Banks hold their own as non-bank payment volumes surge
The volume of payments processed outside the traditional banking sector is growing rapidly. But banks remain confident that they can remain competitive against non-bank or fintech alternative platforms.
More than a quarter of the world’s commercial payments and almost 30% of receivables are now processed by alternative payment rails such as Venmo, Zelle and Paypal.
That is according to a recent Coalition Greenwich report, which concluded that corporate respondents expect to be using alternative platforms for 36% of commercial payments within the next two years – rising to 42% by 2028. Receivables volumes are predicted to exceed one third by 2025 and reach almost 40% within five years.
The survey also underscored how traditional banks have raised their game when it comes to new payment services. Six of of the top 10 most innovative providers referenced by survey respondents were traditional banks.
“Banks have been successful in introducing instant payments on domestic payment rails in different parts of the world,” says Annelinda Koldewe, global head of wholesale banking payments at ING. “There are a number of industry initiatives looking at alternative solutions, such as interconnecting domestic instant payment rails, blockchain technology and digital currencies.”
In industry surveys, alternative payment platforms tend to score highly on speed of payment. However, Nicolas Cailly, head of payments and cash management at Societe Generale global transaction and payment services, reckons banks can hold their own on this metric.