NEWS
IBS Journal April 2018
09
India forecast to experience digital payments boom worth $1tn by 2025
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igital and online transactions in India could be worth as much as $1 trillion by 2025, according to figures from a study by ACI Worldwide and AGS Transact Technologies.
Within seven years, one in every five digital transactions could be made digitally, according to the study, ‘Transactions 2025’. Mass adoption of e-payments and a “thriving fintech scene”, combined with regulatory policy, will propel India into a leading position in the global payments landscape.
Other findings from the research outlined that India’s smartphone user base will likely double to 500 million by 2020 as increasingly affordable devices and data increase secure transactions.
The user base for digital transactions in India is currently close to 90 million, but could triple to 300 million by 2020, as the use cases for digital transactions grow and new users from rural and semi-urban areas enter the market.
ACI and AGS also believe that initiatives like UPI (Unified Payments Interface) payments are driving greater interoperability between banks, independent of acquirer, payment provider or mobile app.
India could be about to join the digital big league
It’s not all sunshine, though. Cybersecurity problems cost Indian firms $4 billion annually. That figure could rise to $20 billion by 2025.
“India is undergoing an incredible transformation driven by the rapid digitalisation of payments,” said Manish Patel, vice president, ACI Worldwide. “The findings of our research reinforce our view that flexible, scalable and reliable technology will be critical to the future of payments in India as the market continues to experience growth.”
Amazon could recruit 70m retail banking customers within five years
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ore than half of US consumers would be willing to buy a financial services product from technology giants such as Amazon, Google and Apple. The former of the three
could have as many as 70 million customers by 2023.
In a survey of more than 133,000 consumers across 22 countries, Bain & Company also found that three-quarters of 18-24 year-olds are keen to bank with tech giants. The news hammers another nail into the coffin of the “fintechs as disruptors” industry view.
According to Bain & Company, Amazon is the best-positioned firm to succeed in US banking, because of its history of purchases and customer trust. The ecommerce behemoth has the advantage of owning credit card details and being fully integrated into potential users’ computers, phones and tablets.
“Amazon’s interest in banking is something we’ve anticipated for a while,” said Gerard du Toit, Bain & Company’s head of banking
and payments in the Americas. “Checking and debit accounts are notoriously unprofitable, especially for a fee-free model aimed at younger customers, who often have little money to keep in the account. Most banks don’t relish serving this part of the market. But Amazon has a number of good reasons to dive in. Its incremental costs to do so will be almost nil and it stands to benefit in ways that go far beyond making money on bank accounts.”
Maintaining a branch and contact centre accounts for about 40% of the costs for a retail bank in North America, and Amazon completely bypasses this, as well as customer acquisition issues.
“Amazon stands a very good chance of succeeding in banking, by disrupting the industry as it has in retailing,” added du Toit. “It possesses all the essential ingredients required to succeed: digital prowess, a large customer base, an organisation skilled at delivering pleasant customer experiences, and ample leeway to extend the brand into banking.”
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