5 Payments Reports You Should Read Now

The CapGemini, now in its 10th year, report gives a good overview of the world payments market. This year, it’s U.S. market summary mentions the growth of payment startups and nonbank competitors, the increasingly rapid decline of check payments (down 8%), and the growth of U.S. proximity mobile transactions (up 93% in 2013, to $1 billion). The biggest growth, however, lies in international payments. As the payments section of the report concludes, “while the domestic payments
business continues to become commoditized due to competition and improved standardization, the cross-border payments world gives many opportunities for banks to tailor offerings and balance risk and convenience in their product mix.”

One of the main themes in this years payment studies is the fundamental transformation occurring in the payments business, “comparable in significance to the advent of downloadable entertainment for the video rental business,” in the words of the BNY Mellon report. At this year’s Sibos global banking and payment conference, held in Boston, BNY Mellon’s Dominic Broom put the opportunity for banks in the report’s term “payment-proximate,” activities surrounding a payment that provide greater service needs for bank customers. “Ultimately, a payment in 2020 will be about transferring value and providing strategically-important solutions in support of broader activity in areas including trade, investment, retail, commercial and public sectors,” the BNY Mellon report states. Banks are in a position to do that, Broom said, because “our business has been based for hundreds of years on trust. I trust that currency has value and is going through a pipeline that’s secure and safe. That pipeline trust and security has enormous value, and I don’t see it being replaced by other market participants.”

As expected, the question arises whether banks will rise to the digital challenge or will the digitally savvy technology companies get their customers. Banks of all sizes do have a strategic advantage, noted Stefan Dab, in presenting Boston Consulting Group’s annual report at Sibos. Disruptions are numberous while regulation and competition intensigy. Yet banks of all sizes have the advantage that they always have had: relationships and receivables. “It’s still back to what it’s always about,” Dab said. Own the household. Get them a credit card. Make the mortgage.

McKinsey, Global Payments 2014: A return to sustainable growth brings new challenges

“Banking is digitizing, and payments are the first to move,” reported McKinsey & Company Marc Niederkorn, in presenting the firm’s 2014 global payments report at Sibos 2014. Markets for other financial services may matter more in terms of profitability, but payments anchors the digital banking relationship to capture the customer. McKinsey’s latest Global Payments Map paints the picture of an industry’s return to sustainable growth, robust in some markets and products, solid in others.

Celent, The Disruptive Potential of Bitcoin: Why Everyone in Financial Services Should Care

Bitcoin arguably was the star at Sibos 2014, as the subject of the most popular first-day seminars and the buzz of many presentations on the second. Although that second-day buzz tended to dismiss bitcoin itself, a good many believe that the blockchain technology behind Bitcoin has the potential to be a disruptive influence way beyond payments. Celent does. In the words of its report summary, “everyone in financial services — from banks and traditional payment systems to insurance carriers and exchanges, central counterparty clearinghouses, and settlement systems — should know and care about bitcoin.” I agree.