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Payments 2025 & beyond

Navigating the payments matrix

Charting a course amid evolution and revolution

Overview

The financial services industry is in the midst of a significant transformation, accelerated by the COVID-19 pandemic. And given the key role digitisation plays in the financial lives of more and more of the world’s population, electronic payments are at the epicentre of this transformation.

Payments are becoming increasingly cashless, and the industry’s role in fostering inclusion has become a significant priority. Payments also are supporting the development of digital economies and are driving innovation — all while functioning as a stable backbone for our economies. 

We are therefore delighted that the first report we are launching in our 2025 & Beyond series focuses on the payments industry and the key themes that are influencing it. How the industry responds to these trends will define how successful it is in the coming years and its impact on society overall.

Payments data at a glance

  • 42% increase in global cashless payment volumes

  • 90% of banks' useful customer data comes from payments

  • 86% agreed that traditional payments providers will collaborate with fintechs and technology providers as one of their main sources of innovation -->

  • 89% agreed that the shift towards e-commerce would continue to increase

  • 42% felt strongly that there would be an acceleration of cross-border, cross-currency instant and B2B payments

    See the data behind the headlines Pause all movement
All Sectors
Questions and Answers Global Asia Pac EMEA Americas
Regulatory Impact Thinking about the different areas that could potentially be impacted by regulatory changes over the next 5 years, which areas of regulation are you most concerned about?

Data shown:

  • Percentage of respondents who included each answer in their top 3

AML (Anti Money Laundering) 24% 23% 22% 27%
Use of new technology 30% 33% 23% 32%
Enhanced accountability 23% 27% 21% 19%
Open Banking 22% 23% 22% 22%
Central Bank Digital Currency (CBDC) 27% 33% 25% 21%
Data privacy and cybersecurity 48% 40% 50% 57%
Environment and climate (e.g. ESG) 28% 36% 26% 20%
Customer communication 25% 28% 19% 26%
Digital identity authentication 31% 34% 26% 31%
E-money/Cryptocurrency 27% 28% 25% 26%
KYC (Know Your Customer) 28% 31% 26% 27%
Local regulatory pressures - different regulations in different regions 30% 35% 28% 26%
New business model (crowdfunding, peer-to-peer lending) 26% 35% 22% 18%
Other (please specify) 0% 0% 0% 1%
Don't know 2% 1% 3% 2%
Cybersecurity Strategy Which of the following factors will have the greatest impact in shaping your cybersecurity strategy over the next 5 years?

Data shown:

  • Percentage of respondents who included each answer in their top 3

Shortage of cybersecurity talent 35% 37% 36% 32%
Introduction of new authentication technologies, such as biometrics 30% 33% 25% 29%
Increasing complexity of cyber threats 45% 42% 42% 51%
Introduction of fifth-generation (5G) cellular networks 29% 38% 23% 24%
Adoption of Internet of Things (IoT) hardware and software 30% 40% 20% 26%
Growing public concern over data privacy 35% 34% 36% 36%
Cybersecurity and data privacy regulations 46% 46% 47% 46%
Vulnerabilities in supply chains and business partners 28% 26% 25% 33%
Rising geopolitical tensions 28% 30% 27% 28%
Human vulnerabilities (unintentional or malicious) 32% 29% 33% 35%
Other (please specify) 0% 0% 0% 0%
Don't know 2% 2% 3% 2%
M&A, Divestitures or Carve-out Is your organisation likely to consider any Merger & Acquisition (M&A), Divestitures or Carve-out activity in the next 5 years?

Data shown:

  • Percentage of respondents who included each answer in their top 3

Yes - expect 1 or 2 M&A/Divestitures/Carve-out activities 25% 22% 23% 29%
Yes - expect 3 to 5 M&A/Divestitures/Carve-out activities 32% 40% 31% 24%
Yes - expect more than 5 M&A/Divestitures/Carve-out activities 13% 13% 11% 13%
No - we don't plan to consider any M&A/Divestitures/Carve-out activities expected within next 5 years 18% 15% 23% 18%
No - but we expect to be the target of an M&A/ ivestiture/Carve-out activity expected within next 5 years 4% 5% 4% 4%
Don't know 8% 5% 8% 11%
ESG Influence To what extent do you expect ESG (Environmental, Social and Corporate Governance) to influence the following aspects of your organisation's business model?

Data shown:

  • No influence
  • Moderate influence
  • Significant influence
  • Don't know
separated by commas in each table cell.

Selection of clients 21%,43%,34%,3% 13%,47%,38%,3% 20%,42%,35%,3% 30%,38%,29%,3%
Selection of suppliers (value chain partners) 17%,46%,34%,3% 13%,45%,40%,2% 17%,49%,31%,3% 21%,44%,31%,4%
Products/service offering 13%,45%,39%,3% 10%,48%,40%,2% 11%,44%,41%,4% 18%,44%,36%,2%
Investment decisions 14%,41%,41%,3% 13%,40%,46%,2% 13%,41%,42%,4% 17%,43%,36%,4%
Lending decisions 19%,43%,35%,4% 18%,44%,33%,4% 13%,41%,42%,4% 24%,38%,33%,5%
Recruitment of employees 22%,43%,33%,3% 17%,50%,32%,1% 24%,37%,35%,4% 26%,38%,32%,4%
Overall organisation's strategy 12%,43%,42%,3% 10%,44%,44%,2% 14%,40%,41%,5% 14%,44%,39%,3%
The role of employees in Financial Services The role of employees in Financial Services organisations is changing. Which of the following activities is your organisation planning topursue over the next 5 years to address a potential future skills gap?

Data shown:

  • Percentage of respondents who included each answer in their top 3

Change the composition of the workforce between permanent and contingent staff 35% 40% 33% 31%
Hire from competitors 30% 28% 33% 30%
Acquire a firm to access new skills/expertise 34% 43% 26% 29%
Establish a strong pipeline direct from education 40% 45% 30% 43%
Hire from outside the industry 29% 31% 28% 28%
Undertake significant retraining/upskilling 47% 47% 44% 49%
Outsource non-core activities to third parties 36% 41% 29% 36%
Other (please specify) 0% 0% 0% 0%
Don't know 4% 3% 6% 4%
Macro trends in FS Thinking about macro trends in the financial services industry, which of the statements below do you think is most likely to be true in the 2025?

Data shown for Trend 1:

  • Continued low interest rates will require that institutions increase investment in measures to reduce costs, digitise and improve productivity to maintain margins and profitability.
  • An eventual increase in interest rates in 2023 will help institutions improve margins and profitability.
  • No change.

Data shown for Trend 2:

  • Asset impairments resulting from the pandemic will further constrain lending and the risk-bearing capacity of regulated banks and insurers, increasing the share delivered by capital markets and the so-called shadow banking or alternative financing industry (such as PE funds and sovereigns) over today's levels.
  • After the pandemic subsides, alternative financing will return to today's levels or below.
  • No change.

Data shown for Trend 3:

  • Alternative providers of capital will increase in importance, forcing financial institutions to adjust their business models to a less pronounced role in providing capital (with a corresponding P&L impact) and find new ways to participate in the value ch
  • Policymakers will have not made the much needed regulatory, tax and legal changes to enable alternative financing to flourish, limiting its influence.
  • No change.

