The world's biggest banks risk losing control of digital payments to small fintech startups and global tech giants, the Boston Consulting Group (BCG) has warned.
Banks have been told they have to “maximize security, minimise complexity, and add value beyond pure payments” if they want to survive in transactional banking.
The BCG has slammed banks’ poor user experiences for many types of transactions, leaving the payments business “ripe for disruption”.
According to a report from the BCG and money transfer network Swift, payments industry revenues hit $1.1 trillion in 2015, representing 29 per cent of global banking revenues.
By 2025, they are projected to reach nearly $2 trillion, a compound annual growth rate of six per cent.
“It’s critical for incumbent banks to map out diverse scenarios,” said Stefan Dab, head of transaction-banking at BCG.
“Banks must also … resolve tough dilemmas such as whether or not to collaborate with fintechs that can become competitors.”