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Transaction Banking

The world of payments remains in constant flux, reflecting an ongoing rebalancing of power among incumbent banks, digital giants, financial technology (fintech) startups, card networks, and, of course, consumers and merchants. At the top of the collective agenda is the digitization of payments. Although the momentum brought about by fintechs is strong, there is still uncertainty as to whether theyeither in collaboration or in competition with digital giants and banking incumbentswill drive a true shift in competitive dynamics.

What can banking incumbents do in the face of these developments? First, they need to forge a digital strategy that enables them not only to survive meaningful incursions by nonbanks but also to thrive and take control of their own digital destinies. They must deliver compelling end-to-end customer experiences that maximize security, minimize complexity, and add value beyond pure payments. Ultimately, with payments revenues expected to reach nearly $2 trillion in 2025driven largely by emerging marketsit is imperative that payments stakeholders understand revenue trends and the factors that are driving shifts in the landscape.

It is also critical for incumbent banks to map out diverse scenarios with some key questions in mind. How will customers’ payments behavior change over the next decade? How will control of customer engagement and brand image diminish as the Internet of Things evolves, as so-called open banking grows, and as commercial customers interface with more third-party providers? The winners will be those that learn how best to compete in truly open seas populated by highly diverse players.

To learn more, read Global Payments 2016: Competing in Open Seas. Also, an interactive edition of the Global Payments Model tracks market trends and gauges the size of future revenue pools.

Financial Institutions

Stefan Dab on Adapting and Winning in a Shifting Landscape

In this video, BCG’s Stefan Dab, senior partner and managing director, Brussels, discusses key trends that are reshaping the transaction banking sector, and how financial institutions can excel by transforming their business and operating models.

The Low-Risk Nature of Trade Finance

BCG was a strategic partner with the International Chamber of Commerce (ICC) in the development of the 2016 ICC Trade Register Report. Data from the Report, which is now in its sixth year, illustrates the low-risk nature of trade finance when viewed alongside comparable asset classes such as corporate and small- to medium-sized enterprise (SME) lending. Covering more than 17 million transactions and an exposure in excess of $9.1 trillion, the data continues to demonstrate that trade finance presents banks with little credit risk across major products and regions.

Read the 2016 ICC Trade Register Report
Financial Institutions
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