Accenture Banking Blog

Banks are countering increased competition with partnerships

There’s no denying that the payments space has changed a lot in recent years. Technological advancements, new competition, growing customer expectations and increasing regulatory obligations are all pushing established firms to embrace the new in many ways. We’re seeing new products, new ways of working and new strategies emerge at a rate that would have been unthinkable just a few short years ago.

In the midst of all this change, the industry as a whole is growing at a respectable rate. Our Payments Pulse report projects that global payments revenue will grow at a 5.5 percent compound annual rate over the next five years to reach a total of US$2 trillion by 2025.

In other words, for the foreseeable future, payments is likely to offer exciting growth opportunities—for those players that are prepared.

To help with this, we’re sharing our top six payments trends in this blog series. This post kicks things off with a look at the growing collaborations in the industry.

Can banks collaborate their way out of rising payments competition?

One of the most interesting recent developments across all of financial services is the entry of big tech firms into the marketplace. The likes of Google, Apple, Facebook, Amazon and Alibaba have all become active in financial services in one way or another.

In response to this rising competitive pressure, conventional banks are developing and launching their own new products and services—often in collaboration with each other and with fintechs.

For example, the Luxembourg-based mobile payments company Payconiq has partnered with many of Europe’s biggest banks on mobile payments solutions. The partner banks give users the certainty of a secure registration process and assurances of the trustworthiness of merchants.

This arrangement also allows the banks the chance to participate in an ecosystem built around open APIs and flexible microservices. This pushes many banks towards greater organizational agility, which is a key competitive advantage in this constantly changing industry.

Other industry players are partnering with some of the leading companies from the New Digital Age—including new competitors. For example, JPMorgan Chase recently developed an e-wallet product designed to help tech firms like Airbnb, Lyft and Amazon provide customers with virtual wallets.

The benefits of collaboration are undeniable in some areas of payments. The classic example is Bizum in the peer-to-peer (P2P) arena. Bizum is an instant account-to-account payments solution that is accessed via mobile phone. It’s connected with a large number of banks. To send a transfer, customers need just the phone number of their recipient—no account number is required.

Banks that are part of the Bizum network can offer this value-added service to their customers, thanks to collaboration. The payments enabled through Bizum are simple and seamless.

In my next post, I’ll look at the power of creating payments systems like this in another context: in-app payments.

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