McKinsey on Payments 32 | Financial services

Our latest edition of McKinsey on payments speaks to the dynamism of the sector, both in the regional diversity of market developments and in the thought leadership emanating from a range of industry voices. These seven articles, which encompass the actions of established payment stalwarts and pioneers advancing disruptive new approaches, explore changing customer preferences, promising technology innovations, and a variety of operating models and strategic issues.

“Technology-Driven Changes and Opportunities in Card Payments” examines three aspects of legacy payments infrastructure that banks and incumbent processors need to address in order to meet changing customer preferences and compete with aggressive start-ups that until recently would not have had the scale to mount effective challenges. The article also discusses how new technologies such as deep learning and blockchain are enabling these changes.

“Emerging Trends in Consumer Digital Payments in the United States” provides the market context in which these new solutions are taking shape. McKinsey’s survey, now in its seventh year, tracks changes in consumer trust in various providers and adoption of financial products and delivery channels. New to this year’s cycle, the survey collects unique insights into the rapid growth of cryptocurrency and “buy now, pay later” installment plans.

“The Future of Payments in the Middle East” explores an intriguing market approaching an inflection point. Despite high smartphone penetration and a digitally savvy population, the region remains heavily reliant on cash. However, the rapid growth of card and other digital payments began even before the pandemic. Separate McKinsey surveys of Middle Eastern consumers and payments practitioners shed light on the likely trajectory over the next five years, as well as potential growth avenues for banks and non-banks.

Over the past few months, McKinsey has launched an ongoing series of high-profile interviews with leaders of payment organizations, offering a wide range of perspectives on key industry topics. To hear the perspectives of the Nordic countries, which have long been recognized as a case study of successful migration to a modern, paperless payment ecosystem, we hosted a panel discussion with three regional leaders, including the CEOs of two fintechs /payment services run by banks. Their experiences illustrate the opportunities for innovation that can arise from working with industry.

McKinsey’s conversation with Payoneer CEO Scott Galit shows how the New York-based fintech leveraged its early successes in cross-border payments to establish a broad business-to-business value proposition. By contrast, our interview with Revolut’s CFO Mikko Salovaara sheds light on the UK firm’s intention to create a global consumer payments ecosystem from the start, with banking license applications pending in several country.

To investigate a somewhat different business model, McKinsey spoke with Plaid COO Eric Sager. As Eric describes it, Plaid is a “development company — for developers, by developers,” so its technology works outside of the customer’s line of sight, enabling the exchange of financial information across a variety of platforms. ‘apps. Eric advocates for transparency between all parties (customers, financial institutions and fintechs) as an essential condition for a thriving ecosystem.

We hope you find this collection of articles stimulating and, as always, we welcome your feedback and continued dialogue.


Alessio Botta is a senior partner in the Milan office of McKinsey, Jeff Galvin is a senior partner in the Tokyo office, and Marie-Claude Nadeau is a senior partner in the San Francisco office.

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