Consumers lay down a US$250bn challenge to financial institutions as they seek more flexible, customized digital products

  • By 2030, the majority of consumers will have used crypto, digital or other non-fiat currencies,  according to research commissioned by Episode Six 
  • From crypto to loyalty points, financial institutions need to respond to the proliferation of new  units of value – and that means overcoming the limitations of their existing technology 
  • Failing to act means that US$250 billion of payments revenue could move to non-financial  institutions by 2030

By 2030, 60% of global consumers will have made a  transaction using a unit of value other than fiat currency, while 73% of global consumer  payments will be processed by non-financial institutions on the Internet of Payments.  

Revealed on the first day of the Singapore FinTech Festival 2021, these forecasts by market  research firm IDC reinforce the need for incumbent financial institutions to adapt their  technology quickly for a market in which consumers expect more choice in terms of units of  value – including digital assets and loyalty program points – as well as more tailored payments  and credit propositions. They also spell out the cost of failing to adapt: US$250 billion of  payments revenue could otherwise move to non-financial institutions by 2030, according to  IDC estimates.1  

“The payments industry is undergoing a massive transformation: non-cash payment volumes  are soaring, on-demand payments are gaining traction, and cloud computing and new  technology have unleashed a wave of innovation, such as BNPL,” said John Mitchell, CEO of  Episode Six. “This is creating a more level playing field for new entrants, and significant  challenges for incumbents. The research we’ve unveiled today shows why financial institutions  need technology that transfers any unit of value, as well as designed to be configurable and  easily integrated into existing financial ecosystems, allowing our clients to bridge the old with  new.”  

“Financial institutions and non-financial institutions are both vying for a key role in the  ownership of payments,” said Cyrus Daruwala, Managing Director IDC Financial Services &  FinTech. “IDC forecasts that by 2030, 73% of consumer payments will be handled by non-FSIs  though the Internet of Payments. Yet, FSIs are far from out of the payments game – they need  to reshape the role they can play in payments of the future and the next-gen payments  technology to succeed.”  

IDC’s data shows that 73% of financial institutions around the world have technology  infrastructures for payments that are ill equipped to handle payments for 2021 and beyond.  For many incumbents, that means existing payments infrastructure needs to be upgraded, payment workflows need to be more data-driven, and risk management needs to be more  flexible to adapt to the regulatory requirements for non-fiat currencies and other units of  value.  

1 Source: IDC Executive Summary, Sponsored by Episode Six, Next-Gen Payments Technology Reshapes the Playing  Field for the Industry: Driving Over 70% of Payments to Shift to Non-FSIs by 2030, Doc #AP76830X, November 2021  

Legacy tech holds banks back  

Yet legacy technology is costing financial institutions more and more, restricting investment in  vital digital transformation. IDC estimates that financial institutions’ global spending on  payments technology will double from US$39.7 billion in 2020 to US$80.3 billion in 2030.  

“Banks need to embrace the new types of payments that recognize that value comes in many  forms, but they have a lot of work in front of them,” added Episode Six’s Mitchell. “There are  infrastructure and process bottlenecks, resources are being drained on maintaining outdated  and disparate systems, and siloed thinking is preventing innovation. Risk aversion can also lead  to lost opportunities.”  

With the rise of embedded finance, and Banking as a Service solutions, non-financial players  can offer payments solutions and are increasingly owning the customer relationship. By 2030,  IDC forecasts that 74% of digital consumer payments globally will be conducted via platforms  owned by non- financial institutions.  

Converge, or crumble  

Although banks will no longer dominate payments as they have in the past, this does not  mean they may be side lined altogether. Instead, they need to rethink how they interact with  fintechs as well as the new generation of blockchain-based digital finance provides, said  Mitchell at Episode Six.  

“Users demand the unified and polished interfaces and smart data-driven products offered by  fintechs,” he argued. “Economies need the stability and consumer protection that exist when  regulated institutions provide financial services, drawing on their long-standing strengths in  risk management and compliance. For banks and fintechs, the choice, with a few exceptions,  will ultimately be to converge or crumble.”  


About Episode Six  

Episode Six is a payments technology company that gives banks, fintechs and brands the  freedom to design and bring to market leading digital payment propositions. It powers its  clients’ payments journeys with the most flexible and adaptable platform on the market today,  providing highly configurable products with user-driven e6Designer to optimize competitive  response and customer demand. Episode Six’s platform and ledger enables the transfer of  value of any kind – fiat currency, cryptocurrencies, brand value points, gold, and more. Co founded in 2015, E6 operates globally across 23 countries with an expanding team located in 

the U.S., Europe, Japan, Singapore, Hong Kong and Australia. Investors include HSBC,  Mastercard, SBI Investment Co., Ltd. and Anthos Capital. 4 million consumers and merchants  use products built with E6 technology. For more information, visit www.EpisodeSix.com or  LinkedIn.  


Media contact
Noel Cheung
ncheung@ashburycommunications.com
+852 9090 5165 

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