This IDC Financial Insights study presents the top 10 predictions — in no particular order — for payment leaders to consider as they think through their upcoming plans. A common set of key drivers are included so that technology leaders can look at the broader conditions beyond the predictions.
IDC Financial Insights’ 2019 predictions for the worldwide payments market are as follows:
- Prediction 1: Cross-border payment tracking will be improved by the SWIFT gpi quasi-standard, but only 10% of banks on the network will have monetized it by 2020 using their own data-rich analytics.
- Prediction 2: By 2022, 50% of global consumer payments will require by law/regulation a biometric authentication method instead of using PIN or password.
- Prediction 3: By 2021, 85% of all financial institutions will use AI-enabled predictive analytic solutions for identity verification to mitigate fraud and drive false positive reduction across all payment types.
- Prediction 4: With the growth and acceptance of consumer and corporate-provided wearables, by 2024, 15% of consumer payments worldwide will be authenticated and/or transacted via wearable devices.
- Prediction 5: By 2021, global investment by banks into interoperable P2P platforms will have tripled from its value in 2018, but fintech players will remain competitive through skillful product differentiation.
- Prediction 6: In the search of a more frictionless payment experience, the pressure to implement contactless payments will grow; 60% of retailers worldwide will be accepting contactless payment technologies by 2023.
- Prediction 7: By 2023, 90% of global banks will have completed the transformation and modernization of their back-end payment systems.
Prediction 8: As the IoT expands, the number of connected devices with access to financial services will also expand to reach 10 billion devices by 2024.
- Prediction 9: The use of mobile technology will continue to expand access to financial services so that by 2022 an additional 250 million people will have access to basic financial services.
- Prediction 10: Cross-border remittance networks built on blockchain will develop along specific geographic corridors and carry more than $60 billion by 2023.
The past decade has seen a transformation in the way businesses and consumers move money. No region, financial institution (FI), or payment product has been immune from this disruption. The next 10 years promise to be even more significant. Consumer expectations, regulations, and increased competition — much of it from outside the financial space — will all play major roles in driving this ongoing change. In addition, new technologies that are only just developing, such as AI and blockchain, will also shape the payment industry. Banks, networks, technology providers, and more are all trying to anticipate what these will mean for financial institutions.
What payments will look like 5 or 10 years down the line is still a hazy vision at this point, but we can expect some characteristics: payments will be low cost and support seamless experiences across any device or channel at any time, with instant settlement. They will have not only financial institutions in the middle of the payment value chain but also include third parties, technology providers, social networks, and more. For consumers and businesses — the payers and the payees in this image of the future — payments will mean cheap, easy access to money movement. For banks, this future is much more complicated. They still need to figure out how their payment businesses fit into this brave new world.
This IDC FutureScape, like previous IDC FutureScape documents, is intended to be a tool for technology leaders in the payment market to build their future strategies. It provides the following:
- This study offers strategic foresight needed to inform technology-based strategies by laying out our top 10 predictions.
- Each prediction supports a five-year planning process by identifying the timing on the x-axis and the overall cost and complexity to address on the y-axis.
Payments continues to be roiled by immense changes, but the key components of the business of moving money remain the same: give businesses and consumers convenient, secure access to their money when they need it. Financial institutions must provide these core services even as competition, technology, and regulation make delivering those core components profitably even more difficult.
Learn more about the 2019 Payments Predictions
For context around these predictions, including the IT impact and guidance on how to integrate each prediction in the digital strategy of the enterprise, view the IDC FutureScape: Worldwide Payments 2019 Predictions web conference on-demand.
Rivka Gewirtz Little, Research Director, IDC Financial Insights