1、The 2023 McKinsey Global Payments ReportOn the cusp of the next payments era:Future opportunities for banksSeptember 20232023 McKinsey Global Payments ReportOn the cusp of the next payments era:Future opportunities for banksThis report is a collaborative effort by Luca Bionducci,Alessio Botta,Philip

2、 Bruno,Olivier Denecker,Carolyne Gathinji,Reema Jain,Marie-Claude Nadeau,and Bharath Sattanathan,representing views from McKinseys Global Banking Practice.2Table of contentsIntroduction 4State of the industry 5Entering a new payments era 14Emerging opportunities for banks 18IntroductionThe 2023 McKi

3、nsey Global Payments Report shines a light on a changing industry and explains how banks and others can capitalize on new dynamics.The analysis is based on McKinseys Global Payments Map,covering more than 25 payment products in 47 countries,accounting for 90 percent of global GDP.We begin by assessi

4、ng the state of the industry.A close look at the industrys revenues highlights emerging changes in geographies and products,as well as developments in instant payments and digital wallets.Next,we look at valuations and find that payments players have re-gained a degree of investment confidence.Among

5、 this years findings are the following:Global payments revenue grew by double digits for the second year in a row.Sustained growth in India,fueled by cash displacement,moved it into the top five countries for payments revenues.For the first time in several years,interest-based revenue contributed ne

6、arly half of revenue growth.Cash usage declined by nearly four percentage points globally in 2022.Over the past five years,the growth rate for electronic transactions has been nearly triple the overall growth in payments revenue.A historical view provides a picture of the progress the industry has m

7、ade.From its early days to the present,the payments sector has already been through three distinct eras.The evidence suggests the industry may be on the verge of a fourth era,which we interpret as an era of“de-coupling.”The industrys transition from the Account Era to the Decoupled Era presents conc

8、rete opportunities for banks and other payments players to differentiate.In our final section,we offer perspectives on two distinct paths that banks and payments players more broadly can follow to solidify their competitive position in the payments industry:finding new opportunities to scale busines

9、s impact and doubling down on improvements to productivity and risk management.4 4On the cusp of the next payments era:Future opportunities for banksState of the industry5State of the industryThe payments industrys 2022 performance,in terms of revenues and valuations,shows ongoing change with opport

10、unities for growth and margin improvement across geographies and products.A close look at revenues uncovers some structural changes,including new developments in instant payments and digital wallets.Also,recent public company returns suggest investors may be regaining confidence following the volati

11、lity of 202022.Revenue results highlight the industrys resilience and future directionGlobally,payments revenues proved remarkably resilient,overcoming a variety of regional headwinds to grow at rates well above the established long-term trend.Payments revenues grew at 11 percent in 2022a double-dig

12、it rate for the second consecutive yearreaching more than$2.2 trillion,an all-time high(Exhibit 1).Revenues by geography:Broad-based gainsRevenue growth was broadly distributed geographically,with three of the four regions posting their strongest increases in a decade.North America;Latin America;and

13、 Europe,the Middle East,and Africa(EMEA)all grew at double-digit rates.The exception to this trend is AsiaPacific.In recent years,this region,which accounts for 47 percent of global payments revenues,has served as the primary growth vector.But in 2022,regional revenues rose just 4 percent,Exhibit 1G

14、lobal payments revenues grew by 11 percent in 2022.Global payments revenues,201727F,$trillionNote:Figures may not sum to totals,because of rounding.1Russia revenues kept fat after 2021.2Total banking revenues excludes capital markets and investment banking(CMIB)revenues.Source:McKinsey Global Paymen

15、ts MapShare of banking revenues,%CAGR,%201722AsiaPacifcNorth AmericaEurope,Middle East,and AfricaLatin America0.80.50.31.70.10.91.00.51.80.52.00.62.21.50.50.33.26373536363814755202227F71166820172020202120222027forecast0.30.30.10.10.2+5%0.40.8+11%+7%1.06as a result of a 3 percent decline in payment r

