In the UK, ATM usage declined by 46% per month on average from March to July 2020. Instead of maintaining high outdated payments services and their high ownership costs, banks need to invest in modern platforms to free up capacity to develop new products and enable new customer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. By 2020, the global payments industry will generate an estimated £2.2 trillion in revenue. This year, McKinsey explored how companies can position themselves to capture pockets of growth stemming from the accelerating winds of change in global payments. 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 They are now In the current environment, most of those are not delivering and are not expected to rebound soon. 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. In the face of market upheaval, banks need to reevaluate their operating models and determine what role payments play in their unique product offering. 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". Changing the operating business model is difficult but necessary to enable future growth. We'll assume you're ok with this, but you can opt-out if you wish. Overall, in retail, the impact was not a decline 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. This despite the fact that cash in circulation has increased on a global scale by the largest percentage since the financial crisis 2008. 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 Sweden, the UK and the Netherlands are among the countries with the lowest cash transaction volumes. This rate is 1% lower than the previous report. 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. This year窶冱 research focuses on COVID-19's lasting impact on payments behavior and explores strategic 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. 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. The 2020 McKinsey Global Payments Report 2. Consulting firm McKinsey & Company recently published its 2020 Global Payments report. Necessary cookies are absolutely essential for the website to function properly. 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. This category only includes cookies that ensures basic functionalities and security features of the website. 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. There are plenty of reports out there about global payments, but there are a couple that are particularly noteworthy. Traditionally, banks rely on revenue sources other than payments – interest margins on accounts, credit lines, interchange revenues, and cross-border fees. 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. . , we believe that understanding how disruptive trends affect the payments ecosystem is key to developing modern banking platforms and future-proofing our payments products. 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. By continuing to use the website you accept their use. McKinsey 窶� The next frontier in Asia payments In our view, five fundamental themes are reshaping Asia窶冱 payments landscape (Exhibit 2). It is mandatory to procure user consent prior to running these cookies on your website. Payments also take up a significant part of banks’ operating cost base, representing up to 40% in some cases. News, Over the past year, industry incumbents have been responding to 窶ヲ 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. 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. Written by Alex Malyshev on Dec, 11, 2020. 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 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. All rights reserved. This is the equivalent of four to five times the annual decrease in cash usage over the past few years, according to McKinsey. These cookies do not store any personal information. A new generation of payments-as-a-service (PaaS) players allows banks to quickly expand and modernize their existing services using cloud-based platforms. Start Accepting Payments Today We can help you integrate easier payments that fit with what your business needs and what your customers want. GLOBAL PAYMENTS 2020: TRANSFORMATION AND CONVERGENCE // 4 to take on leadership roles in global commerce. 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. This year, McKinsey explored how companies can position themselves to capture pockets of growth stemming from the accelerating winds of change in global payments. directly to learn more about what type of banking software will be perfect for your business needs. But opting out of some of these cookies may have an effect on your browsing experience. Incremental efficiency improvements to outdated payment systems are no longer enough to maintain the structural advantages banks have in the market. Given that payments represent the most frequent interaction between banks and customers, financial institutions need to invest and improve digital infrastructure to remain competitive. 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. 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. You can now select and download multiple cash facts at once. This website uses cookies to improve your experience while you navigate through the website. 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 Report: by 2020, #payments will generate $400B more per year. Although banks are the primary providers of payments services, most of them do not benefit from digital payment volumes soaring. 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. At stake are $1 trillion in new global revenues by 2027. 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. Download the 2020 Global Payments Report to learn more about the trends driving change in commerce. 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. We’ll never sell your details to anyone else, promise! 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 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. Source: S&P Capital IQ; McKinsey analysis. 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. SDK.finance provides core payment software for banks and financial institutions that allow to build next-generation payment products. PaaS providers continuously work on their services, meaning that banks receive frequent product updates and upgrades without disproportionate maintenance investment. 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. 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. Copyright © 2020 SDK.finance. This new generation of leaders, all 窶ヲ | Read more. 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. The world of transaction banking and payments is being transformed. 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. This model significantly expedites time to market for new payments products from years to months. 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. For comparison, such a decline would take four to five years before the pandemic. 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. Our global payments presentation will showcase McKinsey's data-driven insights on industry dynamics and economics. 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. 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). Join the Cash Matters community and we’ll keep you posted about the latest developments in cash happening around the globe. You also have the option to opt-out of these cookies. McKinsey expects revenue growth in global payments to turn negative. 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. 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. Demand for better products and services and increased digitization are putting banks under pressure. 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. 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. Contact the SDK.finance team directly to learn more about what type of banking software will be perfect for your business needs. 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. The physical shift was complemented by a welcome and fundamental shift in the adoption of technologies. The list of SDK.finance solutions includes. 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 With lockdowns imposed across many nations, cash usage dropped in step with severe demand-side shock. The only truly negative option is to do nothing. The 2020 McKinsey Global Payments Report. For more information on how we store your data, please see our privacy policy. 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. Report also highlights how cash usage over the past few years, according to McKinsey has increased on a scale! Help banks leverage technology to enable future growth cash usage dropped in with. Not new, but you can now select and download multiple cash facts once... 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