De-banking in cross-border payments: Why the system needs reform
June 25, 2024
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Banks de-bank payment providers, disrupting cross-border transactions and financial inclusion.
What is this article about?
The key trends, challenges, and opportunities in the payments industry based on the PAY360 registrant survey.
Why is it important?
It provides industry leaders actionable insights to navigate the evolving payments landscape and make informed strategic decisions.
What’s next?
Industry leaders should leverage these insights to drive growth, enhance customer satisfaction, and stay competitive in the dynamic payments ecosystem.
This final article in the series, based on the PAY360 registrant survey, reveals the major challenges and opportunities for individuals in the payments industry. By comparing various segments, a broad understanding of the current landscape and future trends is provided. This comprehensive analysis offers actionable insights for leaders within the payments sector, aiding in navigating the complexities and dynamic changes expected over the next 12 months.
The PAY360 registrant survey provides an in-depth look at key areas within the payments ecosystem, highlighting both common challenges and unique opportunities across different segments. From banking and account providers to digital assets and crypto, each segment presents distinct trends that can shape strategic decision-making. The article aims to synthesise these findings into clear, actionable insights, empowering industry leaders to effectively respond to evolving market demands and technological advancements. This detailed examination is essential for understanding and leveraging the factors that will drive growth and innovation in the payments industry.
The PAY360 survey reveals critical trends and insights across various segments in the payments industry. The findings provide actionable intelligence for industry leaders, identifying key trends in challenges, opportunities, and expected spending.
Digital transformation: Keeping up with digital transformation is a prominent challenge in sectors like banking (22%), card industry (22%), and open banking (10%), underscoring the necessity for continuous technological advancements.
Compliance with regulation: Compliance remains a significant challenge, particularly in the government, regulatory, or rules body sector (35%) and the digital assets and crypto sector (29%), reflecting ongoing regulatory pressures.
Implementing new payment methods: This challenge is highlighted in several segments, including cross-border payments (31%), card industry (24%), and NBFIs (22%), indicating a widespread need for innovation in payment solutions.
Artificial intelligence (AI): AI is identified as a major opportunity across multiple segments, such as financial crime/compliance services (50%) and NBFIs (28%), highlighting its potential to revolutionise financial services through automation and data analytics.
Open banking: Recognised particularly in the government, regulatory, or rules body sector (44%) and open banking segment (71%), open banking is seen as a key driver for enhancing financial transparency and data sharing.
Real-time payments: Highlighted as a significant opportunity in sectors like cross-border payments (15%) and tech solutions providers (17%), real-time payments are crucial for improving transaction speed and efficiency.
High investment segments: Sectors like the card industry and tech solutions providers anticipate substantial investments. For instance, 45% of respondents in the card industry predict spending £15 million or more, while 42% of tech solutions providers expect to invest similarly.
Moderate to cautious spending: Segments like open banking show a more cautious approach, with 34% of respondents anticipating spending up to £1 million, reflecting strategic investment planning focused on gradual growth and innovation.
AI and compliance challenges: In segments where AI is seen as a significant opportunity, such as financial crime/compliance services (50%) and NBFIs (28%), compliance with new regulations is often the biggest challenge. This trend highlights the need to balance innovation with regulatory adherence.
Open banking and high expenditure: Sectors identifying open banking as a major opportunity, such as the government sector (44%) and tech solutions (8%), also show high expected expenditures. For instance, 20% of respondents in the government sector anticipate spending £15 million, aligning investment with the potential of open banking.
Digital transformation and new payment methods: Sectors facing significant challenges in digital transformation, such as the banking sector (22%) and the card industry (22%), also highlight implementing new payment methods as a critical challenge. This indicates a trend where adapting to new technologies and payment methods are interlinked challenges.
Cross-border payments and real-time payments: In the cross-border payments segment, the biggest challenge (31%) is implementing new payment methods, while real-time payments are seen as a major opportunity (15%). This reflects the sector’s focus on enhancing transaction speed and efficiency to meet global demand.
Financial crime and cybersecurity: The financial crime/compliance services sector highlights financial crime and cybersecurity threats as the most significant challenge (36%), while AI is seen as the biggest opportunity (50%). This trend underscores the critical role of advanced technologies in enhancing security measures and combating sophisticated threats.
The banking and account provider segment faces well-known challenges such as regulatory compliance and legacy system integration. Additionally, the need for robust cybersecurity measures has become increasingly critical. On the opportunity side, advancements in digital banking and fintech innovations offer significant growth potential. The implementation of mobile banking, enhanced customer data analytics, and the adoption of open banking frameworks allow for improved customer experiences and expanded service offerings.
The count above represents the breakdown of survey participants within the banking and account provider segment, showcasing the breadth of participation across different types of institutions. High street banks or building societies had the highest representation with 191 respondents. Account providers, including non-banks, followed with 162 respondents. Challenger banks, noted for their innovative approaches, had 146 respondents. Lastly, with 47 respondents, is investment banks.
A significant portion of respondents (32%) predict a spend of £15 million, indicating substantial planned investments in this segment. Following this, 22% of respondents expect to invest £1 million, reflecting more conservative spending strategies. 18% of participants forecast spending up to £1 million, while another 18% predict investments of £5 million. Finally, 12% of respondents anticipate a spend of £10 million.
