As digital payments evolves, it is clear that financial institutions and payment providers will continue to use blockchain technology to drive real-time cross-border payment growth. This digital ledger infrastructure, built into bank accounts, digital wallets, and even payout channels, is becoming the engine for the convenience, speed, easy access, transparency, and trust that today’s businesses and consumers need.
The introduction of cryptocurrencies (which as a “digital asset” class have exceeded a value of over USD 1 billion and have matured well beyond the first few years of negative connotations) is intended to eliminate friction losses and to lubricate the acceleration of the transformation of global payments into $ 1.9 billion will be marketed.
We therefore assume that these key trends will lead to hypergrowth in digital payments worldwide in 2021 and beyond:
Paper money is still a mainstay
If we take a step back and look at the bigger picture, it’s obvious that cash is still king. However, as cash remains stable, digital payments will continue to increase.
Even before COVID – ironically, cash was at the core of digital growth. For example, the top cross-border paymentCompanies report that cash makes up more than 80% of all transactions and only a small proportion of all transactions are purely digital.
Although our world is becoming more virtual by the day, the majority of consumers still long for and value access to physical money. When asked which features are important when choosing a major bank or deposit account, 70% of consumers said they can access cash conveniently and free of charge through an ATM.
Interestingly, however, it is this access to cash that is helping digital wallets become a consumer’s primary financial services provider. 31% of people would use a new financial service provider if they also offered free access to ATMs.
Accelerated adoption of mobile money in fintech
Global fintech technology giants are investing heavily in digital payment technologies, which is fueling rapid market growth and the introduction of the mobile wallet. It is estimated that there will be 4.3 billion mobile wallet users worldwide in 2024 – compared to 2.3 billion in 2018. This trend is not only shaped by consumers: 69% of banks are currently experimenting with blockchain technology, if They invest in platform modernization initiatives Drive the digital payment option. It is estimated that there will be more than 200 million blockchain wallet users by 2030. In addition, the oldest bank in the United States, BNY Mellon, recently announced that it will set up a new digital custodian in 2021 to help customers handle digital assets, including cryptocurrencies.
However, many of these banks and financial institutions face very real investment challenges when it comes to upgrading outdated, existing infrastructures to enable new, user-friendly operating models. Payments can represent up to 40% of a bank’s operating costs. Will fintech adapt to this new world driven by technological innovations? If so, how? Like any other company in any other industry, fintech institutions will tackle the wave of changing consumer and small business behavior.
A new generation of technology providers
In 2020 we saw “X” as-a-service offerings grow significantly in importance to empower some of the biggest names in fintech – Payments as a Service; Banking as a service; Transfers as a service. From 2021 we do not expect this trend to subside. In fact, it will only gain momentum and expand into new areas of payments, with new products serving a wide variety of customers, especially in the B2B space.
Payments-as-a-Service (PaaS) uses cutting-edge cloud-based platforms to provide specialized services such as card issuance, payment processing, cross-border payments, withdrawals and e-commerce gateways. For those in the fintech space, this is groundbreaking.
Remember that 40% of a bank’s operating costs are used for payments? PaaS drastically reduces this number by offering cloud-based solutions that are easy to integrate and easy to update. Yes, this is a fundamental change in a bank’s business model, but it is necessary for these large institutions to maintain their central position on the decision-making path to purchase.
Where do you go from here?
The number of users of blockchain-based wallets roughly doubles every year, which mimics the early growth of the internet very well. Will digital payments be as important to the web as the browser? Possibly. Will digital payments grow worldwide like never before in the coming years? Absolutely.
Optimized payments – especially tied to information – will be a priority emerging from the pandemic for consumers and business decision makers. What we know for sure is that cryptocurrency is no longer a dirty word. It will become a mainstay for financial institutions, small businesses, and everyday consumers, and will fuel the dramatic growth in payments.
Small businesses and consumers will demand services that require instant payments. At the moment it can only be provided through digital currencies. Customers will be interested in companies that offer these services.
“What the internet has done for communication, blockchain will do for trustworthy transactions” – Ginni Rometty, former CEO of IBM.
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