Incumbents find themselves on increasingly unstable ground, according to a new report published by Accenture.
In 5 Big Bets in Retail Payments in North America, Accenture finds that the current roll that the North America payments industry is experiencing is expected to stop (payments revenue grew at 6% CAGR between 2015 and 2018).
Over the next three years, it says, "most retail leaders in the top US and Canadian banks" consider it likely that they will lose between 11% and 15% of their revenue pool to emerging competition from fintechs and Big Tech.
All is not what it seems
The driver of this slowing growth, says the report, is the increasing commoditisation of the transactional aspects of payments - in short, customer experience is the new driver of brand value and competitiveness.
This evolving customer demand is being met by a growing number of new entrants to the market, all of which are challenging the position of incumbents. These include: non-banks, fintechs, Big Tech, and challenger banks. The differentiating factor between these market players and incumbents? Instant and invisible payment options in combination with pricing compression that, according to Accenture, mean "the future of materially free payments is taking shape today".
Source: FinTech Magazine