The most prominent challenge, cited by 22% of respondents, is keeping up with digital transformation. This reflects the ongoing need for banks to adopt new technologies and modernise their operations. Implementing new payment methods is another significant challenge, affecting 21% of respondents, highlighting the critical need for innovation in the payments sector.
Compliance with new regulations and policies is a concern for 16% of participants, indicating the constant pressure to stay aligned with evolving legal requirements. Financial crime and cybersecurity threats are highlighted by 11% of respondents, underscoring the importance of robust security measures. Understanding what customers want is a challenge for 15% of respondents, emphasising the need for improved customer insights.
Additionally, streamlining backend infrastructure and processes poses a challenge for 8% of respondents, highlighting the need for operational efficiency. Lastly, wider macro-economic downturns and shifts are a concern for 5% of respondents, reflecting broader economic uncertainties impacting the sector.
Leading the list, with 20% of respondents, are advancements in artificial intelligence (AI) and cross-border payments. These areas are seen as key drivers for future growth and innovation. Open banking, also in the top three with 20% of respondents, presents significant potential for enhancing financial services through greater data sharing and collaboration.
Real-time payments, highlighted by 14% of respondents, offer the chance to improve transaction speed and efficiency. Digital currencies, noted by 9% of respondents, represent a burgeoning field with the potential to reshape the financial landscape. Additionally, connected and/or embedded commerce is seen as a major opportunity by 12% of respondents, integrating payments seamlessly into consumer experiences.
Digital wallets, cited by 5% of respondents, and open banking, which also received attention, reflect the ongoing shift towards more digital and integrated financial solutions. These opportunities indicate the various paths banking and account providers can pursue to drive growth and enhance customer satisfaction.
The card industry is navigating a period of rapid change, driven by technological advancements and shifting consumer preferences. Traditional credit and debit card providers are facing increasing competition from digital wallets and contactless payment solutions. Additionally, the need for enhanced security measures to combat fraud remains a constant challenge. However, these changes also present significant opportunities. Innovations in card technology, such as biometric authentication and dynamic CVVs, are enhancing security and user experience. The rise of mobile payments and e-commerce offers new avenues for growth, making it a unique time for stakeholders in the card industry.
Card issuing is the most represented area, with 102 respondents. Card networks follow with 89 respondents, and card processing is another major area with 84 respondents. Card acquiring and card manufacturing have 69 and 38 respondents, respectively.
Other areas include card payment gateways (28 respondents), specialised card solutions (21 respondents), card program management (17 respondents), ISO services (16 respondents), card PoS terminal providers (10 respondents), and branded card programs (9 respondents).
A significant portion of respondents (45%) anticipate spending £15 million, indicating robust investment plans aimed at driving growth and innovation. Following this, 26% of respondents expect to allocate £1 million, reflecting more moderate investment strategies.
Additionally, 12% of participants forecast spending up to £1 million, while 11% predict investments of £5 million. A smaller segment, 6% of respondents, anticipates spending £10 million. This diverse range of predicted expenditures highlights the card industry’s varying financial strategies and priorities, as companies aim to balance innovation, security, and customer experience enhancements.
Implementing new payment methods is the most significant challenge, cited by 24% of respondents. This highlights the industry’s ongoing efforts to innovate and adapt to new technologies. Keeping up with digital transformation is another major challenge, affecting 22% of respondents, underscoring the need for continuous modernisation.
Compliance with new regulations and policies is a concern for 13% of participants, reflecting the regulatory pressures within the industry. Understanding what customers want, highlighted by 17% of respondents, emphasises the importance of customer-centric strategies. Streamlining backend infrastructure and processes, cited by 12% of respondents, points to the need for operational efficiency.
Financial crime and cybersecurity threats are a challenge for 8% of respondents, underscoring the critical importance of security. Finally, wider macro-economic downturns and shifts pose challenges for 5% of respondents, indicating the impact of broader economic conditions on the card industry.
Artificial intelligence and connected and/or embedded commerce are seen as the top opportunities, each cited by 19% of respondents. These areas promise to revolutionise the industry through advanced technology and seamless integration of payment solutions.
Real-time payments, identified by 16% of respondents, offer the potential to enhance transaction speed and efficiency. Digital wallets, cited by 15% of participants, continue to grow in importance as consumers increasingly prefer digital payment methods.
Cross-border payments, mentioned by 14% of respondents, represent a key growth area, enabling more efficient and cost-effective international transactions. Open banking, noted by 10% of respondents, presents opportunities for enhanced financial services through greater data sharing and collaboration.
Finally, digital currencies, highlighted by 7% of respondents, represent an emerging field with significant potential to transform the financial landscape. These opportunities indicate the diverse avenues for growth and innovation within the card industry, positioning it for a dynamic and evolving future.
Cross-border payments are critical to the global financial ecosystem, facilitating international trade and commerce. This segment is undergoing rapid transformation driven by technological advancements and regulatory changes. Traditional methods are being challenged by innovative solutions that promise faster, more secure, and cost-effective transactions. As businesses and consumers increasingly operate globally, the demand for efficient cross-border payment systems continues to grow. This sector faces unique challenges, such as navigating diverse regulatory environments and managing foreign exchange risks, but also offers substantial opportunities for growth and innovation, particularly through the adoption of blockchain technology and digital currencies.
