Three Key Takeaways from the Capgemini World Payments Report

Unveiled at Sibos, the Capgemini 2016 World Payments Report provides valuable in-depth research on payments topics. These findings, produced through a partnership with BNP Paribas, focus on the challenges and opportunities that transaction banking faces now. Bottom line: corporates expect banks to step up in digitization, partner with fintech challengers, and offer greater interoperability in all their services.

  • Digitization

Global non-cash transactions grew nearly 10% in 2014, reaching $387.3 billion worldwide. Growth rates in these transactions were highest in Asia, with double-digit gains in nearly every country spurred by vast increases in mobile transaction payments.

Although global statistics indicate that cards are the leading non-cash instrument and checks have declined by 10% as the payment method of choice for corporates, the report found that governments all over the world are encouraging the development and use of electronic payment systems for greater transparency and security. The report went so far as to suggest that electronic payment systems can contribute to growth. “The implementation and increased use of immediate payment systems may provide an impetus for accelerated transaction growth going forward, as observed in the U.K.”

  • Fintech Partnership

Those immediate payments systems are developing in different ways the world over. Governments, central banks, and bank consortia are working together to build infrastructure that will allow payments to move the way information does today. Capgemini’s survey indicates that 60% of industry executives believe that banks will achieve this goal through cooperation; joint efforts between regulators and the industry to drive sustainable growth in immediate payments.

This hand-in-glove collaboration is necessary, given the complex environment of compliance regulations that banks and payments service providers face. Corporates that expect the benefits of new financial technology and the assured security of their financial institutions have sent a clear message: “Banks must further open up their ecosystems in order to integrate the innovative capacities of fintechs.”

  • Interoperability

Collaboration will enable not only greater overall efficiency, but also a key strategy for banks to gain advantage in transaction services. During the first boom of e-commerce, banks forfeited much of the transaction and payments space to upstarts payments service providers (PSPs) like PayPal and WorldPay. This was mostly a case of missed opportunity, but was no doubt worsened by the continual lack of interoperability in payments systems, necessitating new platforms.

Entities like PayPal built empires by bridging the gaps between places where money can move easily. Those gaps are the final takeaway from this report. Capgemini and BNP Paribas point out that the world is struggling toward interoperable payment systems, offering examples such as India’s Unified Payment Interface, the move to adopt ISO 20022 as an international payment messaging standard, and the U.S. Federal Reserve’s Faster Payments Task Force. Corporations expect their financial institutions to offer them the same seamless services they’ve come to expect from information, the delivery of goods, and travel. Interoperability is the key.

The final word on this report comes down to the vital importance of collaboration. Collaboration has become the watchword in all conversations about banks and fintech in the last few years. We at Ripple Insights have to agree with the experts on this one.

Read the full report here.