16、evenues in China.Excluding China,however,the AsiaPacific region grew at 25 percentfaster than in 2022.Broadly speaking,the economies with the largest payments revenue pools delivered growth at or above the mean,contributing to 2022s strong result.This list,which includes Brazil,India,Japan,and the U

17、nited States,posted solid results in both interest and fee-driven revenues.A key factor in Chinas results was the 5 percent decline in transactional fee revenue.It fell to$255 billion as a result of smaller ticket sizes on card transactions and fee concessions implemented by payments providers to sp

18、ur small and medium-size enterprise(SME)activity and counteract the COVID-19 macroeconomic shock.By category,interest outpaced fees,and commercial maintained a lead over retailIn many markets,about half of 2022s revenue growth came from rising interest rates,interrupting a long-standing trend in whi

19、ch fees were the main source of growth.The shifting interest rate environment had the greatest impact on the EMEA region,where net interest margins jumped markedly,reversing a trend of the past decade.EMEAs transaction-based revenue continued to grow at a steady pace(5 percent in 2022),while net int

20、erest incomes(NII)share of total revenues rose from 33 percent to 45 percent in a single year,bringing it closer in line with other regions.Another way to understand payments revenues is by customer segment(commercial and consumers)and the products that the industry delivers to each(Exhibit 2).The m

21、ix has been subtly but persistently tilting toward commercial across all regions for some time.Overall,commercial now accounts for 53 percent of revenues and consumer 47 percent.This proportion varies from region to region.Commercial revenues have long predominated in AsiaPacific and EMEA.Consumers

22、still generate the majority in North America(63%)and Latin America(54%),where markets remain mostly card driven.Cross-border payment dynamics were particularly robust.Flows reached about$150 trillion in 2022,a 13 percent increase in a single year.This money movement generated an even greater increas

23、e in cross-border revenues,which rose 17 percent to$240 billion.Revenues from cross-border consumer paymentsboth C2B and C2Cincreased at double-digit rates,accelerating from high single digits in 2021.Conversely,both forms of commercial payments(B2B and B2C)grew by 10 percent,somewhat slower than 20

24、21s postpandemic surge.The United StatesLatin America corridor remains the largest for C2C remittances,representing 11 percent of the total value of such flows.Central America has been an increasingly relevant destination for remittances and humanitarian aid from the United States.While B2B remains

25、the primary driver of cross-border revenue(69 percent of the total),the consumer categories carry higher margins and are projected to grow more rapidly over the next five years.Much of the growth is expected to be in C2B,related to increased travel and e-commerce spending.We discuss this opportunity

26、 further in the last section.Future revenue growth:Instant payments and digital wallets on the riseOur analysis suggests that future revenue growth will likely be stimulated by instant-payments innovations and the rise in digital wallets in certain geographies.The increase in electronic payments tra

27、nsaction volumes has consistently outpaced payments revenue growth(17 percent versus 6 percent)over the past five years.This is indicative of the continuing evolution in payments preferences,a general migration toward lower-fee instruments,and the gradually declining margins that accompany scale.On

28、the cusp of the next payments era:Future opportunities for banks1“Fact sheet:Update on the US strategy for addressing the root causes of migration in South America,”The White House,February 2023.7These dynamics are also evident in cash displacement.Cash usage declined by nearly four percentage point

29、s globally in 2022.Worldwide,the decline in cash usage during the pandemic shows no evidence of being reversed,led downward by the cash-reliant economies of India and Brazil,where the share of cash transactions fell by seven to ten percentage points.Brazils cash declines are concurrent with the rapi

30、d uptake of the countrys Pix instant-payments network.Liquidity revenues in 2022 accounted for$750 billion globally,largely drivenby AsiaPacifc.Global payments revenues,by type and location,2022Note:Figures may not sum to 100%,because of rounding.1Cross-border payment services(B2B,B2C).2Net interest

