The pandemic-induced disruption compressed five years’ worth of change into less than a year, accelerating transformation in customer behavior and payments operating models. These cookies will be stored in your browser only with your consent. The majority of payment transactions are likely to rebound sharply as lockdowns lift. Global Payments 2020: Fast Forward into the Future October 05, 2020 By Yann Sénant , Markus Ampenberger , Ankit Mathur , Inderpreet Batra , Jean Clavel , Stefan Dab , Alexander Drummond , Sushil Malhotra , Stanislas Nowicki , Prateek Roongta , Michael Strauß , Alejandro Tfeli , 窶ｦ In its Global Payments Report 2020 titled 窶廣ccelerating winds of change窶� released today, McKinsey said it expects full-year 2020 global payments revenue to be roughly US$140 billion lower than in 2019, a decline of about 7% from 2019, which leaves revenues 11% to 13% below the pre-pandemic projection for 2020. We expect full-year 2020 global payments revenue to be roughly $140 billion lower than in 2019窶蚤 decline of about 7 percent from 2019窶蚤 change equal in size to prior years窶� annual gains, which leaves revenues 11 to 13 percent below our prepandemic revenue projection for 2020. With scientists and the WHO now emphasising aerosol transmission of the virus over its spread by touch—and the WHO being swift to confirm cash does not carry coronavirus—these early fears have still contributed to a reduction in global cash payments of four to five percent. Tweet This While interest in blockchain and distributed ledger solutions was already under scrutiny a year ago as being over-hyped, many experts like McKinsey still postulated that the technology would be a significant factor in the future of payments in particular and banking in general. Its interesting when you compare these payments trends with the payments trends McKinsey highlighted in October 2015. Our global payments presentation will showcase McKinsey's data-driven insights on industry dynamics and economics. By the end of 2020, McKinsey expects cash usage to decline by four to five percentage points in the share of global payment transactions compared to 2019 fueled by evolving behavior. McKinsey believes that banks can reach an acceptable profitability level if they achieve cost improvements upwards of 30%. But the crisis resulted in much more than a $140 billion decline. At stake are $1 trillion in new global revenues by 2027. Over the past year, industry incumbents have been responding to 窶ｦ This year窶冱 research focuses on COVID-19's lasting impact on payments behavior and explores strategic With lockdowns imposed across many nations, cash usage dropped in step with severe demand-side shock. Market disruption is increasing in the USD 1 trillion global financial services industry, according to the recent 窶廴cKinsey on Payments窶� report (McKinsey & Company, 2020). The World Payments Report 2020 from Capgemini is the leading source for data, trends and insights on global and regional non-cash payments, the key regulatory and industry initiatives (KRIIs), and today窶冱 dynamic payments environment. After an initial spike in cash withdrawals ahead of lockdowns observed in Germany and the United States, concerns around the risk of contracting COVID-19 from high-traffic ATMs and the refusal of some merchants to accept cash (in spite of it being legal tender) pushed consumers towards e-payment options. Cash is the top way for Brits to give and receive Christmas money, and is especially popular amongst younger people… https://t.co/gTXCKPGXbE, The latest episode of U.S. podcast For The Movement reveals how a move towards cashless payments could widen the ra… https://t.co/Q4eyTeUhM6, A recent deep dive into corporate surveillance explored tracking of user behaviour—including cashless payments—and… https://t.co/bCljzabHL8, Canada's small and independent businesses have a simple request to help firms keep prices down: would you consider… https://t.co/jbmfBbuBq6, Webmaster: Bryony Samuel | Designed by Chaos | Responsible for this website are Andrea Nitsche, Gerben van Wijk and Richard Perera | Funded by ICA | Privacy Policy. At SDK.finance, we believe that understanding how disruptive trends affect the payments ecosystem is key to developing modern banking platforms and future-proofing our payments products. A new McKinsey report says post-COVID-19 business recovery could take five or more years depending on the size of business and sector. This approach enables banks to rapidly expand their capabilities and maximize functionality without incurring high in-house development costs. There are plenty of reports out there about global payments, but there are a couple that are particularly noteworthy. Although banks are the primary providers of payments services, most of them do not benefit from digital payment volumes soaring. Overall, in retail, the impact was not a decline They can then seamlessly offer services such as cross-border payments, currency exchange, and payments clearing to their customers. On closer examination, McKinsey窶冱 Global Payments Map simulations suggest that the net interest-margin component, the source of about 60% of overall payments revenues, explains only about 20% of the 窶ｦ directly to learn more about what type of banking software will be perfect for your business needs. The 2020 McKinsey Global Payments Report 5 rebounded, consumers窶� well-documented shift from the point of sale (POS) to digital commerce accounts for the reduced use of cash. Compared to 2019, McKinsey expects payments revenues across all sectors—cards, mobile, online, cash, etc.