Data shown for Trend 4:

  • Regulatory initiatives that had been planned or temporarily postponed during the pandemic will be implemented in short order.
  • Regulatory initiatives that had been planned or temporarily postponed during the pandemic will be further delayed.
  • No change.

Data shown for Trend 5:

  • De-globalisation of financial institutions will continue as will offshoring and nearshoring.
  • Increased regionalisation of institutions and onshoring of operational activities will be driven by increased digitization and risk aversion.
  • No change.

Data shown for Trend 6:

  • Leading institutions will further digitise their customer interaction models, strengthen digital sales and service model interaction, and materially cut back on support functions and infrastructure that failed to prove their value during the pandemic.
  • Leading institutions will revive some of their 'brick and mortar' operations that closed during the pandemic.
  • No change.

Data shown for Trend 7:

  • Big tech companies will continue to push into arenas formerly exclusively owned by incumbent FS firms (such as payments and credit, lending, and trading).
  • Financial services incumbents will be able to fend off the big tech companies by increasing client satisfaction and trust with a wider and evolving set of products and services.
  • No change.

Trend 1: Interest rates 62%,30%,7% 68%,26%,6% 57%,34%,9% 60%,33%,7%
Trend 2: Alternative finance 53%,38%,9% 62%,31%,8% 46%,43%,11% 46%,43%,11%
Trend 3: Sources of capital 56%,32%,12% 65%,26%,9% 49%,36%,15% 50%,38%,13%
Trend 4: Regulatory initiatives 47%,41%,12% 48%,44%,7% 46%,35%,18% 46%,41%,13%
Trend 5: Globalisation 34%,48%,17% 40%,52%,8% 29%,43%,28% 32%,48%,20%
Trend 6: Digital v Bricks & Mortar 68%,22%,10% 67%,25%,8% 66%,20%,14% 70%,21%,8%
Trend 7: Big tech in FS 61%,30%,8% 63%,31%,6% 57%,31%,11% 63%,29%,8%
Thinking ahead to 2025 And finally, thinking ahead to 2025,what do you expect to be your organisation's top 3 challenges over the next 5 years in the order of priority for your organisation? - Ranked 1-3

Data shown:

  • Percentage of respondents who included each answer in their top 3

New and digital only market entrants 14% 13% 15% 14%
Inadequacy of basic infrastructure 8% 11% 6% 6%
Increasing frequency of cyber threats 19% 18% 21% 19%
Regulatory compliance 20% 16% 21% 24%
Investor demands 12% 12% 13% 10%
Low or zero interest rate environment 17% 18% 17% 17%
Increasing inequality 9% 12% 9% 7%
Geopolitical uncertainty 15% 13% 17% 15%
Climate change and environmental issues e.g. ESG 15% 18% 13% 13%
Crisis response preparedness 14% 15% 15% 13%
Customers loss of trust in their financial institutions 13% 16% 15% 9%
Attracting and retaining talented employees 17% 18% 17% 14%
Attracting new customers 19% 20% 19% 19%
Retaining existing customers 15% 14% 16% 14%
Increasing profitability of customers 16% 16% 15% 18%
Impact of new technologies 21% 20% 16% 26%
Product development 11% 12% 10% 11%
Pressure on Fees 15% 13% 18% 15%
Other (please specify) 0% 0% 0% 0%
Digital transformation 22% 19% 23% 26%
Don't know 1% 1% 1% 1%
AWM
Questions and Answers Global Asia Pac EMEA Americas
Regulatory Impact Thinking about the different areas that could potentially be impacted by regulatory changes over the next 5 years, which areas of regulation are you most concerned about?

Data shown:

  • Percentage of respondents who included each answer in their top 3

AML (Anti Money Laundering) 25% 26% 29% 22%
Use of new technology 31% 33% 27% 32%
Enhanced accountability 19% 24% 20% 13%
Open Banking 22% 26% 20% 16%
Central Bank Digital Currency (CBDC) 25% 30% 31% 15%
Data privacy and cybersecurity 51% 41% 47% 66%
Environment and climate (e.g. ESG) 32% 34% 37% 25%
Customer communication 21% 24% 14% 23%
Digital identity authentication 31% 35% 22% 32%
E-money/Cryptocurrency 26% 30% 27% 20%
KYC (Know Your Customer) 29% 36% 18% 25%
Local regulatory pressures - different regulations in different regions 33% 41% 29% 25%
New business model (crowdfunding, peer-to-peer lending) 24% 34% 16% 16%
Other (please specify) 1% 0% 0% 3%
Don't know 3% 0% 8% 4%
Cybersecurity Strategy Which of the following factors will have the greatest impact in shaping your cybersecurity strategy over the next 5 years?

Data shown:

  • Percentage of respondents who included each answer in their top 3

Shortage of cybersecurity talent 33% 42% 22% 27%
Introduction of new authentication technologies, such as biometrics 23% 28% 14% 22%
Increasing complexity of cyber threats 47% 41% 41% 59%
Introduction of fifth-generation (5G) cellular networks 27% 36% 20% 20%
Adoption of Internet of Things (IoT) hardware and software 32% 49% 14% 20%
Growing public concern over data privacy 36% 38% 24% 39%
Cybersecurity and data privacy regulations 48% 51% 47% 46%
Vulnerabilities in supply chains and business partners 31% 30% 27% 35%
Rising geopolitical tensions 33% 34% 31% 34%
Human vulnerabilities (unintentional or malicious) 30% 25% 35% 33%
Other (please specify) 0% 0% 0% 1%
Don't know 1% 1% 4% 0%
M&A, Divestitures or Carve-out Is your organisation likely to consider any Merger & Acquisition (M&A), Divestitures or Carve-out activity in the next 5 years?

Data shown:

  • Percentage of respondents who included each answer in their top 3

Yes - expect 1 or 2 M&A/Divestitures/Carve-out activities 31% 23% 14% 27%
Yes - expect 3 to 5 M&A/Divestitures/Carve-out activities 22% 38% 33% 20%
Yes - expect more than 5 M&A/Divestitures/Carve-out activities 22% 9% 8% 11%
No - we don't plan to consider any M&A/Divestitures/Carve-out activities expected within next 5 years 10% 23% 24% 19%
No - but we expect to be the target of an M&A/ Divestiture/Carve-out activity expected within next 5 years 4% 5% 4% 4%
Don't know 11% 3% 16% 19%
ESG Influence To what extent do you expect ESG (Environmental, Social and Corporate Governance) to influence the following aspects of your organisation's business model?

Data shown:

  • No influence
  • Moderate influence
  • Significant influence
  • Don't know
separated by commas in each table cell.