31、 income on current accounts and overdrafts.Fee revenues on domestic payment transactions and account maintenance(excluding credit cards).Remittance services and C2B cross-border payment services.Source:McKinsey Global Payments MapMcKinsey&CompanyAsiaPacifcNorth AmericaEMEALatinAmericaCommercial(53%o

32、f total)Consumer(47%of total)Cross-borderAccount-related liquidityDomestic transactionsCredit cardsCross-borderAccount-related liquidityDomestic transactionsCredit cards1537816154222171630913252016616831191165162222884$0.4$0.2$0.6$1.0 Global payments revenues,2022,$trillionGlobal payments revenues,2

33、022,%Exhibit 28On the cusp of the next payments era:Future opportunities for banksThe volume of Indias digital payments has grown tenfold over the past five years and is projected to grow at roughly 35 percent per year over the next five.The vast majority of these new digital transactions are the re

34、sult of cash displacement and,in recent years,have migrated directly to instant payments on the Unified Payments Interface(UPI)network.UPIs share of digital transactions has risen from 8 percent in 2017 to nearly 75 percent in 2022.Notably,credit cards also contributed to the growth of digital payme

35、nts,registering double-digit growth.A similar transformation is taking place on a smaller scale in Nigeria,where instant-payments capabilities are being built into point-of-sale devices to facilitate merchant enablement.Nigerias share of cash transactions fell from 95 percent in 2019 to 80 percent i

36、n 2022.Over the same period,instant payments share quadrupled to 8 percent.Instant payments are playing a key role in this transition out of cash.In Brazil,almost half of the transactional revenue growth through 2027 is expected to come from instant payments.Yet in other places,revenue growth from i

37、nstant payments could be meager.Instant payments in India are expected to contribute less than 10 percent of future revenue growth because no fees are currently charged for the Unified Payments Interface(UPI).Conversely,in several European countries such as Germany,instant payments are perceived as

38、a premium option,resulting in relatively strong potential for revenue growth.By 2027,cash-heavy developing economies to make further significant shifts toward instant payments,bringing these transactions share to roughly half of overall payment transactionsnearly two-and-a-half to three times greate

39、r than in 2022.By contrast,our analysis indicates that near-term impact in mature markets such as the United States and United Kingdom will be nominal.Instant payments remain in a nascent stage in the United States,where 2022s cash decline was more muted following 2021s pandemic lockdown-related red

40、uction.July 2023s launch of the Federal Reserves FedNow real-time payment rails may prove to be an inflection point,but the effect will be gradual.Our sidebar on the Indian market(“Indias embrace of digital payments”)offers a valuable case study of payments evolution and its role in a strongly growi

41、ng economy,with particular lessons for cash displacement and instant payments adoption.On the cusp of the next payments era:Future opportunities for banksIndias embrace of digital paymentsAlthough UPI generates minimal transaction fees,these revenues still represent an uplift from no-fee cash events

42、,and the paperless process eliminates the hidden costs of managing cash transactions.Additionally,the associated change in consumer behavior has enhanced security and increased access to digital commerce channels.Arguably,the shift to a digital-payment mindset with credit-led benefits may help expla

43、in increases in Indias credit card usage as well.9India payments revenues have risen by an average of 12 percent over the past five years,reaching$64 billion in 2022,when they grew by 38 percent.India has pulled even with Japan as the fourth-largest payments-revenue-generating countrybehind only Chi

44、na,the United States,and Brazil,and ahead of mature economies including the United Kingdom,Germany,Canada,and Italy.Looking forward,the Indian payments ecosystem faces headwinds similar to those in other markets.Regulatory mandates may result in increased costs,and fintech players are opening new co

45、mpetitive battlefronts through adjacent payment propositions such as credit offers at the point of sale.Despite all this,India has a unique opportunity among large payments economies to continue digitizing a significant cash base.The share of cash transactions is projected to fall from 82 ExhibitNum

46、ber of payment transactions,2022 and 2027F,billions2022 actual2027 forecastSource:McKinsey Global Payments MapIndias payments market has several cash-rich pockets.McKinsey&CompanyInitiationBusiness Consumer Government Destination TotalConsumer Government Business 62011120%30%100%95%5514585%45%30%136