The PAY360 survey breakdown illustrates the diversity of participants within the cross-border payments sector. Leading the category, money transfer services account for 110 respondents, reflecting their significant role in facilitating international remittances. FX providers follow closely with 102 respondents, highlighting their importance in foreign exchange transactions.
Commercial payments are represented by 94 respondents, indicating substantial involvement in business-to-business (B2B) payments. Remittance services, with 66 respondents, showcase the demand for reliable solutions for sending money across borders. Correspondent banking services, with 33 respondents, although fewer in number, play a crucial role in traditional banking transactions internationally.
A significant portion of respondents (26%) anticipate spending up to £1 million, reflecting cautious investment strategies aimed at maintaining current operations and gradual growth. Another 25% of respondents expect to allocate £15 million, indicating substantial investments aimed at major enhancements and scaling operations.
Spending predictions of £1 million are expected by 20% of participants, suggesting a balanced approach between moderate and significant investment. Additionally, 16% of respondents forecast expenditures of £5 million, highlighting mid-range investment plans. Finally, 14% of respondents anticipate spending £10 million, indicating robust investment strategies focused on leveraging growth opportunities.
The most prominent opportunity, cited by 50% of respondents, is the growth in cross-border payments itself, reflecting the increasing demand for efficient international transaction solutions. Real-time payments, identified by 15% of respondents, offer the potential to significantly enhance transaction speed and efficiency.
Artificial intelligence (AI), noted by 11% of participants, presents substantial opportunities for improving transaction security, fraud detection, and customer service. Digital currencies, also cited by 11% of respondents, represent a burgeoning area with the potential to revolutionise cross-border transactions.
Connected and/or embedded commerce is seen as an opportunity by 5% of respondents, integrating payment solutions seamlessly into global trade and commerce. Digital wallets, mentioned by 5% of respondents, continue to grow in importance as consumers increasingly prefer digital payment methods. Lastly, open banking, highlighted by 4% of respondents, presents opportunities for enhanced financial services through greater data sharing and collaboration.
The digital assets and crypto segment is rapidly evolving, characterised by significant innovation and regulatory scrutiny. As cryptocurrencies gain mainstream acceptance, financial institutions and investors are increasingly exploring their potential. This sector offers substantial opportunities, such as enhanced financial inclusion and decentralised finance (DeFi) platform development. However, it faces challenges, including regulatory compliance, market volatility, and security concerns. The integration of blockchain technology promises to revolutionise transaction transparency and efficiency, making digital assets and crypto a pivotal area of focus for the future of finance.
The PAY360 survey breakdown shows the distribution of respondents within the digital assets and crypto sector, highlighting the areas they work in. Cryptocurrencies have the highest representation, with 41 respondents. Distributed ledger technology (DLT) and blockchain solutions follow with 38 respondents.
Decentralised finance (DeFi) and related innovations are represented by 30 respondents. Technology providers account for 20 respondents. Exchanges, with 19 respondents, play a key role in the trading and liquidity of digital assets.
Stablecoins are highlighted by 14 respondents. DLT fraud and security solutions have 3 respondents, while prime brokerage services has 2 respondents.
A significant portion of respondents (29%) anticipate a spend of up to £1 million, reflecting cautious yet strategic investments to explore new opportunities and enhance current operations.
Additionally, 22% of respondents expect to allocate £1 million or more, indicating moderate investment plans to support growth and development in the digital assets and crypto sector. Spending predictions of £5 million are expected by 21% of participants, highlighting a commitment to substantial investment for scaling operations and adopting new technologies.
Further, 16% of respondents forecast expenditures of £15 million, pointing to robust investment strategies aimed at significant expansion and innovation. Finally, 5% of respondents anticipate spending £10 million or more, suggesting a focused approach to leveraging key growth opportunities.
Compliance with new regulation and policy is a significant challenge, cited by 29% of respondents, reflecting the evolving regulatory landscape in the digital assets and crypto space. Financial crime and cybersecurity threats are noted by 8% of participants, underscoring the importance of robust security measures.
Implementing new payment methods, cited by 23% of respondents, remains a critical task, highlighting the need for continuous innovation. Keeping up with digital transformation, noted by 18% of respondents, indicates the ongoing need for technological advancements.
Streamlining backend infrastructure and processes is a challenge for 10% of respondents, pointing to the necessity for operational efficiency. Understanding what the customer wants, cited by 17% of respondents, emphasizes the importance of customer-centric strategies.
Lastly, wider macroeconomic downturns and shifts are mentioned by 6% of respondents, indicating the broader economic factors impacting the digital assets and crypto sector.
Digital currencies stand out as the most prominent opportunity in the digital assets and crypto space, cited by 52% of respondents, highlighting their transformative potential.
Artificial intelligence, noted by 16% of participants, offers significant opportunities for enhancing transaction security, fraud detection, and customer service in the digital assets and crypto sector. Digital wallets, mentioned by 16% of respondents, continue to gain importance as consumers increasingly adopt digital payment methods.
