Accenture predicts US$7 trillion in consumer
spending will shift from cash to cards and digital payments by
2023
The rapid shift to digital payments due to the COVID-19 pandemic
is urgently increasing the need for banks to modernize their
payment systems, according to a new report from Accenture (NYSE:
ACN).
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Susceptibility to Future Disruption
(Graphic: Business Wire)
The report, titled “Playing the Long Game in Payments
Modernization,” is based on a survey of 120 payments executives at
banks globally regarding the transformation of their payments
business, as banks make multi-year investments to compete with
non-bank digital-payments providers and comply with new
regulations.
In the report, Accenture forecasts nearly 420 billion
transactions worth US$7 trillion are expected to shift from cash to
cards and digital payments by 2023 – and increase to US$48 trillion
by 2030. The rapid move to digital payments has put additional
pressure on banks, with three-quarters (75%) of surveyed bank
executives saying that the pandemic has increased the urgency of
their plans to modernize payment systems.
“COVID-19 has accelerated the shift to digital payments at a
pace banks could not have predicted,” said Sulabh Agarwal, who
leads Accenture’s Payments practice globally. “The pandemic will
permanently change how consumers shop and pay for products as they
prioritize convenience above all else. While banks’ investments in
new payments systems have focused primarily on meeting compliance
deadlines, the way they will drive value moving forward is by
embracing the changing consumer dynamic and improving the customer
experience.”
The survey finds three quarters (75%) of banks see payments
modernization as being driven by national payments infrastructure
changes and regulation, which include improving bank-to-bank
payments systems, new industry standards with ISO20022 and Open
Banking.
Transition to digital payments varies by market The rapid
shift to digital payments differs across countries, depending on
the rate of cash decline, adoption of e-commerce and how active Big
Tech companies are in providing payment services.
Using Accenture’s Payments Disruptability Index, which measures
current and future levels of disruption for the payments industry,
the report notes that disruption is highest in the U.S., closely
followed by the U.K., as consumers opt for new ways to pay and
non-banks seize the opportunity to provide payments services. In
China, mobile wallets are rapidly displacing cash payments — 76% of
transactions in 2019 originated from mobile wallets, up from 12% in
2014 — as consumers in China have already been accustomed to using
mobile apps and QR codes to pay at restaurants and stores for
several years.
“COVID-19 has caused consumers to be more open to digital
financial transactions, and this shift will increase competition as
alternative payments providers vie for market share,” said Alan
McIntyre, who leads Accenture’s Banking practice globally. “The
e-payments opportunity for banks varies greatly by market and
depends on the maturity of the transition to digital payments. In
mature markets — such as Western Europe, where payments have been
largely commoditized — we expect to see only incremental change.
The greatest opportunity will be in markets like Southeast Asia and
Latin America, where cash usage has dominated and, in some regions,
even increased during the pandemic.”
Modernization programs not generating revenue growth
Although many of the bank executives surveyed cited revenue growth
as a key objective for their payments modernization programs, only
13% said that their bank’s payments revenue has increased by more
than the average market growth rate of 6% in the last three years,
and only 16% expect to grow payments revenues more than the
anticipated average growth rate of 5% over the next three
years.
While payments transformation is part of most banks’ broader
digital transformation efforts, two-thirds (65%) of bank executives
said that the cost of maintaining legacy technology in their
payments systems is impeding their ability to invest in new
customer solutions. For example, even though many banks have
adopted cloud systems in other parts of their business to improve
operational resiliency, only 38% of banks are investing in cloud
systems for payments. With the pandemic creating a new inflection
point for companies to accelerate their digital transformations,
Accenture recently announced an investment of $3bn over three years
to launch its Cloud First practice to help businesses accelerate
their move to the cloud.
“Banks are stuck in the cycle of improving their payments
systems with ad-hoc technology solutions to meet new industry
standards and reduce costs,” Agarwal said. “Banks are waking up to
the reality that the way to make meaningful changes that resonate
with consumers is to make payments modernization a business
priority and that it can no longer be confined to the IT
department. Successful banks will be those that embed modern
payments into how it runs and is governed, with more attention to
flexible IT architecture and cloud technology that is better
integrated across the business.”
About the research Accenture conducted an online survey
of 120 payment executives in 20 countries between July and August
2020. Surveyed markets include: Australia, Brazil, Canada, China,
Denmark, Finland, France, Germany, India, Italy, Japan,
Netherlands, Norway, Singapore, Spain, Sweden, Thailand, UAE, U.K.
and U.S. Accenture’s forecast of non-cash transactions in consumer
spending is calculated using cash evolution data and MSC rates
provided by GlobalData. The expected drop in cash volume is based
on GlobalData & Accenture Research assumptions.
About Accenture Accenture is a global professional
services company with leading capabilities in digital, cloud and
security. Combining unmatched experience and specialized skills
across more than 40 industries, we offer Strategy and Consulting,
Interactive, Technology and Operations services—all powered by the
world’s largest network of Advanced Technology and Intelligent
Operations centers. Our 506,000 people deliver on the promise of
technology and human ingenuity every day, serving clients in more
than 120 countries. We embrace the power of change to create value
and shared success for our clients, people, shareholders, partners
and communities. Visit us at www.accenture.com.
Accenture’s Banking industry group helps retail and commercial
banks and payments providers boost innovation; address business,
technology and regulatory challenges; and improve operational
performance to build trust and engagement with customers and grow
more profitably and securely. To learn more, visit
www.accenture.com/us-en/industries/banking-index.
This document is intended for general informational purposes
only and does not take into account the reader’s specific
circumstances and may not reflect the most current developments.
Accenture disclaims, to the fullest extent permitted by applicable
law, any and all liability for the accuracy and completeness of the
information in this presentation and for any acts or omissions made
based on such information. Accenture does not provide legal,
regulatory, audit, or tax advice. Readers are responsible for
obtaining such advice from their own legal counsel or other
licensed professionals.
Copyright © 2020 Accenture. All rights reserved
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Natalie de Freitas Accenture +44 7380 799 196
natalie.de.freitas@accenture.com
Melissa Volin Accenture +1 267 216 1815
melissa.volin@accenture.com
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