47、010099%15%10%Business Signifcant projected jump in digitizationDigital transactions75%Consumer Government Destination 15160%100%98%6619097%50%70%10%Medium 510%Low 5%B2BB2CC2BC2CSME trade5,00010,000SME nontrade payments15,00050,000All B2B7,00012,000Dividends and interest payments500Marketplace payout

48、s1,500Payroll1,0002,000Claims and 1-time disbursements250Refunds200Social benefts350High-touch vertical payouts300All B2C5001,000Travel100E-commerce100Education5,00010,000Healthcare5,000Bill payments100Loan repayments500All C2B1,000Remittances3001,0006280.60.30.20.10.10.10.11.30.80.50.20.10.10.11.60

49、.81Including only low-value payouts to individuals.2Eg,legal,NGO.3Eg,utilities,telco.4Excluding real estate and including microloans via platforms.Source:McKinsey analysisLow-value payments use cases collectively account for about$12 trillion in global cross-border payment outfows.McKinsey&CompanyEx

50、hibit 520On the cusp of the next payments era:Future opportunities for banksStart with the basics.Invoice standardization is a prerequisite to payables and receivables automation.The Factur X e-invoice initiative championed by France and Germany is one development.The steady growth occurring in the

51、volume and complexity of invoices merely adds to the imperative.Cloud computing and the increasing acceptance of software-as-a-service(SaaS)alternatives are creating a path forward.Banks,factoring specialists,and SME financing fintechs should assess their options.Some banks may consider partnering w

52、ith others that can provide credit expertise;banks can bring their balance sheet to the table.Others can build their own solutionsfor example,by using their merchant networks and current underwriting capabilities.New moves in embedded financeEmbedded finance10 is taking off,fueled by technology,espe

53、cially by the possibility of exposing APIs that simplify the integration of payments products into any type of consumer journey.Nonfinancial firms with a history of creating strong digital experiences are becoming gateways to financial services for millions of consumers and businesses,while their ba

54、nk partners enjoy expanded,low-cost distribution for their financial products.How can banks break into the business?And how can those already in the game improve their position?We see four basic postures.Global and international banks might seek to build a bank-owned embedded-finance business,replic

55、ating and trying to outcompete challenger models to win business in segments where the legacy approach falls short or cannibalization seems a threat.Examples include installment repayment plans for standard credit card purchases such as American Expresss Pay It,Plan It and Citis Flex Loans.Big banks

56、 can go another way and become strategic partners to retailers and other distributors.Banks choosing this stance typically have strengths in risk and regulatory management that distributors lack.They can contribute these skills and a fit-for-purpose embedded financial structure;distribution partners

57、 can focus on the digital experiences at which they excel.Banks can also tap an area of expertise and become specialists in a given product,such as loans.Their vast experience in certain credit products and serving specific industry verticals can help them partner with distribution companies that ha

58、ve neither the licensing nor infrastructure to address these needs at scale.Some smaller banks might choose a fourth path:becoming providers of balance sheet and risk services.Such banks might use banking-as-a-service(BaaS)platforms like Treasury Prime,Unit,and Bond to provide distribution partners

59、with deposit and lending products.In this way,banks can gain access to new revenue streams while BaaS platforms expand their networks deposit and lending capacity.Deposits:A changed environment calls for new strategiesDeposits represent one of the most critical resources of any bank and one of the m

60、ost important revenue streams for corporate transaction banks around the globe.However,several financial institutions have experienced significant deposit withdrawals and increasing market volatility in response to rising interest rates,credit restrictions,and liquidity gaps.As the banks attempt to

61、capture and maintain their deposit base,investors are closely monitoring their resilience.For several years,businesses and consumers have faced very little opportunity cost for retaining excess funds in current accounts.This changed rapidly as interest rates began to increase in late 2022 and furthe