Cross-border payments, highlighted by 9% of respondents, represent a key growth area, enabling more efficient and cost-effective international transactions. Connected and/or embedded commerce is seen as an opportunity by 7% of respondents, integrating payment solutions seamlessly into global trade and consumer experiences.
Real-time payments, identified by 5% of respondents, offer the potential to significantly improve transaction speed and efficiency. Lastly, open banking, mentioned by 2% of respondents, presents opportunities for enhanced financial services through greater data sharing and collaboration.
The financial crime and compliance services sector is pivotal in maintaining the integrity and security of financial operations amidst evolving threats. With the increasing sophistication of financial crimes, organisations face significant challenges in staying ahead. The sector is heavily investing in advanced technologies such as artificial intelligence and blockchain to enhance detection and prevention mechanisms. Stringent regulatory standards and frameworks continue to evolve, requiring firms to constantly adapt and innovate. This segment remains crucial for mitigating risks, ensuring compliance, and fostering trust in the financial ecosystem.
Compliance services and consultants represent the largest group of survey participants, with 109 respondents. This is followed by KYC (know your customer) and AML (anti-money laundering) data providers, with 55 respondents. ID verification solutions and transaction monitoring are each represented by 25 respondents. Biometric services, with 2 respondents, round out the sector.
A significant portion of respondents (45%) anticipate spending up to £1 million, reflecting cautious investment strategies in financial crime/compliancy services aimed at maintaining and enhancing current capabilities.
Additionally, 29% of respondents expect to allocate £1 million or more, indicating moderate investment plans to support growth and development. Spending predictions of £15 million are expected by 11% of participants, suggesting substantial investments for scaling operations and adopting new technologies.
Furthermore, 9% of respondents forecast expenditures of £5 million, highlighting mid-range investment strategies. Finally, 6% of respondents anticipate spending £10 million, reflecting robust investment plans to leverage growth opportunities.
Financial crime and cybersecurity threats are expectedly the most significant challenge, cited by 36% of respondents, highlighting the critical need for robust security measures to combat sophisticated criminal activities.
Compliance with new regulations and policies is another major challenge, affecting 28% of respondents, underscoring the constant pressure to stay aligned with evolving legal requirements. Understanding what customers want is a challenge for 17% of participants, emphasising the importance of customer-centric approaches in compliance strategies.
Keeping up with digital transformation, cited by 6% of respondents, highlights the need for continuous technological innovation. Streamlining backend infrastructure and processes, noted by 4% of respondents, points to the necessity for operational efficiency. Wider macroeconomic downturns and shifts, also mentioned by 4% of respondents, reflect the impact of broader economic conditions on compliance efforts.
Implementing new payment methods, though a less prominent challenge, is still noted by 3% of respondents, indicating the importance of integrating innovative payment solutions within compliance frameworks.
Artificial intelligence is the most prominent opportunity cited by 50% of respondents, indicating its potential to revolutionise compliance processes and enhance security measures.
Connected and/or embedded commerce, along with cross-border payments identified by 9% of respondents, present substantial opportunities for integrating advanced compliance solutions and expanding the scope of secure international transactions. Real-time payments, also noted by 10% of respondents, offer the potential to improve transaction monitoring and fraud detection capabilities.
Digital wallets, highlighted by 6% of respondents, represent a growing area for secure and compliant financial transactions. Digital currencies, cited by 5% of respondents, continue to gain traction, offering new avenues for secure digital financial activities. Open banking, identified by 9% of respondents, presents opportunities for enhanced data sharing and compliance through improved transparency and collaboration.
The Gift and Loyalty segment continues to evolve, driven by advancements in digital technologies and changing consumer preferences. This sector faces unique challenges, such as maintaining customer engagement and adapting to emerging payment methods. However, it also presents substantial business opportunities to enhance customer loyalty and drive revenue through innovative solutions. The integration of digital platforms and personalised rewards programmes is transforming how companies approach gift and loyalty initiatives.
The biggest opportunity is artificial intelligence, noted by 26% of participants, presents substantial opportunities for personalising customer experiences and optimising loyalty programmes. Connected and/or embedded commerce is the second largest opportunity, cited by 25% of respondents, indicating its potential to seamlessly integrate loyalty solutions into broader commerce platforms.
Digital wallets, mentioned by 19% of respondents, continue to gain traction, offering convenient and secure payment options that can enhance customer loyalty.
Open banking, highlighted by 17% of respondents, presents opportunities for improved data sharing and customer insights, enabling more effective loyalty strategies. Digital currencies, cited by 10% of respondents, represent a growing area with potential to transform the way loyalty rewards are issued and redeemed.
Real-time payments, identified by 7% of respondents, offer the potential to improve the immediacy and efficiency of loyalty rewards, enhancing customer satisfaction.
The government, regulatory, or rules body sector remains pivotal in navigating the complexities of the payments industry. As regulatory landscapes continuously evolve, this sector faces significant challenges adapting to rapid technological advancements while ensuring compliance and security. Regulatory bodies are tasked with balancing innovation with stringent oversight, impacting the entire payments ecosystem. Their decisions and policies are critical in shaping the industry’s future, driving opportunities and constraints for businesses operating within this space.
