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Top Trends in Payments: 2020

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Similar to other financial services domains, payments is evolving into an open ecosystem. The EU’s Payment Services Directive (PSD2) pioneered open banking by encouraging banks and established payments players to securely open the systems to foster competition, innovation, and more customer choices. In tandem with non-cash transaction growth, regulations are driving banks and payments firms to expand their array of payment methods and channels. Governments are encouraging financial inclusion by also promoting the adoption of non-cash payments. Increasingly, merchants and corporates seek to offer alternative payment systems because of widespread popularity among consumers. Alternative payments also enable merchants to provide real-time and cross-border payments to boost business efficiency.
Banks, payment firms, card firms, BigTechs, FinTechs, and other players are continuously developing new technology to cash in on market changes. However, data breaches and fraud continue to hinder innovation as firms devote countless resources each year to address security issues. Many governments are also designing new regulations to reduce ecosystem threats. All these measures are expected to make the current ecosystem much more secure and simple for players as well as customers.
Top Trends in Payments: 2020 explores and analyzes payments ecosystem initiatives and solutions for this year and beyond

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Top Trends in Payments: 2020

  1. 1. Top Trends in Payments: 2020 November 2019 Link: https://www.capgemini.com/top- trends-in-2020/
  2. 2. 2© Capgemini 2019. All rights reserved |Payments Trends 2020 | November 2019 Source: Capgemini Financial Services Analysis, 2019 Top Trends in Payments for 2020 by Capgemini
  3. 3. 3© Capgemini 2019. All rights reserved |Payments Trends 2020 | November 2019 Source: Capgemini Financial Services Analysis, 2019 Regulatory focus area for risk reduction Work towards facilitating robust cybersecurity Protocols especially in an open ecosystem future Achieve uniformity in crypto currency regulations to maintain Homogeneity in standards Enable a level-playing field for all market participants by regulating new entrants Ensuring customer data privacy and protection, with fine tune approach to threat innovation Fortify AML/CTF machinery by closely collaborating with banks and FIs Top Trends in Payments for 2020 by Capgemini Intelligent Bank Open Banking Deep Customer Insights Data- Driven Compliance Trend 1: Regulators worldwide are focusing on risk reduction, in addition to standardization and open banking
  4. 4. 4© Capgemini 2019. All rights reserved |Payments Trends 2020 | November 2019 Source: Capgemini Financial Services Analysis, 2019 4© Capgemini 2019. All rights reserved | Need for standards Countries are promoting the use of centralized digital identity databases/ schemes for customer due diligence (CDD). Several national-level DI systems facilitate attribute collection and storage at a centralized location. Industry associations and industry stakeholders have taken the responsibility of formulating common digital identity framework Distributed ledger technology (DLT) offers promise in creating borderless and open digital identity systems. Growing synthetic identity fraud cases Increased bot usage Increasing democratization of identity-related information Key drivers Top Trends in Payments for 2020 by Capgemini Intelligent Bank Open Banking Deep Customer Insights Data- Driven Compliance Trend 2: As federated digital identity gains momentum, standards are emerging to ensure interoperability
  5. 5. 5© Capgemini 2019. All rights reserved |Payments Trends 2020 | November 2019 Factors driving back-office rationalization Source: Capgemini Financial Services Analysis, 2019 Trend 3: Instant payments and open banking reinforce each other and drive the need for back-office rationalization New Design supporting open banking through API integration Real time design for handling 24/7 transactions Easy deployment and scalability through new technologies Capability to provide all services in as-a-service or microservice mode Omnichannel capabilities driven by rise of IoT Accommodate standards such as ISO 20022 and upgrades of older RTGS and ACH Top Trends in Payments for 2020 by Capgemini Intelligent Bank Open Banking Deep Customer Insights Data- Driven Compliance Payments Trends 2020 | November 2019
