The vast majority of banks (94%) believe that the Covid-19 pandemic has turned the payments market into a technology arms race for which they are unprepared.
This is the finding from a survey of 200 European banking executives carried out by card issuing plaform Marqeta.
The pandemic has seen a massive increase in the use of digital payment services which has in turn led to an increased demand among consumers for more innovative services.
But while banks recognise that this demand is an opportunity to gain a competitive advantage, an overwhelming number (84%) believe they are struggling due to their legacy infrastructure.
Furthermore, new entrants in the payment market and non-banks have raised consumers' expectations to a level that many banks cannot match because of their current technology set-up.
Consequently the majority (85%) believe that overhauling their existing payments infrastructure is a necessity if they are to compete in the current payments market and meet their customers' demands.
“The likes of Uber, Amazon, and Deliveroo, have set the bar when it comes to expectations around payments; having a slick and convenient way to pay has become a fundamental part of the customer experience," said Ian Johnson, Marqeta's managing director in Europe.
"In our view, COVID-19 has greatly shifted behaviours and led to a surge in adoption of new payments technologies. This may increase the pressure to innovate at speed and maintain pace with digital innovators, driving a technology arms race," added Johnson.