The largest group comprises government entities, with 29 respondents participating in the survey. Regulatory authorities follow, with 22 respondents. Other government initiatives are represented by 15 respondents while rules and industry bodies account for 11 respondents. Lastly, individuals of office make up 4 respondents.
A significant portion of respondents (47%) anticipate spending up to £1 million, reflecting a cautious yet strategic approach to budget allocation within the government, regulatory, or rules body sector.
Additionally, 20% of respondents expect to allocate £1 million or more, indicating moderate investment plans to support their regulatory and oversight functions. Another 20% of respondents forecast expenditures of £15 million, suggesting substantial investments to enhance regulatory frameworks and compliance mechanisms.
Further, 7% of participants predict spending £5 million, while another 7% anticipate spending £10 million. These figures highlight the varied financial strategies within the sector, as organisations aim to balance operational needs with the demand for robust regulatory oversight and innovation.
Compliance with new regulation and policy is the most significant challenge with the government, regulatory, or rules body sector, cited by 35% of respondents, highlighting the constant need to adapt to evolving regulatory landscapes.
Keeping up with digital transformation is another major challenge, affecting 26% of respondents, underscoring the importance of integrating advanced technologies to enhance regulatory frameworks and oversight capabilities. Implementing new payment methods is a challenge for 16% of respondents, reflecting the necessity of accommodating innovative payment solutions within regulatory structures.
Financial crime and cybersecurity threats, cited by 15% of respondents, emphasise the critical importance of safeguarding financial systems against increasingly sophisticated threats. Understanding what customers want, noted by 7% of respondents, highlights the need for regulatory bodies to consider consumer perspectives in their policymaking.
Streamlining backend infrastructure and processes is a challenge for 1% of respondents, pointing to the need for operational efficiency and effective system integration. Wider macroeconomic downturns and shifts, cited by 2% of respondents, reflect the impact of broader economic conditions on regulatory efforts.
Open banking stands out as the most prominent opportunity within the government, regulatory, or rules body sector, cited by 44% of respondents, indicating its potential to enhance data sharing and financial transparency.
AI, noted by 21% of participants, presents substantial opportunities for improving regulatory processes and enhancing compliance through advanced analytics and automation. Connected and/or embedded commerce, mentioned by 10% of respondents, offers the potential to integrate regulatory compliance seamlessly into digital transactions.
Cross-border payments, highlighted by 8% of respondents, represent a key growth area, enabling more efficient and secure international transactions. Digital currencies, cited by 6% of respondents, continue to gain traction, offering new avenues for secure digital financial activities.
Digital wallets, noted by 3% of respondents, represent a growing area for secure and compliant financial transactions. Real-time payments, identified by 8% of respondents, offer the potential to improve transaction monitoring and fraud detection capabilities.
The merchant segment is experiencing rapid evolution driven by digital transformation and changing consumer behaviours. Merchants face the dual challenge of adapting to emerging payment technologies while maintaining robust security measures. The rise of e-commerce, mobile payments, and contactless transactions is reshaping the retail landscape, creating both challenges and opportunities. In this dynamic environment, merchants must innovate continuously to enhance customer experience, streamline operations, and stay competitive.
Retailers make up the largest group, with 50 respondents. The gaming and leisure and hospitality sectors each have 16 respondents. Travel merchants are represented by 12 respondents, while the transport sector includes 11 respondents. Lastly, the utilities sector has 6 respondents participating in the survey.
A significant portion of respondents (43%) anticipate spending £1 million or more, reflecting strong investment intentions to enhance their payment systems and customer experiences.
Additionally, 28% of respondents expect to allocate £15 million or more, indicating substantial investments aimed at scaling operations and adopting new technologies. Spending predictions of £5 million or more are expected by 17% of participants, highlighting a commitment to mid-range investment strategies to drive growth and innovation.
Lastly, 13% of respondents forecast expenditures of up to £1 million, showing a more cautious approach towards maintaining and upgrading existing systems.
Implementing new payment methods is the most significant challenge, cited by 29% of respondents, highlighting the need for merchants to adapt to evolving payment technologies to meet customer expectations.
Keeping up with digital transformation is another major challenge, affecting 19% of respondents, underscoring the importance of integrating advanced technologies to enhance operational efficiency and customer experience. Understanding what customers want is a challenge for 18% of participants, reflecting the importance of customer-centric strategies in developing effective payment solutions.
Compliance with new regulations and policies is a concern for 15% of respondents, reflecting the regulatory pressures within the industry. Financial crime and cybersecurity threats, cited by 8% of respondents, highlight the critical importance of robust security measures.
Streamlining backend infrastructure and processes is a challenge for 3% of respondents, pointing to the need for operational efficiency. Wider macroeconomic downturns and shifts, also noted by 8% of respondents, indicate the impact of broader economic conditions on the merchant sector.
Connected and/or embedded commerce is the largest opportunity for participants in the merchants space, noted by 23% of respondents. This reflects the trend towards integrating payment solutions seamlessly within various commercial platforms, offering a more streamlined and efficient customer journey.
Artificial intelligence stands out as a major opportunity, cited by 20% of respondents, indicating its potential to enhance customer experience, optimise operations, and drive innovative payment solutions.
