Over the next five years, the global payments industry will grow by 8% annually, mainly driven by China. This forecast was announced by the McKinsey consulting company in its annual report "Global Payments 2021".
According to analysts at McKinsey, the trend of sustained growth has returned to the global payments industry. After the downturn caused by the 2008 crisis, payment service revenues will show an average annual growth of 8%, reaching $ 2.3 trillion in 2025, or 43% of all banking revenues. For comparison, the same indicator in 2020 was 34%.
The Asia-Pacific region, including China, which now accounts for the largest share of payment service revenue (40%), will continue to drive growth. Its share of the global payments industry will grow to 56% over the next five years, with China alone accounting for about 40%. However, Western Europe and developed Asia, where growth performance has been negative in recent years, will recover. Cross-border payments and trade finance are expected to rise significantly in the coming years, driven by a strong rebound in trade flows (with an annual growth rate of around 8% through 2024).
A number of trends show that payments players are preparing to actively participate in the development of the industry. Many companies are just trying to enter this market and occupy a niche, some are transforming. The emergence of new digital technologies is also driving an increasing number of convenient payment solutions.
McKinsey analysts identify five major trends that will reshape the industry over the next three to five years.
According to analysts at McKinsey, the trend of sustained growth has returned to the global payments industry. After the downturn caused by the 2008 crisis, payment service revenues will show an average annual growth of 8%, reaching $ 2.3 trillion in 2025, or 43% of all banking revenues. For comparison, the same indicator in 2020 was 34%.
The Asia-Pacific region, including China, which now accounts for the largest share of payment service revenue (40%), will continue to drive growth. Its share of the global payments industry will grow to 56% over the next five years, with China alone accounting for about 40%. However, Western Europe and developed Asia, where growth performance has been negative in recent years, will recover. Cross-border payments and trade finance are expected to rise significantly in the coming years, driven by a strong rebound in trade flows (with an annual growth rate of around 8% through 2024).
A number of trends show that payments players are preparing to actively participate in the development of the industry. Many companies are just trying to enter this market and occupy a niche, some are transforming. The emergence of new digital technologies is also driving an increasing number of convenient payment solutions.
McKinsey analysts identify five major trends that will reshape the industry over the next three to five years.
- Further transformation of payments in commerce and services under the influence of emerging digital technologies. The rapid proliferation of smartphones and tablets is bringing the offline and online world closer together, and further penetration into the value chain of developers of various innovative solutions. While we forecast skyrocketing revenue from payment services through new digital solutions, will market players be agile and innovative enough to catch this growth wave?
- Changing the role of data: instead of simple accumulation, operational analysis and use. Historically, banks have always had the advantage of accessing customer data. However, in recent years, many companies have begun to take an unconventional approach to collecting and analyzing data. By combining various sources of information, they offer the market new financial products. Banks, in turn, have a problem: how to get rid of dependence on their own, closed data and use a new approach that encompasses a broader view of customers.
- The emergence of payments in real time without the use of cards. A number of countries have already updated their national payment systems, paving the way for innovation, including real-time payments without cards. Analysts believe that real-time payments can significantly reduce the role of cash, thereby increasing the use of electronic payments.
- Rapid growth and digital transformation of cross-border financial services. Cross-border banking revenues are, of course, closely related to trade flows, which have not seen very strong growth over the past three years. Experts expect global trade to grow faster than global GDP over the next five years. At the same time, clients are looking for simpler and more transparent financial solutions in cross-border trade. Banks will have to deal with constant changes in the direction of trade flows, as well as updates to national and international regulations.
- Payments will be the cornerstone in the next phase of digital banking evolution. McKinsey predicts that over 50% of revenue from virtually all banking products in Western Europe by 2024 will come from digital services. Thus, the main task of payment providers in the coming years will be an in-depth study of the needs and behavior of customers.
