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Banks fear Big Tech competition in booming non-cash payments market

Banks fear Big Tech competition in booming non-cash payments market

As global non-cash transactions boom and competition from fintech startups and Big Tech flourishes, banks remain reluctant to embrace Open Banking via data sharing, ecosystem partnerships and open platforms, according to a report from Capgemini.

Capgemini's latest World Payments Report shows transaction volume of non-cash payments is growing rapidly, particularly in developing markets within Asia (32% growth) and Central Europe, Middle East and Africa (19% growth). By 2022, non-cash transactions are expected to top a billion - a compounded annual growth rate of 14%.

Yet, among the incumbents surveyed by Capgemini across 18 countries, most are more fearful than optimistic about the pace and direction of change in the market, concerned about Big Tech challengers and the downsides of Open Banking.

Nearly two thirds identify as a leading threat Big Tech competitors such as Facebook, Google, Apple and Amazon leveraging their global reach, brand equity, customer trust and great customer experience.

Most digital transformation efforts at 60% of banks are in response to regulatory compliance. Adoption of APIs beyond what regulation requires has been sluggish: a majority of banks have no plans to implement APIs that expose data in areas including intra-bank statement conditional payments and branch/ATM location.

Where banks are not being mandated to share more data, they are generally choosing not to do so and Open API "is seen as a regulatory compliance game rather than a growth opportunity," says the report.

“The global payments landscape is undergoing significant evolution, but not all participants are comfortable with the pace and direction of change,” says Anirban Bose, CEO, financial services strategic business unit, Capgemini.

Comments: (4)

Carlos Santaella
Carlos Santaella - FIDE PBC Europe - Madrid 17 September, 2019, 09:561 like 1 like

1) Facebook, Google, Apple and Amazon all US base corporations. Where are the EU or Asians players ? 

2) Banks just received a temporary "break "for PSD2-APIs implementation; so either banks learn to evolve / adapt or simply partnership or they will be diminished greatly. Another 18 months are ticking. 

A Finextra member
A Finextra member 17 September, 2019, 14:32Be the first to give this comment the thumbs up 0 likes

Facebook, Google, Apple and Amazon does not have a measurable impact to the growing nations listed in this article. The 2/3 believing Facebook matters may need to talk to the other 1/3 knowing Chinese payment providers AliPay and WeChat are the actual power players of non-cash global expansion across the world. 

Chetan Ghadge
Chetan Ghadge - Wipro - Pune 18 September, 2019, 06:51Be the first to give this comment the thumbs up 0 likes

While Open banking is a regulatory initiative smart banks understand the business model of API economy. They are not going to open everything just because tech companies are asking for it.  Banks will open up those things that are required for compliance while work very cautiously in creating an ecosystem of partners to leverage the investments in API infrastructure.  Banks are trying to make business cases beyond compliance and they are smart enough not let the tech companies to walk away with the cake.

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 18 September, 2019, 13:29Be the first to give this comment the thumbs up 0 likes

Naive survey. No industry will be optimistic after being mandated to give away confidential customer info to its competitors. "Fearful" is the right way to be under the circumstances. As they say, only the paranoid survive.

We're seeing tech companies like LinkedIn fighting tooth-and-nail to shut down companies (e.g. hiQ) that do nothing more than scrape user data that LinkedIn anyway displays publicly. Imagine what they'd do if they were told to hand over all the customer info on a platter to their competitors and third parties. Banks are behaving perfectly rationally.

On a side note, I stumbled on to Open Banking Tracker yesterday. This new startup tracks "+130 banks in their journey to ... Open Banking compliance." I clicked thru' the status of around 5 banks. I recall that almost all of them have published documentation for APIs for Branch / ATM locations. This runs counter to the survey's claim that "a majority of banks have no plans to implement APIs that expose data in areas including ... branch/ATM location."

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