Managing Director & Senior Partner
Payments remains one of the brightest spots in the financial services universe. Propelled by positive macroeconomic tailwinds, continuing technological advances, and expanding digital and noncash mechanisms, payments businesses globally are on track to add $1 trillion in new revenue through 2027. That outlook presents enormous opportunities for retail and wholesale payments institutions. Capitalizing on those opportunities, however, requires that banks and payments providers address lingering customer pain points.
The quality of the payments experience matters not only because of the strong projected growth across the transactions space but also because payments has an outsize influence on the banking relationship overall. Payments interactions are the most frequent point of customer engagement, giving banks, card issuers, and acquirers significant opportunity to shape customer perceptions, capture valuable data, and build loyalty. The relationships formed through those repeated interactions allow institutions to deepen their customer understanding, foster customer trust, and improve cross-selling and service, all of which significantly influence the overall shopping experience.
As a result, payments companies have begun to play a more active role across the buying journey, going beyond their traditional narrow role in enabling acceptance to forging customer-centric shopping interactions that reduce cart abandonment rates, create omnichannel customer experiences, and make credit easier for customers to access.
These factors, combined with favorable economics, mean that the payments space will be increasingly contested over the next decade. This will lead to a number of fundamental disruptions, including the following:
Incumbents are in a vulnerable position because many have been slow to address long-standing customer pain points. To hold onto valuable customer relationships and take advantage of the strong growth potential in payments, banks and providers must focus their strategy and resources on the following:
These factors are likely to play out in different ways for retail and wholesale payments providers. BCG’s Global Payments 2018 report examines the challenges and opportunities they will create over the next ten years. We look at the state of the market, both globally and in different geographic regions, and explore the pain points that providers must address to turn payments into a long-term avenue for growth.