62、r accelerated in 2023.North America saw money market rate increases of more than 2 percent,and balances migrated out of current accounts.Across other markets(for example,Singapore),consumers shifted idle money into savings accounts as central banks increased rates,causing declines in current-account

63、 deposits.In economies such as India and Indonesia,however,money market rates rose less dramatically,and current-account balances moderated but did not decline.On the cusp of the next payments era:Future opportunities for banks10 Andy Dresner,Albion Murati,Brian Pike,and Jonathan Zell,“Embedded fina

64、nce:Who will lead the next payments revolution?,”O(jiān)ctober 13,2022.21Corporate deposits generate 40 to 45 percent($500 billion to$550 billion)of transactional bank revenues globally.Recent market events(with bank deposits falling by over$700 billion during the latter half of 202211)and continuous pres

65、sure on banks to reduce fees have made deposits a primary area of competition for many banks.The shakeup of the financial market in March 2023,when Fed data shows that almost$100 billion in deposits were withdrawn during the week up to March 15,12 has reignited the debate on how banks can maximize o

66、ne of their most valuable resources.In todays uncertain environment,where deposit growth has slowed and interest rates have risen significantly,achieving deposit growth requires challenging many of the traditional approaches.A current McKinsey analysis outlines how to achieve such growth:Increasing

67、client visibility into their liquidity position using data lakes,dashboards,and key performance indicators Establishing a Deposit Command Center to coordinate,execute,and monitor the deposit growth effort Mobilizing a specific deposit growth sales approach,including resetting the focus of relationsh

68、ip managers and training staff to address evolving market realities Enhancing value propositions for cash rich client sectors,identifying and pursuing pockets of excess liquidity Leveraging advanced analytics given the wealth of available records,both internal and external Reinvigorating payments an

69、d liquidity management products directly tied to operating accounts Designing optimal pricing strategies based on segments data and rapidly evolving analytic toolsAdditionally,retail deposits continue to comprise 43 percent of current account balances and are therefore another important source of bo

70、th liquidity and revenuealthough the funds are,of course,spread across many more accounts and it is therefore difficult to apply the same granular approach.Both retail and corporate deposit balances grew nominally during 2022 in all regions but North America,and are projected to continue to do so ov

71、er the near to midterm,even as net-interest margins drive the greater share of liquidity revenue growth.It does not follow,however,that all institutions will be affected equally.There will undoubtedly be banks registering deposit share gains and others enduring absolute deposit losses.Strategies tak

72、en today will help determine those who gain and those who dont gain.11 Damian J.Troise,“Bank failures highlight declining deposits,”Associated Press,March 30,2023.12 Jeff Cox,“Nearly$100 billion in deposits pulled from banks;officials call system sound and resilient,”CNBC,March 26,2023.Deposits repr

73、esent one of the most critical resources of any bank and one of the most important revenue streams for corporate transaction banks around the globe.22On the cusp of the next payments era:Future opportunities for banksThree avenues toward better productivityBanks can double down on productivity with

74、strategic use of technology.Three measures relevant to the current state of technology are:identifying valuable applications of generative artificial intelligence,modernizing the banks technology,and applying technology to the ongoing battle against fraud and crime.Deploying generative AI in payment

75、sGenerative AI is taking the world by storm,and banks and other financial service providers can benefit significantly,as several emerging gen AI use cases seem particularly fitting.For instance,banking is stringently regulated,with thousands of pages of rules and documentation to sort through annual

76、ly.Also,the industry has a huge number of customer-facing workers who must answer questions and generate ideas.Finally,the industry is already well embarked on digitization and could significantly benefit from gen AIs impact on software development.McKinsey Global Institute estimates that generative

77、 AI could further increase productivity in banking by 2.8 to 4.7 percent,equivalent to$200 billion to$340 billion in annual revenues.13 As regards the payments industry,we see four applications with the greatest potential:Automating client operations.Payments processes involve significant middle-off

