Forecasts from Accenture show 11.6 billion transactions in the UK, worth up to £155 billion, are expected to shift from cash to cards and digital payments by 2023.
Globally, Accenture predicts £5 trillion (US$7 trillion) in consumer spending will move away from cash in the same time period.
While cash usage has been on a downward trend in the UK, the impact of Covid-19 has been severe on payment trends as consumers avoid in-person payments during lockdown and turn to online shopping and mobile wallets. By 2030, over 50 billion transactions in the UK worth up to £484 billion ($638 billion) are expected to shift from cash to cards and digital payments - with the UK having the highest volume increase amongst its European peers. The boom in online shopping will also see e-commerce as a share of GDP grow by a projected 17% in 2020.
Sulabh Agarwal, Global Payments Lead, Accenture, said: “With the UK seeing the steepest decline in cash usage across Europe, COVID-19 has dramatically accelerated the shift to digital payments at a pace banks could not have predicted. The ongoing impact of the pandemic, acutely felt through the second national lockdown, will further entrench lasting shifts in consumer behaviour when it comes to how they shop and pay for products.”
The latest research from Accenture also includes a survey of 120 payments executives at banks globally regarding the transformation of their payments business, as they make multi-year investments to compete with non-banks and comply with new regulations. The rapid move to digital payments has put additional pressure on banks, with three-quarters (75%) of surveyed bank executives saying that the pandemic has increased the urgency of their plans to modernise payment systems. Despite notable pressure from fintechs and neobanks in the UK, the survey also finds three quarters (75%) of banks see payments modernisation as being driven by national payments infrastructure changes and regulation.
Agarwal added: “The pandemic will also increase pressure on banks to meet customer needs that revolve around safety and convenience. While banks have been actively investing in new payments systems, the focus has been on meeting the next compliance deadline. The challenge is to create new propositions and customer experiences at the same time as achieving compliance. But amid these rapid changes, retaining optionality is still key - the industry as a whole must still look to preserve access to cash for those unbanked or unserved customers who rely primary on cash.”
Accenture surveyed 120 payments executives from the largest banks in Europe, North America, Asia-Pacific, Brazil and the United Arab Emirates (UAE) about the progress and results of their payments modernisation programs. Research was conducted between July and August, 2020.
Accenture forecast of digital payments in consumer spending is calculated using cash evolution data and MSC rates provided by GlobalData. The expected drop in cash volume and projected growth in ecommerce as a share of GDP is developed based on GlobalData & Accenture Research assumptions.