Real-time payments and digital wallets are each highlighted by 14% of respondents, showcasing the growing importance of instant transaction capabilities and secure, convenient digital payment options in enhancing customer satisfaction and loyalty.
Cross-border payments, identified by 12% of respondents, present opportunities for expanding market reach and facilitating international transactions. Digital currencies, cited by 11% of respondents, continue to offer new avenues for secure and innovative payment methods.
Open banking, mentioned by 6% of respondents, represents opportunities for greater financial transparency and improved customer insights through enhanced data sharing and collaboration.
The non-bank financial institutions (NBFIs) sector is pivotal in the financial landscape, offering diverse services that complement traditional banking. This sector encompasses entities such as payment institutions, money service businesses, and consumer credit providers, each facing unique challenges and opportunities. NBFIs are at the forefront of financial innovation, driving technological advancements and enhancing financial inclusion. However, they must navigate complex regulatory environments and intense market competition.
Leading the category are eMoney institutions, with 141 respondents, followed closely by payment institutions, with 132 respondents. Money service businesses are represented by 36 respondents, and financial market infrastructure has 22 respondents. Consumer credit/BNPL providers account for 18 respondents, global messaging services for 6 respondents, and credit unions for 1 respondent.
A significant portion of respondents (32%) anticipate spending £15 million or more, reflecting robust investment plans to drive growth and innovation in NBFIs.
Additionally, 24% of respondents expect to allocate £1 million or more, indicating moderate investment strategies aimed at supporting operational enhancements. Spending predictions of up to £1 million are noted by 20% of participants, suggesting a more cautious approach towards maintaining and upgrading existing systems.
Further, 15% of respondents forecast expenditures of £5 million, and 9% predict spending £10 million.
Implementing new payment methods is the most significant challenge, cited by 22% of respondents, underscoring the need for continuous innovation to meet evolving market demands.
Compliance with new regulation and policy, as well as keeping up with digital transformation, are each cited by 18% of respondents, highlighting regulatory pressures and the necessity for technological advancements. Understanding what customers want is a challenge for 17% of participants, showcasing the importance of customer-centric approaches.
Streamlining backend infrastructure and processes is a challenge for 13% of respondents, pointing to the need for operational efficiency. Financial crime and cybersecurity threats, cited by 10% of respondents, highlight the critical importance of robust security measures. Lastly, wider macroeconomic downturns and shifts, noted by 8% of respondents, reflect the impact of broader economic conditions on the NBFIs sector.
Artificial intelligence stands out as the most prominent opportunity, cited by 28% of respondents, with its potential to automate compliance checks, enhance fraud detection, and personalise customer interactions through advanced data analytics.
Cross-border payments, noted by 19% of respondents, offer substantial growth opportunities by enabling efficient and cost-effective international transactions. Connected and/or embedded commerce, cited by 15% of participants, can integrate financial services into various platforms, enhancing user engagement.
Real-time payments and open banking are each highlighted by 13% of respondents, showcasing the importance of instant transaction capabilities and improved financial transparency. Digital wallets, mentioned by 10% of respondents, continue to gain traction as secure and convenient payment options.
Digital currencies, cited by 9% of respondents, represent a significant opportunity to transform transactions and asset management within the non-banking financial institutions sector.
Open banking is transforming payments by promoting greater transparency, competition, and innovation. By enabling secure access to financial data, open banking facilitates the development of new products and services that enhance customer experiences and financial inclusion. This paradigm shift presents significant opportunities and challenges for financial institutions as they adapt to a more interconnected and data-driven ecosystem.
Open banking technical service providers lead with 64 respondents, followed by payment initiation service providers (PISPs) with 31 respondents, and account information service providers (AISPs) with 14 respondents.
Technology providers are represented by 7 respondents, while other categories, including DeFi, account for 6 respondents. Both account servicing payment service providers (ASPSPs) and cryptocurrencies are represented by 4 and 1 respondent, respectively, alongside prime brokerage with 1 respondent.
A significant portion of respondents (34%) anticipate spending up to £1 million, reflecting cautious yet strategic investment plans in open banking.
Additionally, 23% of respondents expect to allocate £1 million or more, indicating moderate investment strategies aimed at supporting growth and development. Spending predictions of £5 million or more are expected by 21% of participants, highlighting a commitment to substantial investments in open banking initiatives.
Further, 19% of respondents forecast expenditures of £15 million, suggesting robust investment plans to drive significant advancements and innovations. Lastly, 3% of respondents anticipate spending £10 million, indicating focused investment strategies for leveraging growth opportunities.
Implementing new payment methods is the most significant challenge for the open banking sector, cited by 34% of respondents, highlighting the need for continuous innovation to meet evolving market demands.
Understanding what customers want affects 25% of respondents, reflecting the importance of customer-centric approaches in developing effective open banking solutions. Compliance with new regulation and policy, cited by 12% of respondents, underscores the regulatory pressures within the industry.
Keeping up with digital transformation and streamlining backend infrastructure and processes are each cited by 10% of respondents, underscoring the importance of integrating advanced technologies and achieving operational efficiency. Financial crime and cybersecurity threats, cited by 6% of respondents, highlight the critical need for robust security measures.