78、ice activity,much of which are quite complex in nature as they require some form of client interaction.Gen AI applications in this field span multiple areas of the payments business.For instance,it can draft technical documents such as account plans,commercial contracts,and requests for proposal tha

79、t are key in the enterprise payments sales cycle.Gen AI can further automate recurrent activities in payments workflows,such as conducting regulatory checks for cross-border payments,analyzing terms in trade-finance contracts,and matching invoices to purchase orders.It can also be deployed in more s

80、ophisticated workflows,such as streamlining merchant onboarding by automating analysis of application documents and flagging merchants for human review where necessary.Massive deployment of gen AI applications is also expected on the retail payments front,as banks and PSPs can use the technology in

81、post-sale customer care for card and digital wallet businesses.Gen AI also has a major potential role in combating fraud as we discuss below.For instance,it can optimize fraud-detection rules,identify high-priority incidents,and improve human analysts efficiency by highlighting relevant information

82、and recommending next best actions for case handlers.Accelerating code development.Despite efforts to modernize their technology in response to the ecommerce boom,many traditional payments companies still heavily rely on legacy systems written in COBOL.The 1960s70s programming language remains the f

83、oundation for many bank systems yet is difficult to update for much-needed advancements such as migration to cloud.GenAI-based“code assistants”can facilitate bug detection,repair as well as user acceptance testing.They can also interpret legacy code,documenting the results and even rewriting it to m

84、ake it more readable and testable.Indeed,gen AI is proving to be particularly effective in improving software engineering across the board and could represent a once-in-a-lifetime opportunity for banks payments companies to fill the technology gap against digital players.Generating content.Gen AI ca

85、n improve marketing and promotional effectiveness by drafting and personalizing outbound customer communicationsfor example,in credit card marketing.It can also be useful in multimedia content generation,including prospect profiling,where the new tools can use public and internal information to iden

86、tify and prioritize customers and targets for outreach.Providing virtual expertise.An always-on support bot can augment employee performance by supporting technical work and customer service.One leading player has built a virtual assistant based on GPT-4 which takes natural language queries from dev

87、elopers,reads detailed documentation,and provides answers based on relevant documents.On the cusp of the next payments era:Future opportunities for banks13“Industry impacts,”The economic potential of generative AI:The next productivity frontier,McKinsey,June 14,2023.23Companies success will depend o

88、n a coherent strategy,documented in a value-based“road map”to use cases,and careful implementation.Differentiation will come from proprietary data and the ability to execute.Gen AI can be the catalyst to a larger transformation in AI and machine learning,but to do that successfully and capture the p

89、otential value,payments companies will need a multi-disciplinary digital transformation approach grounded in capability building,change management,and risk management.Given the potential of gen AI to alter the scope of jobs in key functions such as research,quality assurance,and engineering,new capa

90、bilities and talent will likely be required.As we discuss next,deploying gen AI will require modernization of many pieces of the tech stack(including cloud platforms,model hubs,and apps),work that to this point may have seemed optional.In addition,a hybrid approach to infrastructure will be required

91、 given many actors in the space.Further,gen AI requires proactive risk management and organizations should be focused on how risks evolve.Gen AI is accelerating risk discussions around data privacy,IP protection,data security,bias,and so on.The ability to roll out gen AI at scale,while avoiding the

92、trap of“pilot purgatory,”cannot be overemphasized.Technology modernization Generative AI is one example of how,as the new era unfolds,companies reliance on technology will only deepen.Incumbent payments players,who for decades faced little external pressure to evolve,now universally acknowledge the

93、need to modernize tech stacks to keep up with the rapid pace of innovation and ecosystem disruption driven by cloud-based fintechs.Payments tech modernization can reduce operating costs by 20 to 30 percent and halve time to market for new products.According to McKinseys Operating Model Index,compile

94、d from research across 150 leading financial institutions,those scoring higher on operating-model maturity tend to be faster growing(20 percent faster revenue growth)and more profitable(69 percent higher TSR)than the others.To achieve these gains,incumbents should strongly consider re-architecting c

