Payments in the Wild Tech World: Digitisation and changing customer expectations

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Payments under siege

In the past, high barriers of entry protected incumbent payments companies from new entrants. This is no longer the case and payments executives are well aware of this ongoing and imminent disruption.

Even though more than one in eight (13%) traditional payments companies believe that their business faces no FinTech-related risk, those who recognise the threat are afraid that, on average, as much as 28% of their business could be lost to the new players. This constitutes the highest percentage of all financial industry players. Payments is also the sector with the highest proportion of participants that fear they could lose more than 60% or even all of their business to FinTechs. 

Payments under siege (graph)

“We are heading in the direction of having FinTech at heart of the corporate strategy and we are getting closer to reaching that goal.”

CFO at a global payments solutions company.

Addressing new vulnerabilities

As fraudsters and those who commit cybersecurity threats become more sophisticated, payments providers are becoming increasingly concerned.

Payments companies from our survey believe that the most critical trend impacting the industry is the development of advanced tools and technologies to protect consumers from security attacks and fraud. Influenced by mobile apps outside of financial services, consumers will continue to demand less friction in payments resulting in a continued push for faster payments. As a result, development of biometric data and tokenisation are moving centre stage in the industry.

FinTechs disrupt with meaningful solutions

Incumbents focus on new service paradigms to win the “top of wallet” position, and they try to keep up to speed with new entrants by addressing changing customer expectations. Rather than simply offering a payment transaction, FinTechs seek to enhance its attractiveness by including better experiences associated with shopping, money management around discretionary spending and money transfers.ent tools.

Payments are becoming the 'enabler' (graph)

Payments are becoming the ‘enabler’

As specific payments subsectors advance or leapfrog through this evolution, payments services are becoming the enabler. This has implications around the visibility and relationships of payments companies with their customers.

The majority of payments companies have already integrated FinTech into their business models. The pace of adapting to new business requirements is determining future market winners and losers.

Active in opening FinTech subsidiaries

Compared to others in the financial space, a disproportionately large number of payments firms are investing heavily to engage with FinTech companies. A unique characteristic of this sector is that payments are mostly dealt with through the launch of FinTech subsidiaries (35%) and by engaging in joint partnerships (35%). P2P payments (including gifting and splitting bills), payments processing, cross-border payments, digital currency exchange and building payments technology standards are just some of the areas which are witnessing most of these partnerships between traditional players and FinTechs. Only 4% of payments companies do not deal with FinTech at all, a proportion substantially lower than the financial industry average (25% overall).

Active in opening FinTech subsidiaries (graph)

Contact us

Steve Davies

Global Blockchain Leader, PwC United Kingdom

Tel: +44 (0) 131 260 4129

Manoj Kashyap

Global FinTech leader, PwC United States

Tel: +91 226 669 1888

John Shipman

APAC FinTech Leader

Tel: +61 (2) 8266 0198

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