUD =
BROKEN CUSTOMER LOYALTY
67% of consumers notified of fraud
changed their bank or credit union

Figure 6. Account access security methods offered by banks and credit unions vs. Account
access security methods trusted by consumers

What types of account access security Which user authentication methods do you
methods does your bank or credit union offer? trust to securely validate your payments?

80% 59%
Username and password Username and password

58% 51%
Security questions Security questions

43% 46%
Two-factor authentication Two-factor authentication

38% 43%
Fingerprint recognition Fingerprint recognition

27% 34%
Facial recognition Facial recognition

13% 14%
Providing a physical credential for in-branch and Providing a physical credential for in-branch and
interactive teller machine access interactive teller machine access

10% 14%
Voice recognition Voice recognition
S ECTION 04 The Great Payments Disruption 12

WHAT DO WE THINK?
Consumers’ answers about the offerings and account security they trust tell
us two things: 1) Most banks are only offering the basics for account security,
and 2) consumers are unaware of the power biometric solutions could provide
when it comes to account and payments protection.

Given consumers’ massive concerns about fraud and their flight risk of switching
banks when they are victims of fraud, banks and credit unions should consider
investing in high-quality security tools and highlighting the strength of those
solutions to customers for both general banking and payments.

By upping their security postures, banks and credit unions can embrace the
future of their industry. They should consider a security portfolio built on trusted
identities, data and payments. An effective portfolio should feature encryption or
tokenization with strong key protection to safeguard sensitive data. Tokenization
protects a bank’s core financial identities from data breaches by providing a
merchant-specific encrypted token for each purchase. So, if a merchant suffers
a data breach, a customer’s payment information is effectively worthless to hackers.

Banks should also leverage solutions that fight fraud and provide a secure
yet seamless customer experience. Solutions such as passwordless access
and device reputation management tools proactively detect fraudulent activity
in the background without adding more friction for customers. And while banks don’t
need to break down the ins and outs of their security tech to customers,
they should be proactive in letting customers know how their account is
protected through the proven strength of authentication technology like
transaction verification and adaptive authentication.
CO NC LUSION The Great Payments Disruption 13

BREAK THROUGH WITH

SECURE DIGITAL EXCELLENCE
Financial institutions have two pathways as the Great Payments Disruption happens
around us: Resist the change and cling to fading practices or become champions of
disruption by providing a superior trusted digital experience that resonates with both
new and existing customers.

Consumers are digitally connected in almost all facets of their lives — and it’s evident
they expect the same from their banks and payment experiences. The timeline for
digital change is getting shorter. The tech is out there for banks to get ahead of the
curve in providing a secure, digital-first omnichannel customer experience — it all
comes down to whether you take the leap now or try to catch up later.

If you’re ready to be an active player in the Great Payments Disruption, Entrust

is ready to streamline your digital transformation journey. Contact us to learn
more about how we can help your organization embrace the future of banking
and engage the connected consumer.
ABO U T The Great Payments Disruption 14

ABOUT ENTRUST CORPORATION

Entrust keeps the world moving safely by enabling trusted identities, payments
and data protection. Today more than ever, people demand seamless, secure
experiences, whether they’re crossing borders, making a purchase, accessing
e-government services, or logging into corporate networks. Entrust offers an
unmatched breadth of digital security and credential issuance solutions at the
very heart of all these interactions. With more than 2,500 colleagues, a network
of global partners, and customers in over 150 countries, it’s no wonder the world’s
most entrusted organizations trust us. For more information, visit entrust.com.

SURVEY METHODOLOGY

Entrust surveyed 1,350 consumers from the United States, Canada, United Kingdom,
Germany, Saudi Arabia, United Arab Emirates, Singapore, Australia and Indonesia.
Respondents made or received digital payments in the past 12 months.

LEGAL DISCLOSURE

Entrust, nShield, and the Hexagon Logo are trademarks, registered trademarks,
and/or service marks of Entrust Corporation in the U.S. and/or other countries.
All other brand or product names are the property of their respective owners.

© 2022 Entrust Corporation. All rights reserved.