Digitisation, Collaboration and Payments Transformation: Introducing the 2017 World Payments Report
By Helen Sanders, Editor
In this special executive interview, which coincides with Sibos 2017, Christophe Vergne, Payments and World Payments Report Leader, Capgemini and Jan Dirk van Beusekom, Executive Director, Client Advisory, Strategic Marketing and Engagement, Cash Management Competence Center, BNP Paribas Group, talk to Helen Sanders, Editor, about the aims and key findings of the 2017 World Payments Report which is launched at the event.
For those not familiar with previous versions of the World Payments Report, what are the aims of the report?
Christophe: The World Payments Report, now in its 13th year, is an in-depth analysis of the evolving dynamic payments environment. It is designed to help both banking and corporate sectors understand payment trends, challenges and opportunities, and help benchmark their own activities.
Jan Dirk: The 2017 World Payments Report (WPR 2017) is focused on the emergence of a new payments ecosystem, which is being driven by changing corporate and customer expectations for value-added services, a dynamic regulatory landscape, the growing influence of financial technology firms, and an increase in payments-enabling technologies. As corporate demand for value-added services grows, coupled with structural changes in the financial industry, we are seeing increasing collaboration between banks and industry participants to shape this new payments ecosystem.
What is the background behind the collaboration between Capgemini and BNP Paribas in the production of this report, and what is the value of this partnership?
Christophe: 2017 marks the second year of partnership between Capgemini and BNP Paribas. As a global banking player and recognised leader in transaction banking and cash management, we are delighted to continue our collaborative partnership with the bank. By working together, we are able to offer a unique perspective of the global non-cash transaction environment as it relates to banks and the payment-related topics are particularly relevant to the corporate sector.
We talk a lot about the digitisation of payments, but what is happening at a global level?
Jan Dirk: Not only are non-cash, or digital payments on the rise, but momentum is building. Although cash remains the most common payment method, particularly for low-value transactions, and in markets with a lack of modernised payment infrastructure and citizen and business access to banking systems, non-cash transactions (most commonly debit cards and credit transfers) are growing strongly. Global non-cash transaction volumes grew by 11.2% during 2014–2015 (the last full year for which figures are available), the highest growth of the past decade, to reach 433.1bn. This growth was driven to a large degree by developing markets, which recorded a 21.6% increase in 2015 while mature markets grew by 6.8%. China has now become the world’s third largest user of non-cash transactions.
Christophe: This growth in emerging markets is being driven by initiatives to promote cashless societies, a push towards increasing financial inclusion, such as in India, Vietnam, Indonesia and Latin America, and technological innovation. While the proliferation of mobile payments and innovative digital payment methods is expected to continue, there are differences in adoption patterns and use cases across regions. Growth will also be encouraged by the entry of new players, the ability to leapfrog to new technologies, and the digitisation of traditional payments infrastructures. Meanwhile, in mature markets, a combination of near field communications (NFC)/contactless technology and mobile payments may lead to the development of new payments use cases. Countries such as Australia, Canada, and the UK are exhibiting this trend.
We estimate that non-cash transactions globally will increase at a CAGR of 10.9% from 2015–2020 (figure 1) with developing economies growing at 19.6%. Emerging Asia, driven mainly by China and India, is expected to grow by 30.9% over this period. As a result, emerging economies, that currently represent one third of global non-cash transaction volumes, will grow to half of it by 2020.
Fig 1: Number of Worldwide Non-Cash Transactions (billion) by region, 2015 – 2020