Thursday, August 25, 2016 2:10pm / PwC
The dynamic nature of emerging markets creates challenges that have never confronted the developed world, but also opens up opportunities for innovation and growth. Payments is an area where this dynamism is already well-established.
Over the next ten years (and beyond) we’re set to see even faster changes in the payments landscape, building on the accelerating growth in electronic payments and the advent of new and disruptive market players. And the emerging markets will be at the forefront of this payments transformation.
Cutting-edge technology will reshape the next-generation payment systems, with both FinTech and established players driving innovation. The payments ecosystem will also be redefined by regulatory interventions, which are balancing the disruption of alternative payment service providers (PSPs) and the reliability of traditional players.
The growth in economic power within the emerging markets and their ability to leapfrog developments in mature markets will aid the creation of a state-of-the-art payments ecosystem, which will set the pace for markets worldwide.
Payment platforms will evolve from being commoditised propositions to strategic solutions that complement and add value to people’s lifestyles. While banks can often have a limited understanding of their customers and operate a vastly complex product set, the winners of 2030 will turn this on its head. They will develop a much more comprehensive understanding of their customers and dramatically simplify their product range. The result will be a significantly enhanced customer experience, with lower levels of operational risk and much more customer-centric business models. The key factors shaping this transformation will be the impact of technology, shifting customer expectations, changing global demographics, the rise of e-commerce and the growing impact of regulation.
In 2030, payments will be much more than just the movement of funds. PSPs will develop enhanced value propositions based on individual accessibility, coupled with customer convenience and changing lifestyles, while ensuring adequate levels of security and risk mitigation. The shift has already begun and is being led by the entry of non-traditional players, the emergence of new solutions, and the development of strategic partnerships that cross traditional industry boundaries. The transformation will be characterised by convergence across markets – convergence around products and solutions linked to payments, around technology platforms and even regulations – that will be global in nature and reach.
The young ‘tech-savvy’ populations of the emerging markets will lead the shift in payments expectations among retail and commercial consumers. The drive for innovation will also accelerate development in areas such as blockchain technology, which promises to simplify international remittances and reduce transaction times by more than half.
In this paper, we examine the current state of the payments industry across the emerging markets, identify key drivers and developments already underway and determine what is required to realise the market potential between now and 2030. A key focus of the paper is the steps being taken by merchants, customers, payment companies, regulators and PSPs towards creating a successful electronic payments infrastructure.
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