Digital wallets could cost banks billions in lost payments income
Consumers are taking to digital wallets in greater numbers and, unfortunately for the banking industry, the space is dominated by tech firms in the U.S. Is there still time for banks to get traction? Or are they stuck on the sidelines as rivals like Apple and PayPal reap big benefits and divert tens of billions in revenue away from banks? An Accenture payments expert reviews the options for banks, looks at different approaches to digital wallets, and explains how partnerships could take off — or not.
Next-generation payment methods such as account-to-account transfers and digital wallets are gaining traction in the U.S. as well as globally. Their growth comes at the expense of credit cards and other traditional payments, according to a study by Accenture.
The consulting firm estimates that such changes in consumer payments preferences will put up to $31.4 billion of revenue at risk for U.S. banks in coming years (2023 through 2026). To avoid these snowballing revenue losses, banks must begin to explore newer payment channels in earnest or come up with competitive moves to counter the growing consumer trend.
The Accenture report, titled “Payments Get Personal,” warns card-issuing banks against timidity, as that will mean surrendering more volume to fintechs and big tech.
“Banks that rethink their strategies, and capitalize on consumers’ trust in their stability and security, could expand revenues and market share,” the report states.
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