Lastly, wider macroeconomic downturns and shifts, noted by 4% of respondents, indicate the impact of broader economic conditions on the open banking sector.
Open banking unsurprisingly stands out as the most prominent opportunity, cited by 71% of respondents, indicating its transformative potential in enhancing financial transparency, data sharing, and customer insights.
Artificial intelligence is noted by 9% of participants, presenting substantial opportunities for improving regulatory processes, customer service, and financial analytics. Real-time payments, selected by 7% of respondents, offer the potential to improve transaction speed and efficiency, enhancing customer satisfaction.
Connected and/or embedded commerce, cited by 3% of respondents, offers the potential to integrate financial services seamlessly into various commercial platforms. Digital wallets, highlighted by 3% of respondents, continue to gain traction as secure and convenient payment options.
Cross-border payments, cited by 2% of respondents, represent opportunities for expanding market reach and facilitating international transactions. Digital currencies, only selected by 1% of respondents, continue to offer new avenues for secure and innovative payment methods within the open banking framework.
The payments industry supplier sector is vital in supporting the infrastructure and operations of the payments ecosystem. This sector faces challenges such as technological integration, regulatory compliance, and the need for continuous innovation. However, it also offers significant opportunities to drive efficiency, enhance data insights, and improve financial processes.
Payment analytics and data providers lead the category with 78 respondents. Billing and invoicing solutions follow with 35 respondents, indicating significant engagement in this area.
Invoice financing and factoring services are represented by 14 respondents, while account aggregators account for 12 respondents. Lastly, payroll services are represented by 11 respondents.
A significant portion of respondents (31%) anticipate spending £15 million or more, indicating robust investment plans in the payments industry supplier sector to drive growth and innovation.
Additionally, 22% of respondents expect to allocate up to £1 million, reflecting cautious yet strategic spending approaches. Spending predictions of £1 million or more are noted by 21% of participants, suggesting moderate investment strategies aimed at supporting operational enhancements.
Further, 13% of respondents forecast expenditures of £5 million, and another 13% predict spending £10 million. These figures highlight varied financial strategies within the sector, emphasising a commitment to significant investments aimed at advancing technology and improving service offerings.
Implementing new payment methods is the most significant challenge in the payments industry supplier sector, cited by 29% of respondents, highlighting the need for continuous innovation to meet evolving market demands.
Keeping up with digital transformation and understanding what customers want are major challenges affecting 18% of respondents. These areas underscore the importance of technological advancement and customer-centric strategies in developing effective payment solutions.
Compliance with new regulation and policy, cited by 13% of respondents, reflects the regulatory pressures within the industry. Streamlining backend infrastructure and processes, noted by 12% of respondents, points to the need for operational efficiency.
Wider macroeconomic downturns and shifts, cited by 9% of respondents, indicate the impact of broader economic conditions on the Payments Industry Supplier sector. Financial crime and cybersecurity threats, cited by 5% of respondents, highlight the critical importance of robust security measures.
Real-time payments stand out as the most prominent opportunity in the payments industry supplier sector, cited by 22% of respondents, indicating its potential to enhance transaction speed and efficiency.
Artificial intelligence is another major opportunity, noted by 19% of respondents, presenting substantial possibilities for improving data analytics, customer service, and operational efficiency. Open banking, cited by 13% of respondents, offers opportunities for greater financial transparency and enhanced customer insights.
Digital wallets and cross-border payments are each highlighted by 12% of respondents, showcasing their growing importance in facilitating secure and convenient transactions and expanding market reach. Connected and/or embedded commerce, cited by 9% of respondents, offers the potential to integrate financial services seamlessly into various commercial platforms.
Digital currencies, mentioned by 7% of respondents, continue to offer new avenues for innovative payment methods. These opportunities reflect the diverse avenues for growth and innovation within the Payments Industry Supplier sector, positioning it to leverage advanced technologies and evolving payment trends to enhance service offerings and market competitiveness.
The professional services sector offers critical strategic support and expertise. With the rapid evolution of the payments landscape, professional services firms play an essential role in navigating regulatory complexities, driving innovation, and enhancing operational efficiency.
Consultancy leads with 531 respondents, followed by PR & marketing with 91 respondents. Law firms have 46 respondents, while accountancy businesses are represented by 28 respondents. Trade associations account for 27 respondents, and audit businesses have nine respondents.
A significant portion of respondents (46%) anticipate spending up to £1 million, reflecting a strategic approach to investment in the professional services to the industry sector.
Additionally, 22% of respondents expect to allocate £1 million or more, indicating moderate investment strategies aimed at supporting growth and operational enhancements. Spending predictions of £15 million or more are noted by 13% of participants, suggesting substantial investments in expanding capabilities and driving innovation.
Lastly, 6% of participants selected £10 million or more, while a predicted spend of £5 million or more was selected by 13% of participants.
Keeping up with digital transformation and understanding what customers want are the most significant challenges for participants in professional services, each cited by 20% of respondents. This highlights the necessity to stay abreast of technological advancements and prioritise customer-centric strategies.