Selection of clients 21%,43%,33%,2% 9%,49%,39%,3% 22%,45%,31%,2% 37%,34%,28%,1%
Selection of suppliers (value chain partners) 15%,46%,35%,5% 6%,43%,49%,2% 16%,53%,24%,6% 25%,44%,23%,8%
Products/service offering 13%,43%,41%,3% 5%,51%,43%,1% 10%,35%,49%,6% 24%,39%,33%,4%
Investment decisions 12%,42%,43%,3% 5%,44%,50%,1% 10%,41%,45%,4% 23%,41%,33%,4%
Lending decisions 21%,43%,30%,5% 12%,49%,36%,3% 16%,49%,31%,4% 37%,33%,23%,8%
Recruitment of employees 19%,46%,32%,3% 10%,53%,35%,2% 27%,45%,24%,4% 27%,37%,32%,5%
Overall organisation's strategy 13%,44%,40%,2% 7%,44%,48%,1% 14%,47%,39%,0% 22%,43%,32%,4%
The role of employees in Financial Services The role of employees in Financial Services organisations is changing. Which of the following activities is your organisation planning topursue over the next 5 years to address a potential future skills gap?

Data shown:

  • Percentage of respondents who included each answer in their top 3

Change the composition of the workforce between permanent and contingent staff 40% 44% 35% 37%
Hire from competitors 27% 26% 24% 28%
Acquire a firm to access new skills/expertise 31% 45% 22% 18%
Establish a strong pipeline direct from education 45% 49% 24% 52%
Hire from outside the industry 27% 30% 16% 30%
Undertake significant retraining/upskilling 46% 45% 37% 52%
Outsource non-core activities to third parties 37% 40% 29% 37%
Other (please specify) 0% 0% 0% 0%
Don't know 6% 4% 12% 4%
Macro trends in FS Thinking about macro trends in the financial services industry, which of the statements below do you think is most likely to be true in the 2025?

Data shown for Trend 1:

  • Continued low interest rates will require that institutions increase investment in measures to reduce costs, digitise and improve productivity to maintain margins and profitability.
  • An eventual increase in interest rates in 2023 will help institutions improve margins and profitability.
  • No change.

Data shown for Trend 2:

  • Asset impairments resulting from the pandemic will further constrain lending and the risk-bearing capacity of regulated banks and insurers, increasing the share delivered by capital markets and the so-called shadow banking or alternative financing industry (such as PE funds and sovereigns) over today's levels.
  • After the pandemic subsides, alternative financing will return to today's levels or below.
  • No change.

Data shown for Trend 3:

  • Alternative providers of capital will increase in importance, forcing financial institutions to adjust their business models to a less pronounced role in providing capital (with a corresponding P&L impact) and find new ways to participate in the value ch
  • Policymakers will have not made the much needed regulatory, tax and legal changes to enable alternative financing to flourish, limiting its influence.
  • No change.

Data shown for Trend 4:

  • Regulatory initiatives that had been planned or temporarily postponed during the pandemic will be implemented in short order.
  • Regulatory initiatives that had been planned or temporarily postponed during the pandemic will be further delayed.
  • No change.

Data shown for Trend 5:

  • De-globalisation of financial institutions will continue as will offshoring and nearshoring.
  • Increased regionalisation of institutions and onshoring of operational activities will be driven by increased digitization and risk aversion.
  • No change.

Data shown for Trend 6:

  • Leading institutions will further digitise their customer interaction models, strengthen digital sales and service model interaction, and materially cut back on support functions and infrastructure that failed to prove their value during the pandemic.
  • Leading institutions will revive some of their 'brick and mortar' operations that closed during the pandemic.
  • No change.

Data shown for Trend 7:

  • Big tech companies will continue to push into arenas formerly exclusively owned by incumbent FS firms (such as payments and credit, lending, and trading).
  • Financial services incumbents will be able to fend off the big tech companies by increasing client satisfaction and trust with a wider and evolving set of products and services.
  • No change.

Trend 1: Interest rates 63%,31%,6% 68%,29%,3% 59%,33%,8% 59%,33%,8%
Trend 2: Alternative finance 53%,38%,8% 67%,30%,3% 45%,47%,8% 42%,43%,15%
Trend 3: Sources of capital 60%,30%,10% 68%,28%,4% 51%,33%,16% 56%,29%,15%
Trend 4: Regulatory initiatives 49%,37%,15% 56%,38%,6% 45%,33%,22% 42%,37%,22%
Trend 5: Globalisation 29%,53%,18% 38%,54%,8% 14%,51%,35% 25%,53%,22%
Trend 6: Digital v Bricks & Mortar 69%,21%,10% 72%,24%,5% 69%,16%,14% 66%,22%,13%
Trend 7: Big tech in FS 59%,33%,9% 58%,37%,5% 53%,37%,10% 63%,24%,13%
Thinking ahead to 2025 And finally, thinking ahead to 2025,what do you expect to be your organisation’s top 3 challenges over the next 5 years in the order of priority for your organisation? - Ranked 1-3

Data shown:

  • Percentage of respondents who included each answer in their top 3

New and digital only market entrants 11% 10% 12% 11%
Inadequacy of basic infrastructure 6% 6% 6% 5%
Increasing frequency of cyber threats 24% 22% 27% 25%
Regulatory compliance 24% 23% 22% 27%
Investor demands 15% 15% 16% 14%
Low or zero interest rate environment 14% 11% 16% 16%
Increasing inequality 6% 9% 2% 5%
Geopolitical uncertainty 21% 11% 22% 6%
Climate change and environmental issues e.g. ESG 13% 15% 8% 14%
Crisis response preparedness 17% 18% 22% 14%
Customers loss of trust in their financial institutions 11% 15% 10% 8%
Attracting and retaining talented employees 15% 18% 12% 14%
Attracting new customers 15% 21% 18% 6%
Retaining existing customers 12% 18% 22% 24%
Increasing profitability of customers 18% 20% 20% 15%
Impact of new technologies 25% 25% 14% 32%
Product development 10% 12% 10% 9%
Pressure on Fees 16% 13% 20% 16%
Other (please specify) 0% 0% 0% 1%
Digital transformation 22% 18% 16% 30%
Don't know 0% 0% 0% 1%
Banking
Questions and Answers Global Asia Pac EMEA Americas
Regulatory Impact Thinking about the different areas that could potentially be impacted by regulatory changes over the next 5 years, which areas of regulation are you most concerned about?

Data shown:

  • Percentage of respondents who included each answer in their top 3

AML (Anti Money Laundering) 26% 23% 24% 30%
Use of new technology 27% 26% 19% 34%
Enhanced accountability 26% 29% 22% 27%
Open Banking 27% 23% 29% 30%
Central Bank Digital Currency (CBDC) 31% 35% 26% 31%
Data privacy and cybersecurity 43% 31% 52% 46%
Environment and climate (e.g. ESG) 26% 33% 28% 19%
Customer communication 24% 27% 19% 26%
Digital identity authentication 31% 33% 30% 31%
E-money/Cryptocurrency 32% 32% 32% 32%
KYC (Know Your Customer) 30% 30% 28% 31%
Local regulatory pressures - different regulations in different regions 24% 23% 27% 23%
New business model (crowdfunding, peer-to-peer lending) 25% 24% 27% 23%
Other (please specify) 0% 0% 1% 0%
Don't know 1% 0% 0% 2%
Cybersecurity Strategy Which of the following factors will have the greatest impact in shaping your cybersecurity strategy over the next 5 years?

