Banks might focus their business models and tech budgets on electronic payment innovation for retail and corporate clients, observes report by KPMG in Mexico.
A rapidly transforming payments industry is creating opportunity for banks to respond with electronic payment methods for both consumers who live mobile and digital lifestyles and corporate treasurers who demand faster, integrated transactions, notes a report by KPMG in Mexico.
Highlighting patterns in both the Mexican and global markets, Key Payment Industry Trends explores changes in the payments industry over the last decade, including the consumer embrace of mobile and digital lifestyles and companies’ growing focus on their domestic and cross-border transactional abilities.
Mexico has definitely demonstrated the consumer payment trend. While the country is already known for its mature payment system – with strong clearing and settlement infrastructure that offers low cost, large and small value payment messaging – mobile payments showed exceptional growth in recent years.
Mexico’s Ministry of Finance revealed that mobile bank accounts grew by more than 250 per cent in 2012 alone, reaching 883,000, and the country gained over three million new internet banking users. While card-based transactions rose by 267 million, the Ministry witnessed twenty million fewer check-based transactions.
Similarly, corporate treasurers within Mexican companies are increasingly seeking sophisticated electronic services, including streamlined cash management, fund management and securities solutions, extending into supply chain finance, foreign exchange and export finance. They want their suppliers – including financial institutions – to provide real-time “capture once, use everywhere” data to improve their efficiency and agility.
As a result, many international banks have either rolled out new transaction services within their corporate and wholesale divisions, or carved out separate transaction banking business lines to offer products and technologies tailored to clients’ cash management, operational or regulatory challenges.
The report outlines potential opportunities for the financial industry, particularly if banks evolve from providing consumers with basic mobile transaction services to creating new and differentiated services via mobile channels. They may even pursue ways to become more integrated in consumers’ broader digital life beyond their banking portfolio.
For commercial and corporate clients, the banks may expand beyond basic account and payment tools and transfers to higher-order services along the value chain, from reporting and payment authorization tools to e-procurement, investment management, e-billing and marketing.
The banks may have no choice but to drive continuous payment innovation, due to heightened competitive threats. There is an unusually high number of new service providers in both the corporate and consumer payments market, with tech firms of all sizes trying to stake a claim in a market which now has low entry barriers.
While there are risks to consider, from increased cybercrime and compliance hurdles, the banks would do well to adjust their business models and technology budgets to better respond to their retail and corporate customers’ sophisticated digital desires.