Compliance with new regulation and policy is a challenge for 16% of respondents in this sector, reflecting the ongoing regulatory pressures within the industry. Financial crime and cybersecurity threats, cited by 8% of respondents, underscore the importance of robust security measures.
Implementing new payment methods and wider macroeconomic downturns and shifts are each cited by 9% of respondents, indicating the need for innovation and resilience against economic fluctuations. Streamlining backend infrastructure and processes, noted by 7% of respondents, points to the need for operational efficiency.
Artificial intelligence is the most prominent opportunity cited by 36% of PAY360 survey respondents, indicating its transformative potential in enhancing data analytics, customer service, and operational efficiency within professional services to the industry.
Open banking is another major opportunity, noted by 14% of respondents, presenting substantial possibilities for improving financial transparency, data sharing, and customer insights. Digital currencies, cited by 12% of respondents, continue to offer new avenues for innovative payment methods.
Connected and/or embedded commerce, as well as real-time payments, are each highlighted by 9% of respondents, showcasing their growing importance in facilitating seamless and efficient transactions. Cross-border payments and digital wallets are each noted by 8% of respondents, reflecting opportunities for expanding market reach and offering secure, convenient payment options.
The tech/solutions providers sector, including banking solution providers, core banking technology, and open banking technical service providers, is pivotal in driving innovation and operational efficiency within the payments industry. As the industry faces rapid technological advancements and increasing regulatory demands, these providers play a crucial role in enabling financial institutions to adapt and thrive.
Banking solution providers lead with 511 PAY360 survey respondents, followed by core banking technology with 163 respondents, and open banking technical service providers with 120 respondents.
A significant portion of respondents (42%) anticipate spending £10 million or more, indicating robust investment plans to drive growth and innovation.
Additionally, 20% of respondents expect to allocate £5 million or more, reflecting substantial investment strategies aimed at supporting technological advancements and operational enhancements. Spending predictions of £15 million are noted by 19% of participants, suggesting major investments in expanding capabilities and driving innovation.
Further, 11% of respondents forecast expenditures of up to £1 million, and 8% predict spending £1 million. These figures highlight a range of financial strategies within the sector, emphasising varied levels of investment in technology solutions.
Understanding what customers want is the most significant challenge, cited by 19% of respondents, relaying the importance of customer-centric innovation in the tech/solutions sector.
Keeping up with digital transformation is another major challenge, affecting 17% of respondents, underscoring the necessity for continuous technological advancement. Implementing new payment methods, cited by 16% of respondents, reflects the ongoing need for innovation in payment solutions.
Compliance with new regulation and policy and streamlining backend infrastructure and processes are each cited by 14% of respondents, highlighting regulatory pressures and the need for operational efficiency. Financial crime and cybersecurity threats, also noted by 14% of respondents, underscore the critical importance of robust security measures.
Wider macroeconomic downturns and shifts, cited by 6% of respondents, indicate the impact of broader economic conditions on the tech/solutions providers sector.
Artificial intelligence stands out as the most prominent opportunity for participants in tech/solutions, cited by 29% of respondents, indicating its transformative potential in enhancing data analytics, customer service, and operational efficiency.
Real-time payments is another major opportunity, noted by 17% of respondents, reflecting the growing demand for instant and secure transactions. Cross-border payments, cited by 15% of respondents, present substantial possibilities for expanding market reach and facilitating international transactions.
Connected and/or embedded commerce, highlighted by 13% of respondents, offers potential for integrating financial services seamlessly into various commercial platforms. Digital wallets, noted by 9% of respondents, continue to be crucial for providing secure and convenient payment options.
Open banking, cited by 8% of respondents, offers opportunities for greater financial transparency, data sharing, and customer insights. Digital currencies, mentioned by 6% of respondents, provide new avenues for innovative payment methods.
The PAY360 survey provides a comprehensive analysis of the current landscape in the payments industry, highlighting the key challenges and opportunities across various segments. This detailed examination reveals that while the industry is rapidly evolving, certain themes consistently emerge, such as the critical need for digital transformation, compliance with regulations, and the adoption of new payment methods.
Artificial intelligence stands out as a transformative opportunity, especially in sectors like financial crime and compliance services, where it is seen as a major driver of innovation. Open banking is another significant opportunity, promising enhanced financial transparency and improved data sharing, which are essential for regulatory bodies and open banking service providers alike. Real-time payments are highlighted as crucial for improving transaction speed and efficiency, particularly in cross-border payments and tech solutions sectors.
Investment trends indicate robust spending plans in high-investment segments like the card industry and tech solutions providers, while more cautious spending is observed in segments like open banking, reflecting a strategic approach towards gradual growth and innovation.
These insights offer valuable guidance for industry leaders, helping them navigate the complexities of the evolving payments ecosystem. By understanding and leveraging these trends, payments organisations can better position themselves to drive growth, enhance customer satisfaction, and maintain a competitive edge in the dynamic world of payments. The PAY360 survey underscores the importance of staying ahead of technological advancements and regulatory changes to capitalise on the opportunities and address the challenges that lie ahead.
Banks de-bank payment providers, disrupting cross-border transactions and financial inclusion.
The PAY360 registrant survey highlights key trends, challenges, and opportunities in the payments industry, focusing on AI, open banking, and real-time payments
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