  6. 6. 6© Capgemini 2019. All rights reserved |Payments Trends 2020 | November 2019 Source: Capgemini Financial Services Analysis, 2019 Growth of alternate payments Changing economic and regulatory scenario Need for user convenience and faster checkout Key drivers Banks are offering several new services on par with new-age players. Card firms have also launched new products to match those of alternative payment players. BigTech firms are targeting the merchant segment through collaborative models. Merchants have adopted alternate payment methods Trend 4: As merchants adopt alternative payment methods, card firms and banks are driven to expand offerings Top Trends in Payments for 2020 by Capgemini Intelligent Bank Open Banking Deep Customer Insights Data- Driven Compliance Payments Trends 2020 | November 2019 6© Capgemini 2019. All rights reserved |
  7. 7. 7© Capgemini 2019. All rights reserved |Payments Trends 2020 | November 2019 Source: Capgemini Financial Services Analysis, 2019 7© Capgemini 2019. All rights reserved | Changing corporate customer expectations Need for transparency in payment transactions Latest technology needs such as instant payments and APIs Key drivers Automation of vendor payments Cash management B2B cross border payments Invoicing solutions Supply chain financing Top Trends in Payments for 2020 by Capgemini Intelligent Bank Open Banking Deep Customer Insights Data- Driven Compliance Trend 5: Banks collaborate with FinTechs to help corporate clients improve B2B payments efficiency
  8. 8. 8© Capgemini 2019. All rights reserved |Payments Trends 2020 | November 2019 Source: Capgemini Financial Services Analysis, 2019 Key drivers Fragmentation of payments value chain Need for differentiation Requirement for end-to-end capability Demand for superior services by clients Payment firms strategy through mergers and acquisitions Top Trends in Payments for 2020 by Capgemini Intelligent Bank Open Banking Deep Customer Insights Data- Driven Compliance Trend 6: Payments firms enhance capabilities and build ecosystems through mergers and acquisitions
  9. 9. 9© Capgemini 2019. All rights reserved |Payments Trends 2020 | November 2019 Source: Capgemini Financial Services Analysis, 2019 Massive and loyal customer base create market Intelligence from huge client database Absence of regulatory supervision Key drivers BigTech Payment firms to complement their core activity and emerge as standalone payment firms New features and services Leverage FinTech player core capability Expand their presence across geographies Top Trends in Payments for 2020 by Capgemini Intelligent Bank Open Banking Deep Customer Insights Data- Driven Compliance Payments Trends 2020 | November 2019 Trend 7: BigTechs pose a threat to incumbents as they eye collaborative roles in the evolving landscape
  10. 10. 10© Capgemini 2019. All rights reserved |Payments Trends 2020 | November 2019 Proliferation of alternate payment methods such as digital wallets Adoption of instant payments-based offerings Customer expectation demanding convenience and reach Regulatory push for growth of digital payments Factors driving non-cash payments growth Top Trends in Payments for 2020 by Capgemini Intelligent Bank Open Banking Deep Customer Insights Data- Driven Compliance Trend 8: Mobile and QR payments, digital wallets, and contactless cards are set to drive future growth of non-cash payments
  11. 11. 11© Capgemini 2019. All rights reserved |Payments Trends 2020 | November 2019 Cloud based compliance as service(CaaS) Drives significant cost reduction Provides ability to outsource for smaller firms Facilitates cross-jurisdiction /regional regulatory compliance Improves usability of latest technologies such as cloud Gives scalability to ramp-up compliance activities Enables to adhere to strict data compliance 11© Capgemini 2019. All rights reserved | Top Trends in Payments for 2020 by Capgemini Intelligent Bank Open Banking Deep Customer Insights Data- Driven Compliance Payments Trends 2020 | November 2019 Trend 9: Compliance-as-a-Service gains ground as firms seek cost-effective data compliance across multiple regions
  12. 12. A global leader in consulting, technology services and digital transformation, Capgemini is at the forefront of innovation to address the entire breadth of clients’ opportunities in the evolving world of cloud, digital and platforms. Building on its strong 50-year heritage and deep industry-specific expertise, Capgemini enables organizations to realize their business ambitions through an array of services from strategy to operations. Capgemini is driven by the conviction that the business value of technology comes from and through people. It is a multicultural company of over 200,000 team members in more than 40 countries. The Group reported 2018 global revenues of EUR 13.2 billion. About Capgemini Learn more about us at www.capgemini.com This message contains information that may be privileged or confidential and is the property of the Capgemini Group. Copyright© 2019 Capgemini. All rights reserved. People matter, results count.

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