Fast-growing Asian markets are driving new business models and innovation. In China, Alipay and WeChat Pay have created a new paradigm around “super-apps” as payment platforms. Our latest global survey of senior financial services executives showed that 78% of respondents said Asian institutions will move at a faster pace on globalisation and convergence than the rest of the world up to 2025, with those in Europe and the Americas struggling to keep up.
With rising strategic significance, some governments are developing payments infrastructure as part of industrial policy to control money flows and own digital and data platforms. These changes have resulted in a mushrooming of domestic payment methods on the back of those infrastructures, such as TROY in Turkey, Mir in Russia, and Brazil’s Elo and PIX systems.
The sector has also become increasingly important as a catalyst for reducing transaction costs, fostering growth and supporting the transition towards digitally enabled and inclusive economies. In developing economic regions in Africa, payments are growing faster than the global average and are allowing millions of “unbanked” people to gain access to goods and services without cash.
The key asset in all of this is data. Payments generate roughly 90% of banks’ useful customer data — information about who is buying what, how much, and when. This is creating new revenue streams for payments businesses that can monetise that data, yet also exposes them to issues and risks related to data privacy.
In our survey, data privacy and cybersecurity were the joint top concern (48%) in terms of the impact of regulatory changes over the next five years. This far outstrips second-ranked digital identity and authentication (31%), and well ahead of cryptocurrencies and central bank digital currencies (CBDCs) (both ranked joint fifth at 28%).
How the payments matrix develops will be determined by the response of banks, technology companies, regulators, governments and consumers to arguably the most profound change in how money moves — even what defines money in our society — for decades to come.