Data shown:

  • Percentage of respondents who included each answer in their top 3

Shortage of cybersecurity talent 36% 34% 39% 35%
Introduction of new authentication technologies, such as biometrics 26% 20% 26% 32%
Increasing complexity of cyber threats 45% 45% 38% 50%
Introduction of fifth-generation (5G) cellular networks 30% 38% 20% 31%
Adoption of Internet of Things (IoT) hardware and software 27% 31% 23% 28%
Growing public concern over data privacy 35% 30% 42% 34%
Cybersecurity and data privacy regulations 46% 38% 48% 50%
Vulnerabilities in supply chains and business partners 28% 21% 25% 36%
Rising geopolitical tensions 27% 25% 28% 27%
Human vulnerabilities (unintentional or malicious) 35% 40% 38% 29%
Other (please specify) 0% 0% 0% 0%
Don't know 2% 2% 2% 2%
M&A, Divestitures or Carve-out Is your organisation likely to consider any Merger & Acquisition (M&A), Divestitures or Carve-out activity in the next 5 years?

Data shown:

  • Percentage of respondents who included each answer in their top 3

Yes - expect 1 or 2 M&A/Divestitures/Carve-out activities 31% 24% 24% 30%
Yes - expect 3 to 5 M&A/Divestitures/Carve-out activities 26% 35% 31% 28%
Yes - expect more than 5 M&A/Divestitures/Carve-out activities 15% 24% 11% 15%
No - we don't plan to consider any M&A/Divestitures/Carve-out activities expected within next 5 years 17% 10% 22% 13%
No - but we expect to be the target of an M&A/ Divestiture/Carve-out activity expected within next 5 years 5% 4% 4% 6%
Don't know 6% 2% 8% 9%
ESG Influence To what extent do you expect ESG (Environmental, Social and Corporate Governance) to influence the following aspects of your organisation's business model?

Data shown:

  • No influence
  • Moderate influence
  • Significant influence
  • Don't know
separated by commas in each table cell.

Selection of clients 16%,42%,38%,5% 10%,43%,43%,4% 19%,41%,35%,5% 19%,41%,35%,5%
Selection of suppliers (value chain partners) 15%,45%,38%,3% 14%,45%,40%,1% 15%,46%,35%,4% 15%,44%,38%,3%
Products/service offering 11%,48%,38%,3% 10%,51%,37%,2% 14%,41%,41%,4% 10%,51%,35%,3%
Investment decisions 14%,41%,42%,3% 13%,40%,47%,0% 13%,40%,41%,6% 15%,43%,38%,4%
Lending decisions 14%,43%,41%,2% 12%,45%,43%,0% 18%,41%,38%,3% 11%,43%,42%,4%
Recruitment of employees 20%,42%,36%,2% 13%,52%,35%,0% 24%,33%,40%,3% 22%,41%,34%,3%
Overall organisation's strategy 11%,38%,47%,4% 11%,41%,48%,0% 14%,34%,43%,9% 9%,40%,50%,2%
The role of employees in Financial Services The role of employees in Financial Services organisations is changing. Which of the following activities is your organisation planning topursue over the next 5 years to address a potential future skills gap?

Data shown:

  • Percentage of respondents who included each answer in their top 3

Change the composition of the workforce between permanent and contingent staff 35% 33% 38% 34%
Hire from competitors 34% 33% 34% 34%
Acquire a firm to access new skills/expertise 35% 38% 28% 40%
Establish a strong pipeline direct from education 38% 40% 36% 39%
Hire from outside the industry 24% 23% 29% 21%
Undertake significant retraining/upskilling 44% 41% 45% 47%
Outsource non-core activities to third parties 33% 35% 30% 34%
Other (please specify) 0% 0% 0% 0%
Don't know 4% 3% 5% 4%
Macro trends in FS Thinking about macro trends in the financial services industry, which of the statements below do you think is most likely to be true in the 2025?

Data shown for Trend 1:

  • Continued low interest rates will require that institutions increase investment in measures to reduce costs, digitise and improve productivity to maintain margins and profitability.
  • An eventual increase in interest rates in 2023 will help institutions improve margins and profitability.
  • No change.

Data shown for Trend 2:

  • Asset impairments resulting from the pandemic will further constrain lending and the risk-bearing capacity of regulated banks and insurers, increasing the share delivered by capital markets and the so-called shadow banking or alternative financing industry (such as PE funds and sovereigns) over today's levels.
  • After the pandemic subsides, alternative financing will return to today's levels or below.
  • No change.

Data shown for Trend 3:

  • Alternative providers of capital will increase in importance, forcing financial institutions to adjust their business models to a less pronounced role in providing capital (with a corresponding P&L impact) and find new ways to participate in the value ch
  • Policymakers will have not made the much needed regulatory, tax and legal changes to enable alternative financing to flourish, limiting its influence.
  • No change.

Data shown for Trend 4:

  • Regulatory initiatives that had been planned or temporarily postponed during the pandemic will be implemented in short order.
  • Regulatory initiatives that had been planned or temporarily postponed during the pandemic will be further delayed.
  • No change.

Data shown for Trend 5:

  • De-globalisation of financial institutions will continue as will offshoring and nearshoring.
  • Increased regionalisation of institutions and onshoring of operational activities will be driven by increased digitization and risk aversion.
  • No change.

Data shown for Trend 6:

  • Leading institutions will further digitise their customer interaction models, strengthen digital sales and service model interaction, and materially cut back on support functions and infrastructure that failed to prove their value during the pandemic.
  • Leading institutions will revive some of their 'brick and mortar' operations that closed during the pandemic.
  • No change.

Data shown for Trend 7:

  • Big tech companies will continue to push into arenas formerly exclusively owned by incumbent FS firms (such as payments and credit, lending, and trading).
  • Financial services incumbents will be able to fend off the big tech companies by increasing client satisfaction and trust with a wider and evolving set of products and services.
  • No change.

Trend 1: Interest rates 62%,32%,6% 69%,25%,5% 58%,34%,8% 60%,35%,5%
Trend 2: Alternative finance 52%,40%,8% 62%,33%,5% 48%,44%,8% 48%,42%,10%
Trend 3: Sources of capital 55%,36%,9% 70%,24%,5% 51%,39%,10% 45%,45%,10%
Trend 4: Regulatory initiatives 49%,40%,12% 56%,40%,4% 40%,42%,18% 50%,37%,12%
Trend 5: Globalisation 41%,43%,16% 48%,47%,4% 34%,40%,26% 42%,43%,15%
Trend 6: Digital v Bricks & Mortar 66%,24%,10% 69%,24%,7% 60%,25%,15% 69%,24%,8%
Trend 7: Big tech in FS 65%,29%,6% 74%,25%,1% 63%,27%,10% 58%,34%,8%
Thinking ahead to 2025 And finally, thinking ahead to 2025,what do you expect to be your organisation’s top 3 challenges over the next 5 years in the order of priority for your organisation? - Ranked 1-3

Data shown:

