12/28/2023 0 Comments Scrutiny 12 instal the new for windowsSafeguarding shareholder value and cost excellence will be key to preserving and growing shareholder value.īoston Consulting Group partners with leaders in business and society to tackle their most important challenges and capture their greatest opportunities. With disruption likely to intensify, leaders must refresh their strategy, revisit their partnership structure, and modernize their tech infrastructure.Although M&A continues to be an important lever, it is shifting from megadeals to capability-led moves, with a particular emphasis on alternative payments methods, integrated software vendors, value-added services, and loyalty.This will put the risk management and compliance practices of both established and nontraditional players to the test. Regulatory authorities are increasing their scrutiny of payments, expanding the rule set, and stepping up enforcement.In product development alone, GenAI-enabled software coding could boost productivity by 20%. Tech modernization is intensifying, and GenAI is exploding onto the payments scene.At current rates of development, retail and wholesale central bank digital currencies could be operational in some countries in every region in five to ten years. ![]() Digital currencies are moving from concept to reality, as more than 90% of central banks actively experiment with them as a complement to cash.By 2030, they could command a revenue pool worth $520 billion, intensifying competitive pressure on incumbents. Payments-focused fintechs now number more than 5,000 globally and account for about $100 billion of total industry revenues.Acquiring and payments processing witnessed the sharpest declines, with TSR falling by roughly 40%. The top 20 largest payments companies saw their TSR drop by an average of 20% over the past two years. Total shareholder returns have plummeted.Contributing macroeconomic factors include cooling inflation and normalization in interest rates. Slowing revenue growth comes from an expected shift in the retail payments mix from cards to account-to-account transactions, along with compressed card margins in some markets.But nontransaction revenue from interest- and fee-based sources is likely to expand by just 5.7%. Of this amount, transaction revenue from card and account-to-account payments rails is on track to grow by 7.1%. Revenue growth is likely to slow to 6.2% annually through 2027, with the revenue pool reaching $2.2 trillion by then.Total payments revenues grew at an annual rate of 8.3% from 2017 to 2022, taking the revenue pool to $1.6 trillion at the end of 2022.Those that undertake this work now can turn disruption into a source of long-term advantage. The throughline across our analysis is that institutions must put aside practices that no longer serve their stakeholders and instead must thoroughly modernize their technologies, techniques, and tactics. We begin by offering a comprehensive market outlook, and then we take deep dives into four subsectors: acquirers, issuers, wholesale transaction banks, and payments infrastructure providers. ![]() BCG’s 21st annual Global Payments Report looks at the opportunities and challenges facing this diverse industry. Change is exciting, but it’s also disruptive. This is a moment of truth for the industry. Payments leaders can fight this trend and resume their strong historical growth by doing things differently-innovation avenues are numerous, and customer appetite for the industry’s solutions remains robust-but they will need to take decisive action now to do so. Revenue growth is expected to slow over the next five years. Looking ahead, however, the operating environment is likely to become more difficult, as valuations have dramatically declined over the past two years and the macroenvironment has become more turbulent. These developments have propelled strong revenue growth and attracted more than 5,000 fintechs into the payments space. ![]() Payments have become more accessible, with innovations such as digital wallets, QR codes, and mobile money accelerating financial inclusion in developing economies. Journeys have expanded from transactions to an integrated array of solutions and value-added services. ![]() The payments industry has come a long way over the past decade-and in myriad directions! Consumers and companies have shifted from cash to a burgeoning array of electronic payments. Technology, Media, and Telecommunications.
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