To Defend Payments Businesses, Banks Must Focus on Customer Pain Points - Seite 2

Survey: Unlocking the Potential of Consumer Digital Payments. According to BCG's survey, the primary reasons for the slow uptake of digital payment methods are threefold: a lack of compelling value propositions that outperform traditional payment methods and reward structures; persistent security and privacy concerns; and, as a consequence, insufficient merchant acceptance and consumer comfort. BCG says that banks, at the highest level, must educate consumers about digital payments and their added value. In BCG's survey, 55 percent of respondents either found no value in m-wallets or had never heard of them. The banking industry, working with card networks, also has an important role to play in ensuring that security and communication standards are implemented, protocols are followed, and platforms are built with full transaction visibility. In addition, the report says, in order to sufficiently differentiate themselves and prosper in the new digital world, individual banks need to form smart partnerships, enhance consumer engagement linked to payments, optimize the overall consumer-banking experience, and experiment with next-generation technology.

Wholesale Transaction Banking. According to the report, wholesale transaction banking generated close to $330 billion in revenues globally in 2014. Account and payment revenues were $243 billion and are expected to nearly double to about $480 billion by 2024, a CAGR of 7 percent. Trade finance added $45 billion, and value-added services (such as information reporting) contributed another $40 billion. Trade finance revenues should reach nearly $100 billion by 2024, a CAGR of 8 percent. In general, growth will be driven by increasing volumes and deposit balances, as well as by improving spreads. The importance of all these drivers, however, will vary by region.

Although revenue-pool growth projections are strong, the report says, excelling in wholesale transaction banking is becoming increasingly difficult. The attractiveness of the business has heightened competition among banks, while deficiencies in bank services and the rise of multibank platforms have opened the door to nonbank competitors. In addition, the regulatory compliance burden has grown dramatically, adversely affecting client relationships, bank operations, product development, and international expansion. BCG says that there are four critical steps to overcoming current challenges and becoming a transaction-banking champion: focusing on the true needs of treasurers and CFOs, excelling in the basics, differentiating along key dimensions, and outperforming in go-to-market strategies.