  • Percentage of respondents who included each answer in their top 3

New and digital only market entrants 14% 12% 15% 13%
Inadequacy of basic infrastructure 8% 15% 6% 5%
Increasing frequency of cyber threats 17% 13% 21% 16%
Regulatory compliance 21% 14% 25% 23%
Investor demands 9% 5% 12% 10%
Low or zero interest rate environment 19% 23% 18% 17%
Increasing inequality 11% 15% 10% 8%
Geopolitical uncertainty 15% 15% 8% 10%
Climate change and environmental issues e.g. ESG 16% 16% 18% 14%
Crisis response preparedness 13% 13% 13% 13%
Customers loss of trust in their financial institutions 14% 16% 18% 9%
Attracting and retaining talented employees 17% 19% 15% 16%
Attracting new customers 18% 19% 12% 24%
Retaining existing customers 11% 10% 16% 17%
Increasing profitability of customers 17% 15% 15% 20%
Impact of new technologies 20% 16% 16% 27%
Product development 9% 12% 7% 9%
Pressure on Fees 15% 14% 19% 12%
Other (please specify) 0% 2% 3% 1%
Digital transformation 26% 21% 25% 30%
Don't know 2% 0% 0% 0%
Insurance
Questions and Answers Global Asia Pac EMEA Americas
Regulatory Impact Thinking about the different areas that could potentially be impacted by regulatory changes over the next 5 years, which areas of regulation are you most concerned about?

Data shown:

  • Percentage of respondents who included each answer in their top 3

AML (Anti Money Laundering) 55% 46% 51% 66%
Use of new technology 28% 23% 20% 38%
Enhanced accountability 29% 27% 31% 29%
Open Banking 29% 27% 31% 29%
Central Bank Digital Currency (CBDC) 26% 35% 29% 17%
Data privacy and cybersecurity 17% 25% 12% 16%
Environment and climate (e.g. ESG) 17% 21% 14% 16%
Customer communication 17% 19% 14% 19%
Digital identity authentication 21% 27% 18% 19%
E-money/Cryptocurrency 27% 27% 22% 31%
KYC (Know Your Customer) 23% 27% 12% 28%
Local regulatory pressures - different regulations in different regions 23% 29% 22% 17%
New business model (crowdfunding, peer-to-peer lending) 11% 8% 8% 16%
Other (please specify) 0% 0% 0% 0%
Don't know 4% 6% 6% 0%
Cybersecurity Strategy Which of the following factors will have the greatest impact in shaping your cybersecurity strategy over the next 5 years?

Data shown:

  • Percentage of respondents who included each answer in their top 3

Shortage of cybersecurity talent 43% 42% 45% 41%
Introduction of new authentication technologies, such as biometrics 45% 42% 45% 47%
Increasing complexity of cyber threats 36% 29% 37% 41%
Introduction of fifth-generation (5G) cellular networks 37% 33% 43% 36%
Adoption of Internet of Things (IoT) hardware and software 30% 25% 22% 40%
Growing public concern over data privacy 24% 21% 20% 29%
Cybersecurity and data privacy regulations 32% 25% 37% 33%
Vulnerabilities in supply chains and business partners 23% 23% 33% 16%
Rising geopolitical tensions 21% 19% 22% 22%
Human vulnerabilities (unintentional or malicious) 25% 19% 24% 29%
Other (please specify) 0% 0% 0% 0%
Don't know 5% 6% 4% 5%
M&A, Divestitures or Carve-out Is your organisation likely to consider any Merger & Acquisition (M&A), Divestitures or Carve-out activity in the next 5 years?

Data shown:

  • Percentage of respondents who included each answer in their top 3

Yes - expect 1 or 2 M&A/Divestitures/Carve-out activities 23% 25% 33% 26%
Yes - expect 3 to 5 M&A/Divestitures/Carve-out activities 28% 17% 29% 22%
Yes - expect more than 5 M&A/Divestitures/Carve-out activities 23% 8% 12% 10%
No - we don't plan to consider any M&A/Divestitures/Carve-out activities expected within next 5 years 10% 21% 22% 26%
No - but we expect to be the target of an M&A/ Divestiture/Carve-out activity expected within next 5 years 6% 10% 4% 5%
Don't know 10% 19% 0% 10%
ESG Influence To what extent do you expect ESG (Environmental, Social and Corporate Governance) to influence the following aspects of your organisation's business model?

Data shown:

  • No influence
  • Moderate influence
  • Significant influence
  • Don't know
separated by commas in each table cell.

Selection of clients 26%,44%,29%,1% 15%,44%,40%,2% 22%,45%,33%,0% 40%,43%,17%,0%
Selection of suppliers (value chain partners) 21%,50%,26%,3% 21%,48%,25%,6% 20%,53%,27%,0% 22%,48%,26%,3%
 Products/service offering 15%,45%,39%,1% 10%,42%,46%,2% 8%,57%,33%,2% 24%,38%,38%,0%
Investment decisions 15%,44%,39%,3% 17%,38%,46%,0% 16%,43%,39%,2% 12%,50%,33%,5%
 Lending decisions 25%,46%,25%,5% 21%,50%,27%,2% 22%,49%,22%,6% 31%,40%,24%,5%
Recruitment of employees 23%,45%,28%,5% 29%,46%,25%,0% 16%,45%,33%,6% 24%,43%,26%,7%
Overall organisation's strategy 14%,46%,37%,3% 13%,40%,46%,2% 16%,43%,39%,2% 14%,55%,28%,3%
The role of employees in Financial Services The role of employees in Financial Services organisations is changing. Which of the following activities is your organisation planning topursue over the next 5 years to address a potential future skills gap?

Data shown:

  • Percentage of respondents who included each answer in their top 3

Change the composition of the workforce between permanent and contingent staff 26% 33% 27% 21%
Hire from competitors 26% 21% 37% 21%
Acquire a firm to access new skills/expertise 27% 33% 22% 26%
Establish a strong pipeline direct from education 34% 29% 24% 45%
Hire from outside the industry 28% 21% 31% 33%
Undertake significant retraining/upskilling 49% 44% 53% 50%
Outsource non-core activities to third parties 35% 42% 29% 34%
Other (please specify) 0% 0% 0% 0%
Don't know 5% 4% 4% 7%
Macro trends in FS Thinking about macro trends in the financial services industry, which of the statements below do you think is most likely to be true in the 2025?

Data shown for Trend 1:

  • Continued low interest rates will require that institutions increase investment in measures to reduce costs, digitise and improve productivity to maintain margins and profitability.
  • An eventual increase in interest rates in 2023 will help institutions improve margins and profitability.
  • No change.

Data shown for Trend 2:

  • Asset impairments resulting from the pandemic will further constrain lending and the risk-bearing capacity of regulated banks and insurers, increasing the share delivered by capital markets and the so-called shadow banking or alternative financing industry (such as PE funds and sovereigns) over today's levels.
  • After the pandemic subsides, alternative financing will return to today's levels or below.
  • No change.

