Global non-cash transaction volumes will reach 1.3 trillion by 2023, said Capgemini Research Institute recently when releasing its 2023 World Payments Report.
The World Payments Report 2023 draws on insights from two primary sources – the Global Large Businesses Survey 2023 and the Global Banking and Payments Executive Surveys and Interviews 2023, according to the firm.
These primary research sources cover insights from 17 markets: Australia, Brazil, Canada, China, France, Germany, Hong Kong, India, Italy, the Netherlands, the Kingdom of Saudi Arabia, Singapore, Spain, Sweden, Switzerland, the UAE, the UK, and the US, the firm noted.
The survey questioned 355 senior executives of corporate treasury departments of large corporates, the firm added.
As consumers and businesses adopt new digital payment schemes, the report suggests this growth will accelerate to 2.3 trillion by 2027 growing at a rate of 15% annually.
At a regional level, digital payments will grow by 19.8% across the Asia Pacific, 10.7% in Europe, and 6.5% in North America by 2027, Capgemini added.
The current model of tackling cash management services needs an overhaul, said Jeroen Hölscher, Global Head of Payments Services at Capgemini.
Corporate executives are feeling the pressure from mounting inefficiencies across lengthy cash conversion cycles, he pointed out .
“What’s clear from our report is that a robust digital foundation is the path forward to optimise the value chain,” he noted. “By simplifying the inherent complexity of their own operating and IT models, banks and payment firms can boost productivity and performance to manage client treasury needs.”
Report highlights
- The expanding digital payment infrastructure, regulations, and open banking are swiftly changing how customers and businesses pay for goods and services.
- By 2027, new payment methods (instant payments, e-money, digital wallets, account-to-account, and QR code payments) will make up approximately 30% of total volume, with traditional non-cash payments (checks, direct debits, cards, and credit transfers) dropping to around 70% of global non-cash transaction volumes.
- Corporate treasurers express dissatisfaction with current cash management services.
- The report reveals over half of corporate treasurers believe the rising globalisation of trade and ongoing supply chain disruptions have driven demand for effective and efficient cash management services (CMS).
- Another third said evolving risks (geopolitics, and cybersecurity) made CMS critical, while nearly 30% call out rising inflation causing their growing need for better cash management.
- As corporations navigate economic headwinds, current CMS offerings largely underwhelm multinational corporates, despite having more than 27 banking relationships on average to meet treasury needs.
- More than 70% of enterprise executives said they face issues in dispute negligence, poor credit risk assessment, and delayed or duplicate payment processing.
- However, the solution is clear with around two in three (63%) payment executives citing legacy infrastructure barriers as the biggest hinderance to providing efficient CMS.
- Corporate clients are demanding a retail-like payment experience from banks
- New payment solutions and key industry initiatives are fuelling the growth of digital payments among enterprises.
- Expectations are also changing, with 63% of corporate clients are demanding a retail-like payment experience from their banks in 2023.
- The payments sector has been at the forefront of digitization, however, it’s coming at a cost with compliance to local, regional and international regulations (including ISO20022 and SWIFT global payments initiatives) leaving limited room for investments in future innovation.
- Payment executives cite nearly 80% of traditional payment revenue sources are stressed and service providers must rebalance their focus between retail and commercial payments.
- Globally, more than 50% of payment executives believe commercial payments offer a better profit potential than retail payments.
- Nurturing strategic corporate relationships requires efficient cash management services
- End-to-end digital transformation in transaction banking requires top-down commitment, cohesive planning, and a unified purpose for structural reforms.
- 67% of bank executives acknowledged that strategically partnering with corporate clients reduces the threat of disintermediation by FinTechs and PayTechs; and 57% of payments executives said strategic banking partners enjoy increased cross- and up-selling opportunities because of these relationships.
