US banks must prioritize digital services in order to remain competitive, according to the World Payments Report 2021 by Capgemini.
By 2025, instant payments and e-money payments will account for more than 25% of global non-cash transactions, with almost 45% of consumers now frequently using mobile wallets to make payments.
The report which surveyed 6,300 customers worldwide and over 210 financial executives found that digital payments demand has increased rapidly following the pandemic.
Capgemini estimates that global B2B non-cash transactions will increase to nearly 200 billion transactions by 2025, compared to 121.5 billion in 2020.
The non-cash transaction growth is estimated to be accelerated by Buy Now Pay Later (BNPL), invisible, biometric and cryptocurrency. Despite this sector decelerating in 2020 to 7.8%, fuelled by pandemic-related uncertain market conditions, transaction are projected to reach 1.8 trillion in volume by the end 2025.
Anirban Bose, CEO of Capgemini’s financial services and group executive board member, said: “As digital payments and mobile wallets become more the norm than the exception, providers must find ways to meet consumer hopes for speed and ease of use.”
Bose added that banks must build a “complimentary partnership ecosystem” to keep up with the rate of change.
Current legacy payments infrastructure is being stretched as customer expectations increase. As a result, nearly 55% of surveyed executives said that their technology investment priorities include modernizing payment infrastructure.
The report stated that providers need to “prioritize digital capabilities” to remain competitive. while loyalty and rewards, frictionless transaction experience, alternate payment options, and sustainable payment products are key areas in which gaps exist between customer expectations and payment executive priorities.
North America is predicted to stabilize non-cash payments after plateaued card transaction growth and slow mobile payments adoption.
Asia Pacific is leading the digital payment revolution in terms of region. By 2025, the region will represent more than half of global non-cash transactions with 28% CAGR from 202-2025.
Meanwhile in Europe, mobile payments and cross-border e-commerce will drive the region beyond 400 billion transactions in 2025, at a CAGR of 13%.