“Slow adoption of next generation payments will affect banks”

Irish-American professional services firm Accenture Plc (NYSE:ACN) said up to $89 billion (4.6 percent) of global payments revenue could be at risk over the next three years for banks that are slow to offer next-generation payment methods. generations.

A new report from ACN indicates that $34 billion in payments revenue is at stake in North America, more than $25 billion is at risk in Latin America and more than $24 billion in Asia Pacific. In Europe, where more than 55% of consumers do not use credit cards regularly, more than $4 billion in payments revenue is at risk.

The “Payments Go Personal” report is based on a survey of over 16,000 consumers in 13 countries in Asia, Europe, Latin America and North America. It explores how leading banks and payment processors can add value to consumer transactions and benefit from future payment innovations.

ACN stated that “While traditional payment methods continue to dominate consumer payments, next-generation offerings are rapidly gaining momentum.”

The company, headquartered in Dublin, Ireland, said its research revealed widespread use of traditional payment methods such as cash (used by 66 percent of respondents), debit cards (64 percent) and credit cards (48 percent). However, more than half (56 percent) of consumers surveyed said they use digital wallets, and 10 percent use account-to-account (A2A) payment apps.

Failure expected

ACN said it expects a “bigger disruption” from biometric payments (authentication of physical characteristics such as retina, hand/fingerprint and face prints).

He added that more than four in ten respondents (42 percent) believe that biometrics is likely to be widely used by 2025. About 9 percent of respondents said they would be willing to use it as their main in-person payment method if it were available. , by 2025.

The study also found that external macroeconomic factors, including inflation and rising interest rates, influence consumer payment choices as they seek to lower the interest rate on debt. Nearly a third (31 percent) of credit card users said they are considering switching to other payment options for in-person purchases, with just over half (54 percent) of them planning to use interest-free payment methods, including debit cards. , cash and buy now, pay later financing.

“As consumers re-evaluate how they pay and transfer their money, traditional payment providers are rapidly losing control of the customer payment experience to new market entrants,” ACN Managing Director Sulabh Agarwal said in a statement. “This significant threat to core banking revenues is exacerbated by current economic volatility, accelerating digitalization and consumer demand for seamless payments.”

Recommended Strategies

The THE report recommends several strategies for banks looking to ensure a seamless payment experience.

The report says that banks need to expand partnerships. “Collaborating with other banks and fintechs could help protect revenue from core payments and lock out new entrants.”

Simplicity and speed should also be offered. “Apps and digital wallets can replace physical interactions with branches and digitize payments, offering greater insight into customer behavior and needs.”

The report also recommends that banks go beyond payments, as “online marketplaces and ‘super apps’ can put banks at the center of consumers’ digital lives.”

“The time has come for banks to bet on the ground and implement a strategy to protect their revenues from principal charges,” Agarwal said. “Banks that are taking bold steps to embrace next-generation payment methods by offering people more choice and control can open up a higher level of customer engagement and drive growth in the face of rising interest rates.”