North American banks face $88B hit in payments revenue: report

By Staff | November 27, 2019 | Last updated on November 27, 2019
2 min read
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North American banks could lose as much as 15% of their payments revenue to technology companies by 2025, according to a report from research firm Accenture.

Competition from non-banks, whether fintech startups or large technology companies, could skim US$88 billion from revenues, the report said (all figures are in U.S. dollars). American banks are more vulnerable than their Canadian counterparts: roughly $82 billion of the lost revenue would be for U.S. banks compared to $6 billion for Canadian institutions.

The report found that payments revenue for banks is slowing to a compound annual rate of 4% over the next six years. Only those that adopt new technology and transform the customer experience will win a share of that growth, it said.

“With new entrants introducing instant and invisible payment options, combined with pricing compression, banks that are unable to shift to new business models and continually innovate face a future of revenue loss and diminishing relevancy,” said Andrew McFarlane, managing director — payments and global open banking at Accenture in Canada, in a release.

Bank executives interviewed as part of the study acknowledged that payments were becoming instant, invisible and free. They cited next-generation reward offers and embedded payments capabilities among the priorities for generating new revenue from payments.

With payments making up the largest segment for North American fintechs, McFarlane said banks need to figure out how to handle the competition.

“Banks need to determine which fintechs they want to beat, buy or join,” he said. “Banks that don’t collaborate with fintechs will likely fall behind in customer experience, innovation and agility.” staff


The staff of have been covering news for financial advisors since 1998.