Banks in South-east Asia could miss out on as much as $5 billion, or 14.3 percent of their payments revenue by 2025, displaced by the growth of digital payments and competition from non-banks, according to a new report.
As payments become more «instant, invisible and free, banks will face further pressure on income from card transactions and fees over the next six years. Free payments put 9.6 percent of payments revenue at risk in the region, according to professional services firm Accenture said in a report titled Banking Pulse Survey: Two Ways To Win.
The world of instant, invisible and free payments is here to stay, squeezing margins further on a business that was already feeling a lot of pressure from new competition, particularly in South-east Asia with the proliferation of e-wallets,» said Divyesh Vithlani, who leads Accenture’s financial services practice in ASEAN. The survey polled 240 payments executives from the largest banks across 23 markets.
Next, competition from non-banks in invisible payments, where payments are completed in a “virtual wallet” on a mobile app or device, will put 3.1 percent of bank revenues at risk, Accenture said. Card displacement by instant payments – an area where banks make little to no interest – is projected to put an additional 1.7 percent of payment revenues in jeopardy.
Banks previously earned billions of dollars from some of these channels, and that’ll dry up eventually as competition heats up, so they’ll need to develop new digital business models to compete in this new era, said Vithlani.
However, the industry is aware of the challenges posed by new technologies in payments. More than two-thirds (71 percent) of the banking executives polled in all markets agree that payments are becoming free. Nearly three-quarters (73 percent) believe that most payments are already invisible, or will become so over the next 12 months.