According to a recent article by the Financial Brand, an Accenture report titled, “Payments Get Personal,” issues a warning to banks who remain unassertive towards next generation payment methods.
Globally, next generation payment methods such as digital wallets and account-to-account transfers are growing in popularity. As these payment methods continue to grow, credit cards and other traditional forms of payment stand to lose valuable ground. The report also found that this rapid change in consumer preferences in payment could inevitably place banks at risk of losing $31.4 billion in revenue in the next few years.
To counteract the trend, the consulting firm recommends that banks should seriously consider adopting new payment channels to remain competitive. Credit cards are one of the biggest sources of income generation for banks, however, if the card volumes start moving away to other payment types, this could pose significant challenges for financial institutions.
In response to growing competition from non-bank entities, Sulabh Agarwal, Global Payments Lead at Accenture, suggests that banks can mitigate the encroachment through partnerships. The key is to act quickly as cards are already losing favor with consumers as they move away from cards as a payment method within their digital wallets.
We are seeing the growing trend of traditional banking services becoming less common as more consumers opt for convenience and accessibility of digital wallets. We covered this trend for digital wallets and other digital money options here.