—to be down seven percent by the end of 2020. Given that payments represent the most frequent interaction between banks and customers, financial institutions need to invest and improve digital infrastructure to remain competitive. Contact the SDK.finance team directly to learn more about what type of banking software will be perfect for your business needs. Download the 2020 Global Payments Report to learn more about the trends driving change in commerce. McKinsey is predicting an average growth rate of 5% for the next four years. McKinsey窶冱 new research report, with insight on shifting consumer sentiment over a five-week timeframe of the global pandemic in 42 countries is an eye-opener. We also use third-party cookies that help us analyze and understand how you use this website. Since June, the top four banks In Australia have removed over 2000 ATMs and closed 175 physical branches. Here窶冱 what to expect. In the UK, ATM usage declined by 46% per month on average from March to July 2020. Companies are urgently looking for ways to come off the sidelines as modern digital platforms enable newcomers to capture spaces dominated by established financial institutions. Instead of maintaining high outdated payments services and their high ownership costs, banks need to invest in modern platforms to free up capacity to develop new products and enable new customer experiences. Payments also take up a significant part of banks’ operating cost base, representing up to 40% in some cases. These cookies do not store any personal information. 2019 State of the Industry Report on 6 Incremental efficiency improvements to outdated payment systems are no longer enough to maintain the structural advantages banks have in the market. The list of SDK.finance solutions includes. According to McKinsey, this development takes place partly because lower cash usage is desirable for [commercial] banks, given the cost of handling cash is higher than the revenue it generates for them, while e-payments generate incremental revenue. This is the equivalent of four to five times the annual decrease in cash usage over the past few years, according to McKinsey. Start Accepting Payments Today We can help you integrate easier payments that fit with what your business needs and what your customers want. The world of transaction banking and payments is being transformed. Payments trends 2020 InFocus: Strategies to prepare for the future of paymentsPayments trends 2020 InFocus: Strategies to prepare for the future of payments Top takeaways In particular, we see five emerging trends driving change Studies, The 2020 McKinsey Global Payments Report, p.2, The 2020 McKinsey Global Payments Report, p.5, The 2020 McKinsey Global Payments Report, p.12, an initial spike in cash withdrawals ahead of lockdowns observed in Germany and the United States, scientists and the WHO now emphasising aerosol transmission of the virus over its spread by touch. This rate is 1% lower than the previous report. Different operational models can help banks leverage technology to enable new services such as instant payments and open banking. McKinsey projects that the 2020 global payments revenue will be 7% lower than in 2019. Payments trends 2020: Mastering a dynamic market The dynamic payments industry continues to expand and evolve, with digital payment vehicles and transaction volumes growing across the globe. All rights reserved. These trends are not new, but they are evolving rapidly, and COVID-19窶冱 impact over recent months has reinforced several of their trajectories. This website uses cookies to improve your experience while you navigate through the website. We'll assume you're ok with this, but you can opt-out if you wish. Payments revenues shrank by around 22 percent (equivalent to roughly $220 billion) in the first six months of 2020 alone. . McKinsey expects revenue growth in global payments to turn negative. You also have the option to opt-out of these cookies. Join the Cash Matters community and we’ll keep you posted about the latest developments in cash happening around the globe. Written by Alex Malyshev on Dec, 11, 2020. A new generation of payments-as-a-service (PaaS) players allows banks to quickly expand and modernize their existing services using cloud-based platforms. The 2020 McKinsey Global Payments Report Mc Kinsey & Company octubre 8, 2020 The public health crisis triggered by COVID-19 has had an impact on nearly all aspects of daily life for people across the globe, and has put the world economy on an uncertain footing. McKinsey has released their latest report 窶�Global Banking Annual Review 2020: A test of Resilience窶� 窶廣 test of resilience: Banking through the crisis, and beyond窶� The following article on the Global Banking Annual Review 2020 has been sourced from the McKinsey & Company website. The management consultancy expects revenue for the entire year to be about $140bn lower than in 2019, a 7 per cent decline from a year earlier. March 31, 2020 窶� The challenges are immediate, with long-term implications for global, regional, and local economies窶蚤nd for the payments... industry itself. Without high upfront costs, banks can link specialized payments services via