Amidst sustained growth, accelerating challenges demand bold actions


Global Payments Report 2019:

Amidst sustained growth, accelerating challenges demand bold actions

Executive summary

Alongside the headline of double-digit revenue growth in last year’s global payments report, we cautioned banks of the underlying trend toward industry disruption and the imperative for near-term transformation in order to maintain their central position in the market. We have indeed seen many of these trends accelerate over the past year.

Global payments revenues totaled $1.9 trillion in 2018, returning to a solid yet more sustainable growth level of 6 percent. In many ways, however, the context behind these top-line numbers is as remarkable as last year’s attention-grabbing result. Our analysis reveals significant regional variations in performance as well as the perhaps counterintuitive finding that the largest and fastest-growing categories may not always be the most attractive candidates for entry. Chapter 1 of our report explores these findings in greater detail. The ongoing evolution in payments ecosystems— which encompasses a blurring of the lines between payments types as well as bold entry moves by non-bank players leveraging non-traditional business models—has spurred a wave of industry consolidation. Chapter 2 delves into the rationale behind these acquisitions and explains why the next wave may look different. Chapter 3 addresses the notion of “payments as a service,” which is lowering barriers to market entry and enabling the testing of many of these new business models. Global transaction banking continues to comprise roughly half of global payments revenue. Chapter 4 explains how customer-facing innovations that first impacted the retail banking space are now moving into commercial banking. Finally, chapter 5 makes the case that despite margin pressures and heightened competition, the retail payments business remains a valuable catalyst for banking overall. The insights in this report are based on the 2019 version of McKinsey’s Global Payments Map, which has been the industry’s premier source of information on worldwide payments transactions and revenues for two decades. The map gathers and analyzes data from 45 countries comprising nearly 90 percent of global GDP.

Phil Bruno

Olivier Denecker

Marc Niederkorn

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