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BCG sees growth opportunities for the incumbents

Boston Consulting Group sees growth opportunities for the incumbents

Tom Nijenhuis


24 September 2019

BCG sees growth opportunities for the incumbents


The Boston Consulting Group (BCG) presented its annual Global Payments Report at Sibos 2019 and it will come as no surprise that the report describes a world of payments which is changing quickly. After many years of rapid growth for the vast majority of the players, BCG is starting to see a divergence of winners and losers in payments. The report concludes that there are plenty of growth opportunities for incumbent payment providers. 

Using several smooth slides, which were heavily photographed by the audience, BCG explored these ‘bright spots’ for incumbent payment providers in the retail and wholesale payments space.

Key takeaways from the report

BCG illustrates how regulation, consolidation and innovation are changing the payments space. Regulators have a big impact, as they contributed to the move to cashless. They also challenged the margins of market players (interchange, for example) and opened the door for new entrants.

The very strong consolidation is changing the landscape as well, as shown by the heavy (continued) activity in mergers and acquisitions (M&A). Players invest a lot of money in innovation of the payment system and this leads to the introduction of new payment methods. BCG figures show that there is still a good and healthy growth in payments. As said before, there are several growth opportunities in the retail and wholesale space and BCG explored these in its presentation by highlighting a number of important developments and strategies that incumbents can follow.

Natural advantages

With other words, incumbent operators still have an edge and the opportunity to reinvent payments, but then they need to move fast as the pace of change requires rapid adaptation. Incumbents should focus on areas where they have natural advantages. If they want to grow, then they must also play a role in the consolidation game.

Another interesting topic that BCG addresses is the activity in the M&A landscape, which also shows some interesting, strategic messages. One example: deals done by the card schemes clearly show that they feel the need to diversify beyond cards, with Instant and Open Banking gaining traction.   

Some reflections

BCG urges incumbents to act quickly. This is not a new sound and also other speakers at Sibos have voiced this. The sense of urgency seems to gain strength over the years. I suppose this is because we are more and more seeing how our payments industry is being reshaped by developments in our industry (Instant and Open Banking) and beyond (changing customer demands, ai, platform economy). The time for analyzing, familiarizing and piloting is probably over. It is time for the established parties to take the next concrete steps as quickly as possible.

For more details I would recommend downloading the BCG report. To speak for myself, it was quite an interesting presentation about the current state of payments in which I saw that BCG still sees a lot of growth opportunities for the incumbents. A nice thought to end the session with.