Data shown for Trend 3:

  • Alternative providers of capital will increase in importance, forcing financial institutions to adjust their business models to a less pronounced role in providing capital (with a corresponding P&L impact) and find new ways to participate in the value ch
  • Policymakers will have not made the much needed regulatory, tax and legal changes to enable alternative financing to flourish, limiting its influence.
  • No change.

Data shown for Trend 4:

  • Regulatory initiatives that had been planned or temporarily postponed during the pandemic will be implemented in short order.
  • Regulatory initiatives that had been planned or temporarily postponed during the pandemic will be further delayed.
  • No change.

Data shown for Trend 5:

  • De-globalisation of financial institutions will continue as will offshoring and nearshoring.
  • Increased regionalisation of institutions and onshoring of operational activities will be driven by increased digitization and risk aversion.
  • No change.

Data shown for Trend 6:

  • Leading institutions will further digitise their customer interaction models, strengthen digital sales and service model interaction, and materially cut back on support functions and infrastructure that failed to prove their value during the pandemic.
  • Leading institutions will revive some of their 'brick and mortar' operations that closed during the pandemic.
  • No change.

Data shown for Trend 7:

  • Big tech companies will continue to push into arenas formerly exclusively owned by incumbent FS firms (such as payments and credit, lending, and trading).
  • Financial services incumbents will be able to fend off the big tech companies by increasing client satisfaction and trust with a wider and evolving set of products and services.
  • No change.

Trend 1: Interest rates 54%,34%,12% 50%,33%,17% 53%,35%,12% 59%,33%,9%
Trend 2: Alternative finance 50%,37%,12% 52%,35%,13% 45%,37%,18% 53%,40%,7%
Trend 3: Sources of capital 46%,32%,22% 48%,25%,27% 41%,37%,22% 50%,33%,17%
Trend 4: Regulatory initiatives 44%,43%,14% 33%,50%,17% 55%,27%,18% 43%,50%,7%
Trend 5: Globalisation 30%,44%,26% 35%,44%,21% 33%,41%,27% 24%,47%,29%
Trend 6: Digital v Bricks & Mortar 61%,24%,15% 35%,40%,25% 76%,12%,12% 71%,21%,9%
Trend 7: Big tech in FS 60%,27%,13% 58%,27%,15% 55%,29%,16% 66%,26%,9%
Thinking ahead to 2025 And finally, thinking ahead to 2025,what do you expect to be your organisation’s top 3 challenges over the next 5 years in the order of priority for your organisation? - Ranked 1-3

Data shown:

  • Percentage of respondents who included each answer in their top 3

New and digital only market entrants 19% 21% 22% 14%
Inadequacy of basic infrastructure 15% 15% 14% 17%
Increasing frequency of cyber threats 19% 15% 14% 26%
Regulatory compliance 25% 21% 31% 24%
Investor demands 17% 19% 16% 17%
Low or zero interest rate environment 16% 15% 16% 17%
Increasing inequality 19% 19% 27% 14%
Geopolitical uncertainty 14% 13% 12% 17%
Climate change and environmental issues e.g. ESG 13% 13% 16% 10%
Crisis response preparedness 13% 15% 12% 12%
Customers loss of trust in their financial institutions 10% 13% 27% 28%
Attracting and retaining talented employees 23% 10% 12% 9%
Attracting new customers 11% 13% 12% 9%
Retaining existing customers 15% 13% 18% 16%
Increasing profitability of customers 16% 27% 10% 12%
Impact of new technologies 11% 13% 12% 9%
Product development 12% 10% 10% 14%
Pressure on Fees 12% 13% 12% 10%
Other (please specify) 10% 15% 4% 10%
Digital transformation 2% 0% 0% 0%
Don't know 0% 2% 0% 3%
Payments
Questions and Answers Global Asia Pac EMEA Americas
Regulatory Impact Thinking about the different areas that could potentially be impacted by regulatory changes over the next 5 years, which areas of regulation are you most concerned about?

Data shown:

  • Percentage of respondents who included each answer in their top 3

AML (Anti Money Laundering) 13%
Use of new technology 26%
Enhanced accountability 17%
Open Banking 30%
Central Bank Digital Currency (CBDC) 30%
Data privacy and cybersecurity 39%
Environment and climate (e.g. ESG) 30%
Customer communication 26%
Digital identity authentication 13%
E-money/Cryptocurrency 22%
KYC (Know Your Customer) 26%
Local regulatory pressures - different regulations in different regions 26%
New business model (crowdfunding, peer-to-peer lending) 17%
Other (please specify) 0%
Don't know 0%
Cybersecurity Strategy Which of the following factors will have the greatest impact in shaping your cybersecurity strategy over the next 5 years?

Data shown:

  • Percentage of respondents who included each answer in their top 3

Shortage of cybersecurity talent 26%
Introduction of new authentication technologies, such as biometrics 30%
Increasing complexity of cyber threats 39%
Introduction of fifth-generation (5G) cellular networks 26%
Adoption of Internet of Things (IoT) hardware and software 26%
Growing public concern over data privacy 30%
Cybersecurity and data privacy regulations 48%
Vulnerabilities in supply chains and business partners 17%
Rising geopolitical tensions 26%
Human vulnerabilities (unintentional or malicious) 30%
Other (please specify) 0%
Don't know 0%
M&A, Divestitures or Carve-out Is your organisation likely to consider any Merger & Acquisition (M&A), Divestitures or Carve-out activity in the next 5 years?

Data shown:

  • Percentage of respondents who included each answer in their top 3

Yes - expect 1 or 2 M&A/Divestitures/Carve-out activities 30%
Yes - expect 3 to 5 M&A/Divestitures/Carve-out activities 30%
Yes - expect more than 5 M&A/Divestitures/Carve-out activities 13%
No - we don't plan to consider any M&A/Divestitures/Carve-out activities expected within next 5 years 17%
No - but we expect to be the target of an M&A/ Divestiture/Carve-out activity expected within next 5 years 0%
Don't know 9%
ESG Influence To what extent do you expect ESG (Environmental, Social and Corporate Governance) to influence the following aspects of your organisation's business model?

Data shown:

  • No influence
  • Moderate influence
  • Significant influence
  • Don't know
separated by commas in each table cell.

Selection of clients 13%,30%,52%,4%
Selection of suppliers (value chain partners) 22%,30%,43%,4%
Products/service offering 9%,43%,43%,4%
Investment decisions 4%,43%,43%,9%
Lending decisions 13%,48%,35%,4%
Recruitment of employees 17%,35%,48%,0%
Overall organisation's strategy 9%,39%,43%,9%
The role of employees in Financial Services The role of employees in Financial Services organisations is changing. Which of the following activities is your organisation planning topursue over the next 5 years to address a potential future skills gap?

Data shown:

  • Percentage of respondents who included each answer in their top 3

Change the composition of the workforce between permanent and contingent staff 17%
Hire from competitors 22%
Acquire a firm to access new skills/expertise 22%
Establish a strong pipeline direct from education 39%
Hire from outside the industry 52%
Undertake significant retraining/upskilling 26%
Outsource non-core activities to third parties 52%
Other (please specify) 0%
Don't know 0%
Macro trends in FS Thinking about macro trends in the financial services industry, which of the statements below do you think is most likely to be true in the 2025?