95、omplex,monolithic technology stacks to microservices-based,cloud-native platforms that are flexible,consumable,and scalable.Payments attackers use such platforms to achieve low cost-to-income ratios.For instance,ClearBank would be unable to pursue its modular BaaS strategy without cloud technology.M

96、odernizing complex payments tech stacks is no small undertaking.As the technology gap to fintechs and native digital players continues to widen,incumbents can no longer afford to wait three to five years to transform.Instead,companies will need to take an agile approach,focusing modernization invest

97、ments on strategic,high-development-intensity products where paying down technical debt and modularizing legacy code into micro-services will deliver the most benefit.Companies should also consider partnerships to integrate innovative products and services that may be too lengthy or costly to develo

98、p in-house.Payments tech modernization can reduce operating costs by 20 to 30 percent and halve time to market for new products.24On the cusp of the next payments era:Future opportunities for banksAs companies rebuild their platforms,they can look to best-in-class tech companies for inspiration on s

99、tructure and working practices for modern product delivery.Payments companies will also need to attract,retain,and upskill future-ready tech talent well versed in modern technologies and skill sets,such as cloud,generative AI,and user interface and user experience(UI/UX).Payments companies must also

100、 look to improve speed to market and reduce engineering toil by deploying modern software engineering practices.We have found that typical software development organizations(in payments and other industries)spend more time on outer-loop activities14tasks such as security,compliance,configuration,and

101、 integration testing that are not directly related to building new features and shipping product(the inner loop).Automationincluding generative AIand modern practices in agile and DevSecOps15 can enable firms to redeploy people and resources to the inner loop,lifting productivity by 15 percent or mo

102、re(Exhibit 6)and improving speed to market by more than two times.Generative AI is proving to be a powerful speed and efficiency lever as well,with especially promising results in code generation,legacy code refactoring,and test automation.On the cusp of the next payments era:Future opportunities fo

103、r banksClientscurrent stateOtherInfrastructure confgurationIntegration testingSecurity and complianceDevelopment toolsTech/infrastructuremodernizationTechnology debtMaintenance4357Opportunity toincrease efciencyby 15%by increasinginner-loop timeInner loopOuter loop505055457030Building new featuresPo

104、tentialfuture stateIndustrybenchmarkAspirational techbenchmarkAllocation of time to inner-and outer-loop activities(illustrative),%1Example assumes a high-tech company with mature application of elevated automation tools.Source:McKinsey analysisImproving time utilization in inner-loop processes has

105、potential to increase developer productivity by roughly 15 percent.Exhibit 614“Yes,you can measure software developer productivity,”McKinsey,August 17,2023.15 Santiago Comella-Dorda,James Kaplan,Ling Lau,and Nick McNamara,“Agile,reliable,secure,compliant IT:Fulfilling the promise of DevSecOps,”McKin

106、sey,May 21,2020.2525Incumbents technology gap with fintechs and native digital players continues to widen;for some,modernizing technology wont be enough.These firms may want to consider partnerships with others and more generally think through the areas where paying down technical debt16 will delive

107、r the most benefit.Some tech work can be outsourced;looking ahead,industry utilities could simplify internal operations for many firms in one go.Staying ahead of financial crimeA final way to lower costs is by updating how the organization limits risks and costs related to fraud.The face of financia

108、l fraud has changed.Todays financial criminals are sophisticated,coordinating borderless attacks simultaneously and globally by using low-cost tools that exploit recent technological advancements.Although unauthorized card-not-present(CNP)fraud is declining in SEPA(2.8 basis points of transacted car

109、d value in 2021,compared with 3.66 basis points in 2020),the introduction of faster payments has opened new fronts for authorized push payment(APP)scams.In APP scams,fraudsters trick victims,often through social engineering,into initiating payments to an account posing as a genuine payee.In the Unit

110、ed Kingdom,APP scams accounted for 44 percent of the 583 million lost to financial fraud in 2021.17 Of the$6.9 billion lost to internet scams in the United States in 2021,98 percent began with social engineering,according to the FBI Internet Crime Center.18 Worse may be in store.Its easy to envision

