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Treasury

Fintech disruption threatens wholesale payment revenues

Banks with large wholesale payments and cash management operations must innovate to avoid being ousted by disruptors.

By Anna Fedorova

Wholesale payments and cash management (PCM) is a rapidly growing area, but existing players are under threat from technological disruption and must innovate in order to survive, according to a report by management consulting firm Oliver Wyman.

In ‘Wholesale payments report: Disrupt from within’, the consultancy argues that banks must look closely at the strategies adopted by challengers and make changes to their legacy systems in order to defend their turf. 

Ronan-OKelly-160-186

Ronan O’Kelly,
Oliver Wyman

“We see up to $175 billion (70% of revenue pool) in revenues at risk for incumbents,” writes Ronan O’Kelly, partner at Oliver Wyman and co-author of the report. 

“Advances in technology are reducing the cost of market entry and switching, at the same time regulations are requiring banks to make client data available to competitors. With $250 billion of revenue at stake, wholesale payments and cash management is a battleground that banks need to defend.”

In the first half of 2018, revenues for PCM jumped 10%, and the firm forecasts annual growth of 5% over the next five years, propelled by growing volumes and rising interest rates that look more than able to offset margin compression. 

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