Banks are at risk of losing up to 15% of global payments revenue, valued at US$280bn, due to “the growth of digital payments and competition from non-banks”, Accenture predicts — but they also have the opportunity to capture US$500bn in new payments-related revenues “if they adopt innovative business models”.
Global payments revenue will grow at an annual rate of 5.5%, from US$1.5tn in 2019 to more than US$2tn by 2025, Accenture’s new ‘Banking Pulse Survey: Two Ways To Win’ report forecasts, but “only banks that change their business models to adopt the latest technologies and focus on providing value-added services to customers will capture a share of the US$500bn in incremental revenue growth”.
The report found that, over the next six years, banks will face further pressure on income from card transactions and fees, with free payments putting 8% of payments revenue at risk.
Competition from non-banks in invisible payments — where payments are completed in a ‘virtual wallet’ on a mobile app or device — will put a further 3.9% of bank revenues at risk.
Card displacement by instant payments, where funds are settled and transferred in real-time and banks make little or no interest, is projected to put an additional 2.7% of payment revenues at risk.
“This builds on current declines in income from card transactions and fees, with regulation triggering fee compression and technology displacing the role of banks in payments,” Accenture says.
“Already between 2015 and 2018, revenue from business customer credit card transactions dropped 33%, revenue from consumer debit card transactions dropped nearly 15%, and revenue from credit cards dropped almost 12%.”
“We face an inevitable world of instant, invisible and free payments, which spells trouble for banks that don’t want to be relegated to the plumbing of payments,” says Gareth Wilson, Accenture’s global payments lead.
“But it also presents an opportunity to tap into a new business model based on this digital boom.”
To take advantage of that digital boom, however, banks will have to “fundamentally change the way they think about their revenue composition,” adds Alan McIntyre, leader of Accenture’s global banking practice.
“Channels that once made the banks billions of dollars will cease to exist. To succeed in the future, banks will need to develop new digital business models at scale, with ‘one-click’ payments the new norm, and set their sights on delivering secure, convenient and frictionless customer experiences.”
Scale and differentiation will be the two “key complementary, interconnected and interdependent actions” that banks will need to take to succeed, the report concludes.