111、 how generative AI could aid fraudsters in producing fake videos or spoofing voices,exploiting vulnerabilities of common identity recognition routines,say,through synthetic identities.But generative AI and other new technologies also offer new avenues for those defending against fraud.Early examples

112、 indicate that generative AI could boost productivity by 30 to 50 percent in fraud detection by automating some currently manual activities and accelerating others.Its proven ability to process unstructured data could optimize detection rules,identify high-priority incidents,and foster improved effi

113、ciencies for human analysts by displaying relevant information and checklists for case handlers and recommending next best actions during investigations.It could also pre-compile suspicious-activity reports for vetting and regulatory submission.To get the most out of the new technologies,payments co

114、mpanies will likely need to upgrade their fraud operations from back-office functions to an actively managed competence center.Companies can incorporate what has worked for them and their own advanced technology skills to design strategies that both counter financial crime and enhance the customer e

115、xperience.v v vThe transition from the Account Era to the Decoupled Era presents opportunities for banks and other payments players to capitalize on the resulting tailwinds.Many of these are driven by technology advancements,generative AI being the clearest example.The need to modernize tech stacks

116、has been recognized for some time;market dynamics give the imperative added urgency while cloud-native platforms and refined API connections offer a new path forward.Technology empowers both sides of the financial crime battle,making it both an offensive and defensive maneuver.The shifting interest

117、rate environment has reset deposit dynamics to a state many current leaders have no experience navigating,with the added twist of technology enabling faster balance movement than in past cycles.The outlook for the payments sector remains strong,with five-year growth projected at or above the long-te

118、rm average.The vectors of growth are evolving,however,and banks must take steps to optimize the profitability of such growth.This requires a detailed evaluation of their business,making clear and difficult investment decisions in building an efficient payments operating core that delivers a share of

119、 that growth to both the top and bottom lines.16 Aamer Baig,Sven Blumberg,Arun Gundurao,and Basel Kayyali,“Breaking technical debts vicious cycle to modernize your business,”McKinsey,April 25,2023.17“Over 1.2 billion stolen through fraud in 2022,with nearly 80 per cent of app fraud cases starting on

120、line,”UK Finance press release,May 11,2023.18 FBI internet crime report 2021,US Department of Justice/Federal Bureau of Investigation,March 2022.26On the cusp of the next payments era:Future opportunities for banksCopyright 2023 McKinsey&Company.All rights reserved.Luca Bionducci is an associate par

121、tner in McKinseys Rome office,Alessio Botta is a senior partner in the Milan office;Philip Bruno is a partner in the New York office;Olivier Denecker is a partner in the Brussels office;Carolyne Gathinji is an associate partner in the Nairobi office;Reema Jain is an associate partner in the Gurgaon

122、office;Marie-Claude Nadeau is a senior partner in the San Francisco office;and Bharath Sattanathan is a partner in the Singapore office.The authors wish to thank Diksha Arora,Hamza Arshad,Sukriti Bansal,Debopriyo Bhattacharyya,Szilard Buksa,Tommaso Canzian,Neha Dar,Nunzio Digiacomo,Fuad Faridi,Alber

123、to Farroni,Amit Gandhi,Hemant Gaur,Yannis Harizopoulos,Reinhard Hll,Sumi Hur,Keerthi Iyengar,Larry Lerner,Baanee Luthra,Pavan Kumar Masanam,Kate McCarthy,Prakhar Porwal,Priyanka Ralhan,Glen Sarvady,Nikki Shah,Julia Simchuk,Shwaitang Singh,Vasiliki Stergiou,Christabel Sunmugam,Aparna Tekriwal,and Adolfo Tunon for their contributions to this report.Scan Download PersonalizeFind more content like this on the McKinsey Insights AppMcKinsey Global Banking Practice September 2023 Copyright 2023 McKinsey&Company Designed by D McKinsey McKinsey