APIs to their core banking platforms. Demand for better products and services and increased digitization are putting banks under pressure. Maintaining outdated infrastructure, managing upgrades, and rationalizing legacy technologies is expensive, and many banks face a significant challenge in the near to midterm if they do not optimize costs. ATM availability worldwide has grown 11% annually (G4S, 2018), In Egypt, 80% of online sales are paid for with cash on delivery (G4S, 2018), White Paper "Virtually Irreplaceable: Cash as Public Infrastructure", White Paper "Keeping Cash: Assessing the Arguments about Cash and Crime". In response to a reduction in cash use and in-person services, banks have accelerated the move to online banking by closing branches and ATMs. The list of SDK.finance solutions includes Digital Retail Bank, Microsoft Power BI payment dashboards, Voice Banking, Money Transfer, Currency exchange, Wallet Engine, and Event Payments. Investments into instant payments and account-to-account transfers infrastructure have begun to reap significant benefits as digital payment volumes soar, driven by consumer migration to digital channels. By continuing to use the website you accept their use. For more information on how we store your data, please see our privacy policy. At. Here are the three key takeaways we got from reading the new report. We care about your data and use cookies to give you the best experience. As a banking and payment software provider, we devote a lot of time and resources to researching how global changes impact our clients and the industry. This category only includes cookies that ensures basic functionalities and security features of the website. This model significantly expedites time to market for new payments products from years to months. This website uses cookies to improve your experience. The physical shift was complemented by a welcome and fundamental shift in the adoption of technologies. It explains: "Instead of growing by 6%, as projected by our 2019 global payments report, activity could drop by as much as 8% to 10% of total revenues, or a This year, McKinsey explored how companies can position themselves to capture pockets of growth stemming from the accelerating winds of change in global payments. While some sectors have rebounded—such as retail, which has seen an overall shift towards online sales—electronic payments have risen, and cash use remains lower. Changing the operating business model is difficult but necessary to enable future growth. Banks that don’t have the capacity to invest in a full payments technology stack developed in-house can still offer top-of-the-line services to their customers by outsourcing select services. The 2020 McKinsey Global Payments Report. You can now select and download multiple cash facts at once. The fear of contracting the virus through cash and high-traffic ATMs resulted in customers and merchants shifting towards electronic and contactless payment options to complete transactions. However, McKinsey observes, the move from cash to e-payments will probably continue, especially in developing economies. Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. The decline in revenue and new entrants successfully leveraging market changes has banks and long-time players rethinking their approach. This year, McKinsey explored how companies can position themselves to capture pockets of growth stemming from the accelerating winds of change in global payments. Out of these cookies, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. PaaS providers continuously work on their services, meaning that banks receive frequent product updates and upgrades without disproportionate maintenance investment. In the current environment, most of those are not delivering and are not expected to rebound soon. Physical distancing measures, limits on business activity, and shifts in commercial behavior have resulted in a sharp reduction of in-person purchases and cash transactions. In the face of market upheaval, banks need to reevaluate their operating models and determine what role payments play in their unique product offering. By 2020, the global payments industry will generate an estimated £2.2 trillion in revenue. Source: S&P Capital IQ; McKinsey analysis. GLOBAL PAYMENTS 2020: TRANSFORMATION AND CONVERGENCE // 4 to take on leadership roles in global commerce. Consulting firm McKinsey & Company recently published its. | Read more. The 2020 McKinsey Global Payments Report 2. For comparison, such a decline would take four to five years before the pandemic. News, Consulting firm McKinsey & Company recently published its 2020 Global Payments report. The only truly negative option is to do nothing. Despite the near-term disruption to revenue growth related to the COVID-19 pandemic, Asia窶冱 payments sector remains positioned for long-term success and is poised for a swift return to healthy 窶ｦ We’ll never sell your details to anyone else, promise! Traditionally, banks rely on revenue sources other than payments – interest margins on accounts, credit lines, interchange revenues, and cross-border fees. It is mandatory to procure user consent prior to running these cookies on your website. But opting out of some of these cookies may have an effect on your browsing experience. Our insights are also informed by ongoing dialogue with industry leaders and with McKinsey窶冱 global network of payments experts, and on our work with payments providers across Asia. This despite the fact that cash in circulation has increased on a global scale by the largest percentage since the financial crisis 2008. An analysis of the global payments industry by McKinsey & Company predicts that Covid-19 will result in a loss of revenues of between US$165bn and US$210bn in 2020 窶� and sets out 窶徼en fundamental changes to the payments ecosystem that will help all of us find a new normal.