A transformation agenda for generating revenues and reducing complexity
Payments globally are moving toward a cashless future. There is immense potential for scalable, pan-European innovation in digital payments, helping improve the lives of the region’s citizens on many levels.
Yet although Europe is a leader in payment standards and customer privacy, its ability to grasp this future is being held back by a fragmented payments landscape, structural impediments that limit revenue-generation potential for banks, a focus on data privacy, and insufficient industry innovation.
The opportunities for financial-services firms have been clear since at least 2018, but European banks and payment providers have not yet taken advantage of them. We have three key recommendations:
In following these recommendations, European financial-services firms must act now, in a collaborative, cross-border way. It is risky to postpone taking action; it could make individual banks fall further behind, making them more vulnerable to upstart competitors. But if they can rapidly develop and execute a strategy for noncash payments, the European FS sector can capture the potential benefits of innovation and generate enough revenue to thrive.
Our proposals for an innovative European payments model would benefit consumers, banks and payment companies, and merchants in the following ways:
However, following the curbs on interchange and cross-border transaction fees, plus limits on using customer data, it is all the more important for the payments industry — including banks — to be able to foster services that leverage open banking and GDPR, Europe having taken a lead in both dimensions.
It is already clear that Europe’s fragmented payments and settlement model is not fit for purpose. Europe-wide action is urgently required before the currently disjointed payments model becomes too unprofitable or intractable to reform.
Director, PwC Italy
Senior Manager, PwC Germany
Senior Associate, PwC Germany
Partner, PwC Italy