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TRUSTECH 2019 conference: A World Payment Perspective

Presentation made on November 27th 2019 at TRUSTECH by Gregoire Toussaint – Director at Edgar, Dunn & Company
Contents: Grégoire Toussaint, Director at Edgar, Dunn & Company (EDC), global strategy consultancy specialised in payments analysed key payment trends and presented EDC’s report on Fintech describing the impact of Fintech on the payment value chain.

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TRUSTECH 2019 conference: A World Payment Perspective

  1. 1. A World Payment Perspective Greg Toussaint – Director at Edgar, Dunn & Company 27 November 2019 © Edgar, Dunn & Company, 2019
  2. 2. Confidential 2 Agenda 10:00 – A World Payment Perspective Greg Toussaint – Edgar, Dunn & Company 10:15 – Challenges Ahead in Fast Changing Landscape Sirpa Nordlund – NETS.EU 10:50 – Panel discussion: Instant Payment and Open Banking 11h40 – Panel discussion: Authentication and the Impact on Payments 12h20 – Panel discussion: Payment Innovation 10:30 – Beyond payments. Revamping business management for SMEs Stefan Stankov – myPOS
  3. 3. Confidential 3 Edgar, Dunn & Company (EDC) is an independent global payments strategy consultancy working closely with retailers in the luxury sector to optimise payments EDC Office LocationsEDC: Independent, Global, Focus on Payments & Retail Founded in 1978 in San Francisco, the firm is widely regarded as a trusted advisor to its clients, providing a full range of strategy consulting services, expertise and market insight, and M&A support EDC has been providing consulting support to its client base working with:  Many of the world's leading merchants, including leading luxury retailers  More than 40 European banks & card issuers/acquirers  Most of the top 25 US banks and credit card issuers  All major international card associations / schemes & many domestic card schemes  Many of the world's most influential mobile payments providers +1,000 projects completed +250 clients in 40 countries & 6 continents EDC Key Metrics Financial services and payments focus Six office locations worldwide Independent - owned and controlled by EDC Directors Office locations Shaded blue countries represent markets where EDC conducted client engagements London Sydney Frankfurt ParisSan Francisco Dubai
  4. 4. Confidential 4 Reports of the death of payment cards have been greatly exaggerated 11 B 1,49 B 1,46 B 0,8 B 0,7 B 13 B 1,61 B 1,60 B 0,9 B 0,8 B Asia-Pacific North America Europe South & Central America Middle East & Africa Total number of cards from 2019 to 2022 (in Billions) 2019 2022 +17% +8% +10% +11% +21% Source : GlobalData 92 Tn € 40 Tn € 29 Tn € 5 Tn € 9 Tn € 118 Tn € 50 Tn € 35 Tn € 6 Tn € 11 Tn € Asia-Pacific North America Europe South & Central America Middle East & Africa Total value of transaction from 2019 to 2022 (in Trillions €) 2019 2022 +28% +25% +21% +25% +30%
  5. 5. Confidential 5 5 key trends in the payment ecosystem 1. The rise of digital commerce 2. Retail innovation 3. Instant Payments 4. IoT payments 5. Impacts of regulations
  6. 6. Confidential 6 Digital commerce will continue to grow significantly especially in Asia-Pacific 0% 5% 10% 15% 20% 25% 30% 35% 40% 2018 2019 2020 2021 2022 2023 E-commerce as % of total retail sales per region Asia-Pacific Global North America Europe Latin America Middle East & Asia Asia-Pacific Global North America Europe Latin America Middle East & Asia Source : EDC Advanced Payment Report 2018
  7. 7. Confidential 7 19% 25% 43% 60% 65% 81% Beacon technology/proximity marketing Internet of Things & Connected Commerce Faster Payments In-App Payments Frictionless In-Store Payments (e.g. Uber-type Experience) Seamless / Frictionless Cross-Channel Payment Acceptance Importance for merchant's payment acceptance strategy Retailers are now placing greater emphasis on customer experience Source : EDC Advanced Payment Report 2018
  8. 8. Confidential 8 The deployment of faster payments platforms is accelerating 52% 44% 42% 41% 32% 29% 26% 24% P2P Online Retail Payments Bill Payments B2B Payroll Consumer to Small Businesses B2C and C2C distributions (non-payroll) Low value payments at POS Faster Payments schemes that are expected to have over 20% of market share over the next 5-10 years Source : EDC Advanced Payment Report 2018
  9. 9. Confidential 9 Internet of Things (IoT) and connected objects are developing significantly Consumers Merchants Smart Home and Payments Wearables Connected transport Connected screens Kiosks Source : EDC Advanced Payment Report 2018
  10. 10. Confidential 10 Payment regulations have strong impacts on payment security and innovation PSD2 main objectives Contribute to a more integrated and efficient European payments market Improve the level playing field for payment service providers (including new players) Make payments safer and more secure Protect consumers Open-Banking and Third Party Providers (TPPs) Strong Customer Authentication (SCA) Key recent regulations Source : European Commission Example in Europe
  11. 11. Confidential 11 Fintech also impact significantly the development of the payment market EDC newly released report on the impact of Fintech on the payment value chain
  12. 12. Confidential 12 Why Fintech threaten traditional banks? Innovation Competition Regulation Fintech lead the disintermediation of the payment value chain New specialised and innovative lenders are emerging New neo-banks, payment providers and Fintech have emerged since 2005 (1,400 in Europe) Big technology groups are also strengthening their offering related to financial services (GAFA) Regulatory developments are designed to encourage competition in the payments sphere Traditional banks 1 2 3 Sources : Deloitte and Financial Times
  13. 13. Confidential 13 Fintech investments in 2019 and different categories of payment companies Source : EDC Fintech Report , CB Insights and EDC Analysis 18% 21% 21% 37% 51% 57% Banking Infrastructure Blockchain and Cryptocurrency Security & Fraud Management Payments Open Banking - APIs AI & Automation & digitisation Fintech investment areas 2019 The Payment Market Map Point of sale payments Bitcoin Payments Billing, Automation, Streamlining Payment Processing Services Mobile Payments infrastructure Personal Payment Services Money Transfer Services Connected Card Payments
  14. 14. Confidential 14 Consumer and business pain points that should be solved by Fintech to compete with traditional banks Source : EDC Fintech Report Consumer Pain Points Merchants Pain Points Real payments – but not real time Proof of account ownership P2P Payment High cross border costs Fighting fraud
  15. 15. Confidential 15 Global remittances: an example of market where Fintech have accelerated the shift to digital $61 $106 $149 $189 $237 $285 $339 $382 $421 $442 $543 $489 $440 $444 $453 $439 $422 $409 $401 $397 $- $100 $200 $300 $400 $500 $600 $700 $800 $900 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Global recorded remittances (in US$ Billions) Digital Non-Digital $ 604 $ 595 $ 589 $ 633 $ 690 $ 724 $ 761 $ 791 $ 822 $ 839 Source : EDC Fintech Report
  16. 16. Confidential 16 Conclusion “It’s all about the experience. Either banks remove friction…. or someone else will.” Brett King – Futurist, author and CEO of Moven
  17. 17. Contact details Edgar, Dunn & Company 1 bis rue du Havre 75008 Paris France Tel +331 4007 9224 Mobile +336 7026 9925 gregoire.toussaint@edgardunn.com Greg Toussaint Director Confidential 17

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