窶� Discretionary spending worldwide was initially down 40 percent, with the impact felt most strongly in the travel and entertainment industries (experiencing 80 to 90 percent reductions). McKinsey’s analysis suggests that evolving consumer behavior in both mature and emerging markets will reduce the share of global payment transactions in cash by four to five percent. One of them is the McKinsey offering 窶� this year the McKinsey report is titled Global Payments 2015: A Healthy Industry Confronts Disruption.. The public health crisis triggered by COVID-19 has had an impact on nearly all aspects of daily life for people across the globe, and has put the world economy on an uncertain footing. Global payments revenue in the first six months of 2020 contracted 22 per cent, or $220 billion, from a year ago due to the impact of the Covid-19 pandemic, according to a new report by McKinsey & Company. Compared to 2019, McKinsey expects payments revenues across all sectors窶把ards, mobile, online, cash, etc.窶杯o be down seven percent by the end of 2020. They are now In India, ATM usage fell by 47% in April, while in the UK, ATM usage per month experienced 46% declines on average from March to July 2020. The report reveals that participants believe that the Covid-19 pandemic and the 窶徼emporary fall of about 6% in European payments revenues in 2020窶� predicted in McKinsey窶冱 Global Payments Report for 2020 will prompt banks to 窶徨einforce their commitment to digitising customer journeys, introducing machine learning, and improving their technological and operational resilience窶�. Under this scenario, global GDP would contract by 4.7% in 2020, which could lead to a decline in global payments revenues in excess of $210 billion, around 10 to 12% of pre-crisis levels. You can now select and download multiple cash facts at once. McKinsey 窶� The next frontier in Asia payments In our view, five fundamental themes are reshaping Asia窶冱 payments landscape (Exhibit 2). Three Key Takeaways From the 2020 Mckinsey Global Payments Report McKinsey projects that the 2020 global payments revenue will be 7% lower than in 2019. Given the high opportunity cost of maintaining legacy technology in the current economic climate, banks need to thoroughly evaluate their payment capabilities and how they can improve them. The report highlights The report highlights We cover the latest disruptive payments industry news: fintech, product launches, payment industry leaders, disruptive payments technology, developing market opportunities. The report also highlights how cash usage varies greatly by region. McKinsey Report: by 2020, #payments will generate $400B more per year. SDK.finance provides core payment software for banks and financial institutions that allow to build next-generation payment products. Four EPIC Global Payments Trends: Do read the BCG-Google report for full details, but following is a quick snapshot of the 4 global payments trends that will continue to drive the payments industry in the coming years. As a banking and payment software provider, we devote a lot of time and resources to researching how global changes impact our clients and the industry. Explore this interactive to learn how the market will evolve. Sweden, the UK and the Netherlands are among the countries with the lowest cash transaction volumes. , we believe that understanding how disruptive trends affect the payments ecosystem is key to developing modern banking platforms and future-proofing our payments products. This new generation of leaders, all 窶ｦ Necessary cookies are absolutely essential for the website to function properly. The 2020 McKinsey Global Payments Report窶排eleased on 2 October窶派ighlights 窶和ccelerating winds of change in global payments窶� caused by the COVID-19 pandemic. This report examines these trends and industry initiatives that will push the number of registered accounts well beyond a billion in 2020 and move us a step closer to a digital future for all. But the crisis resulted in much more than a $140 billion decline. Copyright © 2020 SDK.finance. Source: MCKINSEY GLOBAL PAYMENTS REPORT 2020 STRAITS TIMES GRAPHICS 39% The estimated percentage of transactions in Singapore this year in which cash will be used, compared with 59 per cent in 2010. Their services, meaning that banks receive frequent product updates and upgrades without maintenance... Report on 6 the world of transaction banking and payments clearing to their customers their services, of. 40 % in some cases next-generation payment products your customers want the new report sdk.finance team directly learn! Opt-Out if you wish be stored in your browser only with your.. Understand how you use this website third-party cookies that help us analyze and understand how you this! 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Predicting an average growth rate of 5 % for the next frontier in Asia payments in our,!