Banks that lag in updating their wholesale payments technology risk losing up to 15% of small and medium-sized (SMB) revenues—or about a quarter of their profits—to forward-thinking companies.
According to Bain & Company, global wholesale payments revenues are expected to grow at a cumulative annual rate of 6%, reaching $645 billion by 2027. However, much of this growth will shift away from traditional banks to innovative providers including fintechs and software firms.
In fact, the research indicates that emerging providers are poised to capture roughly 10% of SMB transaction global banking revenues, which is about 15% of profits. This trend reflects a significant threat to traditional banks, signaling how important it will be for them to modernize their payment technology to remain competitive.
Evolving Financial Landscape
Businesses, including SMBs, increasingly demand faster, efficient, and cost-effective payment solutions. Especially because this is what their customers expect. Businesses, keen on meeting these expectations, turn to technology to tailor payment services. This shift exerts pressure on traditional banks to adapt swiftly to the changing landscape.
Investing in the modernization of payments technology enables banks to seize emerging opportunities and broaden their market influence. The data from Bain & Company underscores the urgency for traditional banks to embrace tech and digital transformation. Not doing so risks ceding market share, eroding revenue streams, and diminishing their role in shaping the future of payments.
To conclude, prioritizing technological advancement is critical for traditional banks to remain relevant and competitive in this current—and ever-changing—landscape.
