When asked if banks felt threatened by these competitors, Henaghan replied that it depends on the banks. Some banks welcome such innovations and partner with these competitors as they believe that the innovations help certain segments of consumers to be more comfortable with electronic payments. However, these banks also anticipate that those consumers will demand for other services that non-banking institutions will not be able to offer, such as mortgages and investment services, once their financial situations improve, said Henaghan. Thus, consumers will eventually turn to banks for their financial activities.
On the other hand, some banks believe in competing head on with non-banking competitors. For instance, DBS bank in Singapore announced earlier this year that it will be investing S$200 million (US$160 million) over the next three years to expand its digital banking services. It has also gone into a partnership with A*STAR Institute for Infocomm Research (I2R) in February this year to set up a Joint Lab that will develop solution to enable it to engage customers in new ways.Be it partnering with non-traditional competitors or doing it on their own, banks need to take advantage of new technologies to remain competitive. "Staying ahead of what the consumer wants is the game changer," said Henaghan. "We all know the savvy consumer today adopts technology in heartbeat especially if it offers absolute convenience and security. So, if banks were to meet these demands, they will be able to create a significant revenue stream from payments."
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