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Global payments remade by COVID-19

Scenarios for the global payments ecosystem

How will the COVID-19 pandemic accelerate or redirect the global payments industry over the next three to 12 months? And how might payments industry leaders prepare for this evolution? Explore four scenarios that global payments companies and resilient leaders should consider to help them identify opportunities, recover, and ultimately thrive in the world remade.

Uncovering the four scenarios for resilient leaders

In the wake of COVID-19, Deloitte and Salesforce hosted a dialogue among renowned scenario thinkers to consider the potential societal and business impacts of the pandemic. The results of this collaboration can be found in “The World remade by COVID-19: Scenarios for resilient leaders.”

This report is intended to spark insight and help identify opportunities as payments industry leaders seek to understand potential implications of COVID-19. It outlines actions that resilient leaders can take over the next three to 12 months to help enable long-term success for their people and organisation.

Global payments remade by COVID-19

Why use scenario thinking for the global payments industry?

Although we are in uncharted waters, scenario thinking can help leaders prepare for a future no one can predict and clarify the potential implications of their choices. And as governments across the globe start to reopen their economies, business leaders should shape their “recover” strategies even in the face of uncertainty.

Building on several payments trends already in motion, the four scenarios are built on important macro and payments industry uncertainties, both already evident and others potentially plausible based on the severity of the pandemic and government actions.

These scenarios target the global payments industry, which in many cases includes consumer payments and commercial payments in different geographies. We chose to focus on the next three to 12 months on the assumption that this time frame is long enough that change is possible, but close enough that it matters to executives today.

As you read this document, challenge yourself to imagine how things you were sure were going to happen could now be on a different course. Avoid the temptation to conclude that the crisis will accelerate the changes you already expected or believed were inevitable or that the scenarios are truths or future payment forecasts.

Two critical uncertainties will drive the overall impact of COVID-19:

  • What is the overall severity of the pandemic and pattern of disease progression?
  • What is the level of collaboration within and between countries?

Explore four possible scenarios for the global payments industry

Four distinct scenarios emerge based on current trends and critical uncertainties. They are summarized below, and more details can be found in our full report:

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<p>The pandemic is managed due to effective responses from governments to contain the virus, but is not without lasting repercussions, which disproportionately affect small- and medium-sized businesses (SMBs) and lower- and middle-income individuals and communities.</p><p><br></p><ul><li>Relatively constrained disease dynamic</li><li>Effective health system and policy response</li></ul><p><br></p><p>What would the global payments industry look like in this scenario?</p><p><br></p><ul><li>Companies weather the passing storm with government stimulus and focus investments on delivering digital experiences.</li><li>Despite the relatively contained duration of the pandemic, contactless payments are widely adopted, and digital and faster payments gain share, propelled by rapid adoption by customers and merchants.</li><li>Stronger demand for data security enhancement and fraud prevention with shift in customer behavior to online, mobile, and contactless commerce.</li></ul>

<p>Governments around the world struggle to handle the crisis alone, with large companies stepping up as a key part of the solution and an acceleration of trends toward “stakeholder capitalism.”</p><p><br></p><ul><li>More prolonged pandemic</li><li>Collaboration to control the pandemic led by large companies</li></ul><p><br></p><p>What would the global payments industry look like in this scenario?</p><p><br></p><ul><li>Corporates step into the void and drive digital transformation and creation of digital superstores and marketplaces.</li><li>Customers are prudent in spending, primarily on nondiscretionary purchases.</li><li>Products, services, and customer retention programs are reimagined. Customers’ trust in large corporates and governments rises, leading to increased data-sharing.</li><li>Large corporates acquire for scale and show leadership in risk domains.</li></ul>

<p>China and other East Asian nations are more effective in managing the virus and take the reins as primary powers on the world stage.</p><p><br></p><ul><li>Severe pandemic</li><li>Collaborative health response led by East Asian countries</li></ul><p><br></p><p>What would the global payments industry look like in this scenario?</p><p><br></p><ul><li>East Asian players gain market share; they leverage their innovative business models, technology, and large customer base power.</li><li>Recovery in Western countries lags and is influenced by lessons learned from East Asian countries; US dollar declines as preeminent world currency.</li><li>Increased innovation and competition force players in the West to invest in intelligent automation and digital assets.</li></ul>

<p>Prolonged pandemic period, spurring governments to adopt isolationist policies, shorten supply chains, and increase surveillance.</p><p><br></p><ul><li>Severe, rolling pandemics</li><li>Insufficient global coordination and weak policy response</li></ul><p><br></p><p>What would the global payments industry look like in this scenario?</p><p><br></p><ul><li>Competing nationalistic interests lead to fragmentation of global payment standards, networks, and regulations.</li><li>Reduced business interoperability and regionalisation of trade leads to impediments in cross-border supply chain and increase in price of goods.</li><li>Companies are less resilient, weakened by a prolonged recession and limited investments. Governments and public sector take the lead in setting up national payment standards and enabling infrastructure.</li></ul>

What might recovery look like across the global payments industry?

Advance your global payments organisation in the world remade

For an in-depth discussion of the four scenarios, impacts on the payment ecosystem, and 12 no-regret decisions that can enable success across scenarios, download the full report perspective.

Published: July 2020

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