Data shown for Trend 1:

  • Continued low interest rates will require that institutions increase investment in measures to reduce costs, digitise and improve productivity to maintain margins and profitability.
  • An eventual increase in interest rates in 2023 will help institutions improve margins and profitability.
  • No change.

Data shown for Trend 2:

  • Asset impairments resulting from the pandemic will further constrain lending and the risk-bearing capacity of regulated banks and insurers, increasing the share delivered by capital markets and the so-called shadow banking or alternative financing industry (such as PE funds and sovereigns) over today's levels.
  • After the pandemic subsides, alternative financing will return to today's levels or below.
  • No change.

Data shown for Trend 3:

  • Alternative providers of capital will increase in importance, forcing financial institutions to adjust their business models to a less pronounced role in providing capital (with a corresponding P&L impact) and find new ways to participate in the value ch
  • Policymakers will have not made the much needed regulatory, tax and legal changes to enable alternative financing to flourish, limiting its influence.
  • No change.

Data shown for Trend 4:

  • Regulatory initiatives that had been planned or temporarily postponed during the pandemic will be implemented in short order.
  • Regulatory initiatives that had been planned or temporarily postponed during the pandemic will be further delayed.
  • No change.

Data shown for Trend 5:

  • De-globalisation of financial institutions will continue as will offshoring and nearshoring.
  • Increased regionalisation of institutions and onshoring of operational activities will be driven by increased digitization and risk aversion.
  • No change.

Data shown for Trend 6:

  • Leading institutions will further digitise their customer interaction models, strengthen digital sales and service model interaction, and materially cut back on support functions and infrastructure that failed to prove their value during the pandemic.
  • Leading institutions will revive some of their 'brick and mortar' operations that closed during the pandemic.
  • No change.

Data shown for Trend 7:

  • Big tech companies will continue to push into arenas formerly exclusively owned by incumbent FS firms (such as payments and credit, lending, and trading).
  • Financial services incumbents will be able to fend off the big tech companies by increasing client satisfaction and trust with a wider and evolving set of products and services.
  • No change.

Trend 1: Interest rates 65%,22%,13%
Trend 2: Alternative finance 52%,26%,22%
Trend 3: Sources of capital 65%,22%,13%
Trend 4: Regulatory initiatives 52%,43%,4%
Trend 5: Globalisation 39%,43%,17%
Trend 6: Digital v Bricks & Mortar 83%,13%,4%
Trend 7: Big tech in FS 74%,26%,0%
Thinking ahead to 2025 And finally, thinking ahead to 2025,what do you expect to be your organisation’s top 3 challenges over the next 5 years in the order of priority for your organisation? - Ranked 1-3

Data shown:

  • Percentage of respondents who included each answer in their top 3

New and digital only market entrants 9%
Inadequacy of basic infrastructure 22%
Increasing frequency of cyber threats 4%
Regulatory compliance 0%
Investor demands 13%
Low or zero interest rate environment 13%
Increasing inequality 26%
Geopolitical uncertainty 0%
Climate change and environmental issues e.g. ESG 13%
Crisis response preparedness 9%
Customers loss of trust in their financial institutions 9%
Attracting and retaining talented employees 22%
Attracting new customers 26%
Retaining existing customers 30%
Increasing profitability of customers 17%
Impact of new technologies 35%
Product development 17%
Pressure on Fees 13%
Other (please specify) 0%
Digital transformation 17%
Don't know 0%

Where are we now?

Sending a text to pay for a bus ticket in Turkey, using a QR code to pay for groceries in China, or tapping a sales terminal with a mobile phone in the US. 

Even before COVID-19, these ways of paying for goods and services were evidence of a steady shift to digital payments— a shift that might ultimately lead to a cashless global society. Global cashless payment volumes are set to increase by more than 80% from 2020 to 2025, from about 1tn transactions to almost 1.9tn, and to almost triple by 2030, according to analysis by PwC and Strategy&.

Asia-Pacific will grow fastest, with cashless transaction volume growing by 109% until 2025 and then by 76% percent from 2025 to 2030, followed by Africa (78%, 64%) and Europe (64%, 39%). Latin America comes next (52%, 48%), with the US and Canada growing least rapidly (43%, 35%).

Chart graphic

This means that by 2030 the number of cashless transactions will be about double to triple the current level, across regions.

Payments trend

During COVID-19 lockdowns, many people adopted digital behaviours, accelerating the proliferation of mobile-first digital economies and rendering cash even less relevant to daily life than it already was (although in less developed economies, cash remained essential). In our latest global survey of banking, fintech and payments organisations, 89% of respondents agreed that the shift towards e-commerce would continue to increase, requiring significant investment in online payment solutions. Not only that, but they agreed (97%) that there will be a shift towards more real-time payments. 

Underneath the shift to cashless lies a larger, more profound change. Not only are traditional ways of paying for goods and services — including the humble paper check and analogue invoices — set for radical transformation, but the entire infrastructure of payments is being reshaped, with new business models emerging. 

That reshaping involves two parallel trends: an evolution of the front- and back-end parts of the payment system (instant payments; bill payments and request to pay; and plastic cards and digital wallets); and a revolution involving huge structural changes to the payment mix and ecosystem (emergence of so-called “buy now, pay later” offerings; cryptocurrencies; and work underway on central bank digital currencies). 

Both evolution and revolution are sweeping the globe, but in different ways and at different paces, creating a complex payments matrix. Many organisations are trying to figure out where to play — and win — in that matrix, as evidenced by the intense level of merger and acquisition (M&A) activity since 2017.

 

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.

1. Inclusion and trust

In 2014, the World Bank set a goal under its Universal Financial Access program that by 2020, adults who were not part of the formal financial system would be able to have access to a transaction account to store money and send and receive payments. 

That goal is still some way off from being achieved, but there’s a growing number of initiatives to address, like Thailand’s PromptPay which enables users to make and receive payments using bank accounts or digital wallets linked to their national ID, mobile phone number or email address. By 2019, it had attracted 43 million subscribers, in a country with a population at the time of 69.5 million.  

In developing countries, financial inclusion will continue to be driven by mobile devices and providing access to affordable, convenient payment mechanisms. By 2025, smartphone penetration is estimated to reach 80% globally, driven by uptake in emerging markets like Indonesia, Pakistan, and Mexico. Trust in these systems, particularly as central banks consider the feasibility of CBDCs, puts new emphasis on the role of supervisors to ensure data privacy and traceability for consumers and businesses. 


2. Digital currencies 

CBDCs — digital tokens or electronic records that represent the virtual form of a nation’s currency — along with private sector cryptocurrencies are predicted to have the biggest disruptive impact over the next 20 years (see Figure 4). In our survey, financial services organisations in Europe, the Middle East and Africa with more than US$5bn in revenues cited “market uncertainty and potential disruption,” such as the introduction of CBDCs, within their top three concerns.

Prominent private sector examples like the Diem, proposed in 2019 by Facebook as a form cryptocurrency that would be backed by a basket of sovereign currencies, could replace account-based payments with a tokenised system of non-sovereign payment systems.

