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. You also have the option to opt-out of these cookies. Contact the SDK.finance team directly to learn more about what type of banking software will be perfect for your business needs. 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. Traditionally, banks rely on revenue sources other than payments – interest margins on accounts, credit lines, interchange revenues, and cross-border fees. directly to learn more about what type of banking software will be perfect for your business needs. 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. McKinsey expects revenue growth in global payments to turn negative. With lockdowns imposed across many nations, cash usage dropped in step with severe demand-side shock. 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. Consulting firm McKinsey & Company recently published its 2020 Global Payments report. 2019 State of the Industry Report on 6 This website uses cookies to improve your experience while you navigate through the website. Necessary cookies are absolutely essential for the website to function properly. One of them is the McKinsey offering 窶� this year the McKinsey report is titled Global Payments 2015: A Healthy Industry Confronts Disruption.. 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. | Read more. Join the Cash Matters community and we’ll keep you posted about the latest developments in cash happening around the globe. Since June, the top four banks In Australia have removed over 2000 ATMs and closed 175 physical branches. You can now select and download multiple cash facts at once. At. The decline in revenue and new entrants successfully leveraging market changes has banks and long-time players rethinking their approach. 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. For comparison, such a decline would take four to five years before the pandemic. 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. Discretionary spending worldwide was initially down 40 percent, with the impact felt most strongly in the travel and entertainment industries (experiencing 80 to 90 percent reductions). The pandemic-induced disruption compressed five years’ worth of change into less than a year, accelerating transformation in customer behavior and payments operating models. 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. We’ll never sell your details to anyone else, promise! Although banks are the primary providers of payments services, most of them do not benefit from digital payment volumes soaring. 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. McKinsey projects that the 2020 global payments revenue will be 7% lower than in 2019. 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. Demand for better products and services and increased digitization are putting banks under pressure. This is the equivalent of four to five times the annual decrease in cash usage over the past few years, according to McKinsey. PaaS providers continuously work on their services, meaning that banks receive frequent product updates and upgrades without disproportionate maintenance investment. Payments revenues shrank by around 22 percent (equivalent to roughly $220 billion) in the first six months of 2020 alone. Start Accepting Payments Today We can help you integrate easier payments that fit with what your business needs and what your customers want. McKinsey is predicting an average growth rate of 5% for the next four years. In the UK, ATM usage declined by 46% per month on average from March to July 2020. This year窶冱 research focuses on COVID-19's lasting impact on payments behavior and explores strategic The majority of payment transactions are likely to rebound sharply as lockdowns lift. News, GLOBAL PAYMENTS 2020: TRANSFORMATION AND CONVERGENCE // 4 to take on leadership roles in global commerce. We also use third-party cookies that help us analyze and understand how you use this website. The 2020 McKinsey Global Payments Report. All rights reserved. In the current environment, most of those are not delivering and are not expected to rebound soon. By 2020, the global payments industry will generate an estimated £2.2 trillion in revenue. The report also highlights how cash usage varies greatly by region. 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 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. It is mandatory to procure user consent prior to running these cookies on your website. There are plenty of reports out there about global payments, but there are a couple that are particularly noteworthy. Incremental efficiency improvements to outdated payment systems are no longer enough to maintain the structural advantages banks have in the market. These cookies do not store any personal information. 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�. 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 At SDK.finance, we believe that understanding how disruptive trends affect the payments ecosystem is key to developing modern banking platforms and future-proofing our payments products. SDK.finance provides core payment software for banks and financial institutions that allow to build next-generation payment products. Tweet This While interest in blockchain and distributed ledger solutions was already under scrutiny a year ago as being over-hyped, many experts like McKinsey still postulated that the technology would be a significant factor in the future of payments in particular and banking in general. Three Key Takeaways From the 2020 Mckinsey Global Payments Report McKinsey projects that the 2020 global payments revenue will be 7% lower than in 2019. Copyright © 2020 SDK.finance. 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. These cookies will be stored in your browser only with your consent. This model significantly expedites time to market for new payments products from years to months. Given that payments represent the most frequent interaction between banks and customers, financial institutions need to invest and improve digital infrastructure to remain competitive. , we believe that understanding how disruptive trends affect the payments ecosystem is key to developing modern banking platforms and future-proofing our payments products. 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. 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). In the face of market upheaval, banks need to reevaluate their operating models and determine what role payments play in their unique product offering. 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