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Tech giants target slice of €128bn payments industry

Banks projected to miss out on €22bn due to tech disruption by 2030

23 September 2015

Technology titans are set to cause €22bn of disruption in the European retail payments sector, according to a new report by Deloitte, the business advisory firm.

Payments disrupted: The emerging challenge for European banks expects the market to be worth €128bn to European banks in 2015. This will grow to €139bn by 2030, but this is €22bn less than it would have been due to technology disruption.

Stephen Ley, Deloitte’s UK head of payments, said: “Our forecasts show payments revenues for this year will equal roughly one-quarter of total European retail banking revenues. However, the status quo, in which payment systems continue to be run by and for the major banks, will not last. Barriers to entry are being lowered for new entrants by both technology and regulatory advances, so we will see more non-bank players slowly, but surely, start to gain a greater presence in the market.

“Many of the big tech companies are now able to offer customers easy access to alternative, lower cost funding, whilst having an army of loyal customers behind them, as well as scale and strong brands. If they’re able to make payments convenient, then customers and SMEs are likely to gravitate to them.”

Despite this, about half of the European banks surveyed by Deloitte expect non-bank players to have either a low or very low impact on retail bank card and non-card payments. The research suggests payments is ‘anyone’s game’, as regulations such as the Payments Services Directive 2 (PSD2) seek to open up the market and new, non-bank players gather momentum. In the face of increased non-bank competition, an overwhelming majority of respondents said industry collaboration was the preferred strategic response. Seventy-five percent said they would work with well-established players like MasterCard and Visa for card payments, a figure that increases to over 80% for non-card payments.

Stephen Ley commented: “Some banks are lagging behind in fintech investment, so it makes sense for big and small banks to team up with non-bank players. This could include payment providers, acting as product manufacturers to the non-banks’ retail front end.

“For small banks specifically, the logic would be to pursue selective industry collaboration – for example, in infrastructure or particular network areas. The overall prescription for larger banks is relatively clear: selective in-house investment, whilst partnering with or acquiring fintech companies. Larger banks shouldn’t go it alone in this innovation race, as they are unlikely to win, given their culture, regulation, and the firepower ranged against them. Instead, some larger banks can build scale as payment utilities, exploiting their advantages in compliance and resilience, and providing the essential rails in what continues to be a fast-growing area of business.”


About the report
Deloitte spoke to 24 payments experts from retail banks, card and non-card payment schemes, payments processors and non-bank payment service providers. The objective was to understand their perspective on developments in payments, and how they felt the industry should respond to them. These experts were asked questions about the impact of regulation and technological change. Specifically, respondents were asked to evaluate the effectiveness of new, non-bank payment service providers on their payments revenues, the future ownership and governance of non-card payment schemes, and possible consolidation among payments processors.

Notes to editors
About Deloitte
In this press release references to Deloitte are references to Deloitte LLP, which is among the country's leading professional services firms.
Deloitte LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu Limited (“DTTL”), a UK private company limited by guarantee, whose member firms are legally separate and independent entities. Please see for a detailed description of the legal structure of DTTL and its member firms.

 The information contained in this press release is correct at the time of going to press.

Member of Deloitte Touche Tohmatsu Limited.

Gillian Bishop
Deloitte LLP
+44 020 7303 0776

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