Fintech Startups Are Going to Take a Lot of Banks’ Revenue
The global payment business, which covers everything from card payments to remittances abroad, will generate about $ 1.5 trillion this year, according to Accenture. But new players are entering the market, TechNews.bg reports. Now banks dominate the payments sector, but by 2025, when that market grows to $ 2 trillion, banks can lose $ 280 billion, or about 15% of the total payment revenue. And the reason for this is the alternative services that are already gaining popularity, notes Reuters.
Banks are facing increasing competition from start-up technology companies (fintech startups) such as California-based payment providers Stripe and Square, as well as PayPal and London-based TransferWise, which offer individuals and small businesses lower-cost foreign currency payments.
According to Accenture, more and more payments are instant, and this eliminates the need for credit cards that generate revenue for banks. In addition, payments are increasingly being made directly to the end seller through new technologies. Increased competition also means reduced margins and an accelerated trend towards free payments.
"The digital boom means that banks need to radically change their perceptions about the structure of their income," Accenture reported. "The channels that once brought billions of dollars to banks will cease to exist," the company warned.