The world is in the midst of a cashless payment boom. However, many banks will not take the steps to embrace open banking and fear the looming threat of big tech companies’ competition.
That’s according to the new World Payments Report 2019 from Capgemini, the tech consultancy. It revealed that 63% of banks were weary of the threat of tech titans leveraging their global reach, brand equity, customer trust, great customer experience and finally payments infrastructure to compete with incumbents in the market.
The report also found that many banks are reluctant to embrace open banking, with only 48% planning to use open APIs beyond the level needed for regulatory compliance. Moreover, 53% of banks had no plans to implement APIs that expose data in areas including intra-bank statements or conditional payments. Of the people polled, 67% said the same about branch and ATM locations.
The majority of the adoption that has been made was made to comply with new regulations, with 60% citing this as a reason.
“The global payments landscape is undergoing significant evolution, but not all participants are comfortable with the pace and direction of change,” said Anirban Bose, CEO of Capgemini’s Financial Services and group executive board member. “Banks are clearly acknowledging the importance of embracing an ecosystem-based model to meet changing customer demands and thrive in a competitive landscape. We encourage incumbent banks to consider quick-win solutions that position them for the future market, such as implementing a microservices architecture to circumvent the limitations of legacy infrastructure.”
The report also took a look at where cashless payments are the most popular. Overall, the market growth was projected to rise by a compound annual growth rate (CAGR) of 23.5% between 2017 and 2022.
The Capgemini’s researchers found that developing markets are leading the growth in the non-cash payment sector. While these markets accounted for 35% of global growth two years ago, this figure was expected to rise to 50% in the coming years. Russia had the fastest growing non-cash payment sector with cashless transactions grew by 40% in 2017.It was followed by India and China, which grew by 39% and 35% respectively.
By contrast, mature markets including APAC, Europe and North America saw a steadier growth rate of 7%.
The figures about India comes after FinTech Global recently reported that digital payments have grown by 12.7% since 2018.
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