The Boston Consulting Group’s tenth comprehensive study since 1995 of the worldwide payments landscape appears at a time when unprecedented changes are sweeping the payments industry. Amid growing competition and price pressure, increasing regulatory constraints and scrutiny, rising macroeconomic volatility, changing demographic patterns, and shifting customer demands, only those institutions that are able to adapt, transform, and optimally link their business and operating models will prosper and seize a greater share of revenues and profits over the next decade. The size of the prize is too large not to take action: we estimate that the global payments market will be worth $782 trillion in noncash transaction value and $492 billion in transaction revenues by 2020.
In our last report, Weathering the Storm: Global Payments 2009, we concentrated on the actions that financial institutions needed to take to withstand the global financial crisis and emerge from the downturn in a strong position.In this report, we focus on developing optimal business models (target customer segments, product portfolios, regions, and channels) and operating models (target processes, IT, sourcing, and organization) that will drive successful and sustainable growth strategies in payments and transaction banking “after the storm."
We define payments revenues as direct and indirect revenues generated by a payment service. These include transaction-specific revenues, card and account maintenance fees, and spread income generated from current accounts—also known as checking or demand-deposit accounts (DDAs). Fees for overdrafts and nonsufficient funds are considered transaction-specific revenue. (See "An Overview of Volumes, Values, and Revenues in the Payments Marketplace, 2010–2020" for details.) Given this definition, payments make up approximately one-third to one-half of most banks’ revenues. We define transaction banking as products and services related to payments, such as cash management services for corporate clients.