A world payments report of Capgemini and BNP Paribas indicated that there is strong demand for digital payments driven by emerging economies. However, they have expressed their doubts as far as the innovation landscape in payments is concerned. That is because BigTech entrants are making their presence felt while the incumbents face the challenges from technical and regulatory sides.
A press statement indicated that the report found that digital payment requires more than bank-driven initiatives to increase the landscape of new payments. Therefore, the wider financial services community will be forced to find out their new roles apart from working with big payment users. These will ensure not only smooth and balance but also the development of a strong payments ecosystem.
According to the World Payments Report 2018, non-cash transactions could deliver a compound annual growth rate (CAGR) of 12.7 percent until the year 2021. This forecast is higher than the 10.1 percent achieved during the period 2015 – 16 wherein a total non-cash transactions volume has hit 482.6 billion. While mature markets are having a constant growth of over 7 percent, it is the emerging markets that have driven the boom.
For instance, the report suggested that Russia has topped the non-cash boom with a CAGR of 36.5 percent followed by India with 33.2 percent and China 25.8 percent during the year 2015-16. The emerging markets might demonstrate a CAGR of 21.6 percent driven by Asia with 28.8 percent in the next five year period. Additionally, the developing markets might enjoy nearly 50 percent of all non-cash transactions throughout the world by 2021.
Such a situation would mean that it would exceed the mature markets as they currently enjoy a 66.3 percent share. The boom is due to the acceleration of new technologies while BigTechs and FinTechs are making their presence felt. Capgemini’s Financial Services CEO, Anirban Bose, said,
“With their significant market share in the payments industry and implementation of new technologies, banks are in a unique position to shape the marketplace. They can also create new revenue streams through innovative, collaborative relationships with Fintech’s and active participation by the broader financial services community.”
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