Payments And Transaction-Banking Revenues To Top $1.1T By 2022

By Pete Rizzo (@pete_rizzo_)

Released on September 24, the latest report from The Boston Consulting Group (BCG) has revealed that payments and transaction-banking revenues at global banks will grow at an 8 percent compound annual growth rate (CAGR) to top $1.1 trillion by 2022.

The international business strategist uncovered that banks across all regions will continue to shift toward account-related revenues and away from transaction fees over the next decade.

“The payments industry is in flux, and its basic economics – notably the shift from account-based revenues to fee-based revenues – is changing the landscape,” the report authors concluded.

The driving factor? BCG noted that since the 2008-2009 financial crisis, payments and transaction-banking services have become “vital revenue generators for banks.” In 2012, account-related and transaction-banking revenue comprised one-quarter of global banking revenue.

Still, that wasn’t all the report had to offer. In this Data Point, we break down the BCG’s findings to reveal new insights from BCG’s “Global Payments 2013: Getting Business Models and Execution Right.”

Non-Cash Transactions To Top $700T

The report revealed new statistics regarding global non-cash transactions. Banks handled $337 trillion in non-cash transactions in 2012, a figure that was five times the global gross domestic product (GDP). By 2022, BCG estimated that the value of non-cash transactions will rise to $712 trillion, or a CAGR of 7 percent.

“Overall, payments-related businesses have continued to serve as a relatively stable source of income for banks, providing a solid platform on which to build customer loyalty and increase share of wallet,” the report authors wrote.

Bank Revenues By Region

The study also broke down how payments and transaction-banking revenues are expected to increase by region from 2012 to 2022. The largest growth is expected in emerging Asia-Pacific nation banks. Bank revenues in this region are expected to rise to $337 trillion annually by 2022, up from the $92 million observed in 2012.

As this chart illustrates, however, banks in all regions are expected to see sizeable increases in revenue from these tools over the next decade. 

Payments: A Stable Income Source For Banks

Based on these figures, BCG concluded that investments in payments-related businesses will continue to pay dividends for global banks. Excluding credit cards, BCG said that these businesses possess a number of advantages, as they provide “predictable volumes” and present “low risk factors.”

For more insights, including data on how average fees per transaction are expected to change around the globe over the next decade, download the full report here