Scepticism within central banks about the potential of private sector cryptocurrencies to undermine the conduct of monetary policy may begin to shift, as some players have recently said they’re prepared to facilitate use of such digital assets. While a recent BIS survey suggests that 60% of central banks are considering CBDCs,  and 14% are actively conducting pilot tests. Observers believe that China may be the first to launch its digital renminbi — or “e-yuan” — at the Winter Olympics next year, in what may be seen as a prelude to the decentralisation of finance.

Share of growth


3. Digital wallets

Digital wallets allow consumers to load and store payment methods and access funding sources, such as cards or accounts, on their mobile devices. These wallets will be increasingly pivotal as a payment “front end,” as exemplified by Apple Pay, the relaunched Google Pay and the rise of super-apps WeChat Pay and Alipay in China.

The use of digital-wallet-based transactions grew globally by 7% in 2020, according to a report by FIS, a financial services technology group, which predicts that digital wallets will account for more than half of all e-commerce payments worldwide by 2024, as consumers shift from card-based to account- and QR code-based transactions. 

In response, banks and card companies have been partnering with or investing in digital wallet businesses to create payments platforms with scale, such as Standard Chartered bank’s venture with Toss, the largest payments company in South Korea, operated by Viva Republica.

Looking ahead, as many as 86% of our survey respondents agreed with the prediction that traditional payments providers will collaborate with fintechs and technology providers for innovation. 45% of respondents “strongly agreed” that there will be increased investment in mobile technology beyond retail payments to support business-to-business (B2B) payments and the digitalisation of supply chains.


4. Battle of the rails

Behind-the-scenes payments processing — the “plumbing” of payments — is also changing, as payment initiation changes from cards and traditional accounts to digital wallets and as regulators force the industry to strengthen, or build up, domestic infrastructure for payments.  

As a result, international card networks and card processors, often US-domiciled, are facing pressure on their core business, and have started to reposition themselves to retain relevance. Outsourcing of cloud and platform infrastructure will become increasingly important, too. In our survey, eight out of ten financial services organisations expected to have outsourced such infrastructure by 2025.

Other issues for processors and networks will be ensuring relevance in the merchant services space, where payments are initiated. They can double down on the provision of value-added services and open up the existing card rails to a wider range of payee and payer points. Digital wallet providers will look to adopt “open-loop” technologies and seek interoperability in order to benefit from (and not fall behind on) the ongoing globalisation of payment rails.

Processing trends

5. Cross-border payments 

Frustration with the traditional correspondent banking model, both cumbersome and costly in a world of instant, low-cost payments, has led to the intensification of non-bank providers. New players and solutions are competing with bank and card-based solutions at scale, like the P27 initiative in the Nordic region, integrating 27m inhabitants across four countries and currencies in one “domestic” instant payments system.

In our survey, 42% of respondents felt strongly that there would be an acceleration of cross-border, cross-currency instant and B2B payments in the next five years. This is reinforced by the adoption of ISO 20022, a globally developed methodology for transmitting data which provides a consistent messaging standard for payments. 

A recent pilot by Faster Payments Service, owned and operated by British retail payments authority Pay.UK, saw the fastest payment ever sent from Australia to a UK beneficiary, with confirmation of credit and funds available in just 36 seconds. Singapore and Thailand recently linked their respective national systems PayNow and PromptPay, allowing registered users on either system to instantly send money between the two countries using only a mobile phone number.


6. Financial crime

The pandemic’s effect in driving increased e-commerce provided an opening for fraudsters, with the average value of attempted fraudulent purchases rising by almost 70% in 2020, compared with the previous year, according to a report by digital fraud prevention company Sift.

Open banking, combined with a set of new players and the shift towards payment initiation and digital wallets, is also opening new doors for all types of financial crime, such as the increased risk to consumers from authorised push payments (APP) scams across payment networks, globally. Payment providers that help merchants and their customers move money across borders might also enable sanctions evasion and money laundering. 

In our survey, security, compliance, and data-privacy risks and related issues were the top concern for banks, fintechs and asset managers in implementing a fully integrated technology strategy. All this points to the need for, and likelihood of, greater collaboration among banks, payment providers and the public sector in preventing fraud and money laundering, with expected trade-offs between cybersecurity measures and customer convenience, according to a recent Bank for International Settlements report.

What kinds of solutions are trending

Machine-learning-based tools 

These are analytical services with machine learning and AI capabilities to identify authorised payment fraud. They encompass the necessary speed and processing capabilities that are required to analyse data in real-time. 

Risk scoring tools

Risk scoring tools use statistical models to identify possibly fraudulent transactions. Risk scoring allocates a probability of fraud using evolving criteria.

Mule account modelling tools 

Mule accounts (those set up by a real customer but with fraudulent papers or identity to enable criminal use) can be targeted using modelling tools that find behaviour patterns in anonymous crowdsourced intelligence from millions of daily consumer activities.

Implications for payments players

Understanding these trends is crucial for banks, card companies, fintechs and others to be able to map a new path to 2025 and beyond. 

Banks need to work with business customers to help them integrate payments into their services directly. This will help them deal with a world in which increasingly multifunctional digital wallets and super-apps are proliferating. Bill payments and request-to-pay or instant cross-border offerings could provide opportunities for some larger banks.

Card processors might need to consider moves that position them more effectively for payment initiation, such as partnering with significant digital wallet providers. In this way, they can ensure relevance in the merchant services space, where payments are initiated. Processors also need to bridge the card- and account-based payment worlds and adopt cloud and artificial intelligence technologies to avoid being overtaken by a new generation of cloud-based solutions.

Payment services providers have to work on ensuring transparent global structures and creating trust and visibility with regard to client acceptance, their ability to bear credit risk, and ensuring efficient global supervision structures. They also need to fully master data to win in the race for global scale.

Central banks and supervisors will need to improve their knowledge in order to provide effective supervision of increasingly global players that are not banks.

Comparison or payments

A new way to think about the future of your business

One of the main challenges at any organisation is determining how to best allocate precious resources to bring about the types of change required to not only manage through the crises of today, but to be successful tomorrow. We’ve created a framework that gives examples of how payment leaders can determine gaps and priorities.

Accelerated by the pandemic, the shift to a cashless society and the rising role of payments as more than simply an exchange of value for goods and services create a once-in-a-lifetime opportunity for the payments industry to lead in financial services. At the same time, by becoming a cornerstone of the global economy, payments can serve as a catalyst for economic growth, innovation and inclusion.

Firms now need to define what their role will be in this evolution. It is critical for firms to understand what they need to do to stay relevant and how to improve the customer experience and contribute to a bigger societal purpose. We look forward to helping you and your institution successfully secure your tomorrow, today.

Contact us

Kurtis Babczenko

Kurtis Babczenko

Global Banking and Capital Markets Leader, and US Finance Transformation Leader, PwC United States

Andreas Pratz

Andreas Pratz

Partner, Strategy& Switzerland

Chantal Maritz

Chantal Maritz

Partner: Payments Solutions, PwC South Africa

Tel: +27 (0) 11 287 0289