Transaction Trends

After years of fending off fast-growing fintechs and other nonbanks for payments share and revenues, banks will soon lose their dominance in the race for revenue, according to research recently released by Accenture Payments.

In 2017, U.S. banks claimed $163 billion of revenue, with nonbanks netting $136 billion—a 45 percent share of revenue—last year. According to Accenture, trajectories of current trends indicate that incremental revenues will accrue primarily to nonbanks over the next two years, benefiting both already established nonbank players and new businesses. The research projects that, by 2020, the nonbank revenue share will increase to $177 billion, compared to $167 billion for banks, marking the first time banks slip below 50 percent of the share.

Accenture forecasts the scales will tip in nonbanks’ favor as banks gain $15 billion in revenue but lose nearly $12 billion to pricing pressure and business taken over by new payment players, such as fintech, “bigtech” (Amazon, Apple, Google, and other big technology firms), and other third parties phasing into the market. Nonbanks are expected to experience pricing pressure as well, in the range of around $27 billion. But Accenture predicts they will generate about $69 billion of new business—enough to counter the losses caused by lower pricing.

Whether banks or nonbanks rule the revenue realm will depend on factors besides payments, such as artificial intelligence, blockchain, cross-border transactions, major geopolitical movements, open banking, privacy, regulation, and security. However, Accenture predicts the key to winning the majority share will be staying relevant by focusing on the customer journey, deploying technology quickly and efficiently, and monetizing technologies.