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. 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. 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. But the crisis resulted in much more than a $140 billion decline. Sweden, the UK and the Netherlands are among the countries with the lowest cash transaction volumes. Traditionally, banks rely on revenue sources other than payments – interest margins on accounts, credit lines, interchange revenues, and cross-border fees. | Read more. 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 , we believe that understanding how disruptive trends affect the payments ecosystem is key to developing modern banking platforms and future-proofing our payments products. 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. The report also highlights how cash usage varies greatly by region. You can now select and download multiple cash facts at once. 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. By 2020, the global payments industry will generate an estimated £2.2 trillion in revenue. We'll assume you're ok with this, but you can opt-out if you wish. They are now 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 trends are not new, but they are evolving rapidly, and COVID-19窶冱 impact over recent months has reinforced several of their trajectories. Payments revenues shrank by around 22 percent (equivalent to roughly $220 billion) in the first six months of 2020 alone. But opting out of some of these cookies may have an effect on your browsing experience. This category only includes cookies that ensures basic functionalities and security features of the website. This despite the fact that cash in circulation has increased on a global scale by the largest percentage since the financial crisis 2008. The majority of payment transactions are likely to rebound sharply as lockdowns lift. 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�. They can then seamlessly offer services such as cross-border payments, currency exchange, and payments clearing to their customers. A new generation of payments-as-a-service (PaaS) players allows banks to quickly expand and modernize their existing services using cloud-based platforms. directly to learn more about what type of banking software will be perfect for your business needs. 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. 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� In the current environment, most of those are not delivering and are not expected to rebound soon. 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. 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. Necessary cookies are absolutely essential for the website to function properly. 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 These cookies do not store any personal information. 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. McKinsey is predicting an average growth rate of 5% for the next four years. 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. 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. Our global payments presentation will showcase McKinsey's data-driven insights on industry dynamics and economics. 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. 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 new generation of leaders, all 窶ヲ This rate is 1% lower than the previous report. Payments also take up a significant part of banks’ operating cost base, representing up to 40% in some cases. Join the Cash Matters community and we’ll keep you posted about the latest developments in cash happening around the globe. However, McKinsey observes, the move from cash to e-payments will probably continue, especially in developing economies. 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. At. 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. The decline in revenue and new entrants successfully leveraging market changes has banks and long-time players rethinking their approach. This is the equivalent of four to five times the annual decrease in cash usage over the past few years, according to McKinsey. 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 2019 State of the Industry Report on 6 We’ll never sell your details to anyone else, promise! 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. Given that payments represent the most frequent interaction between banks and customers, financial institutions need to invest and improve digital infrastructure to remain competitive. 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. We care about your data and use cookies to give you the best experience. 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. Copyright © 2020 SDK.finance. News, Demand for better products and services and increased digitization are putting banks under pressure. 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. All rights reserved. This website uses cookies to improve your experience while you navigate through the website. 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 physical shift was complemented by a welcome and fundamental shift in the adoption of technologies. Since June, the top four banks In Australia have removed over 2000 ATMs and closed 175 physical branches. The 2020 McKinsey Global Payments Report 2. Written by Alex Malyshev on Dec, 11, 2020. Source: S&P Capital IQ; McKinsey analysis. McKinsey expects revenue growth in global payments to turn negative. But the crisis resulted in much more than a $140 billion decline. For more information on how we store your data, please see our privacy policy. The world of transaction banking and payments is being transformed. The list of SDK.finance solutions includes. 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. Post-Covid-19 business recovery could take five or more years depending on the size of business and sector next frontier Asia! Revenues shrank by around 22 percent ( equivalent to the 2020 mckinsey global payments report $ 220 billion in. Rate of 5 % for the next four years and we’ll keep you about... Four to five years before the pandemic, currency exchange, and COVID-19窶冱 over! Payments, currency exchange, and COVID-19窶冱 impact over recent months has several! 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