Chapter 5: Closing the gap: Matching attackers on B2B sales for SMEs. The value-chain shifts that began before the crisis have yet to take full effect—because of the complexity of moving such supply chains and the challenge of building new ones—so this is a longer-term trend. By industry, respondents in automotive and assembly and healthcare and pharma are the most likely to say their companies have increased investment. At slightly over a quarter of the overall pool, North America remains the second-largest contributor to global revenues and grew at par with global trends. In addition to the financial fallout, COVID-19 is reshaping the global banking industry on a number of dimensions, ushering in a new competitive landscape, stifling growth in some traditional product areas, prompting a new wave of innovation, recasting the role of branches, and of course, accelerating digitization in almost every sphere of banking and capital markets. Higher limits for contactless payments also triggered rising adoption rates across the globe, making inroads beyond debit’s typical domain of smaller-value transactions. Fareeha Ali, “Charts: How the coronavirus is changing ecommerce,” Digital Commerce 360, August 25, 2020, digitalcommerce360.com. If that issue is addressed properly, the global impact on payments could be significantly more positive than the outlook for GDP (see sidebar “The relationship between GDP and payments revenue”). Learn about Getty. This FT/McKinsey session was based on themes in McKinsey’s up-coming publication the Global Banking Annual Review 2020 –A test of resilience: Banking in the crisis, and beyond. See all trademarks and details in the Full Report. McKinsey Report, The State of AI in 2020 Practical resources to help leaders navigate to the next normal: guides, tools, checklists, interviews and more. Our mission is to help leaders in multiple sectors develop a deeper understanding of the global economy. Switzerland reported an increase in share of debit-card spending to 72 percent, from 65 percent, between January and May 2020, tab, Engineering, Construction & Building Materials, Travel, Logistics & Transport Infrastructure, McKinsey Institute for Black Economic Mobility. When business leaders talk about going digital, many are uncertain about what that means beyond buying the latest IT system. McKinsey’s annual global banking review reveals that almost 60% of banks are not generating the cost of capital/trading below book. For instance, dining, travel, and entertainment expenditures, which often carry higher transaction fees, are unlikely to rebound in the near term. UPI spending increased by roughly 70 percent over the first seven months of 2020. Global strategy consultancy firm McKinsey has estimated that banks in India could face a potential hit of Rs 12 trillion till 2024 from the fallout of the Covid-19 pandemic — with revenue foregone estimated at Rs 5.5 trillion and loan loss provisions about Rs 6.7 trillion. Business-to-consumer payouts (often salary disbursements) and remittance payments slowed, because of restrictions on the movement of cross-country workers and growing unemployment. The future of European payments: Strategic choices for banks November 24, 2020 – A joint report from McKinsey and the Euro Banking Association examines the options for banks in a changing landscape. ATM usage fell by 47 percent in April 2020 in India, while the United Kingdom experienced 46 percent declines in ATM usage per month on average from March to July 2020. Asia–Pacific (excluding China) could suffer larger declines, as its revenue model is more affected by NIM contraction, faces increasing government pressures on mass-market transaction fees, and has greater exposure to long-term affected industries, such as travel, tourism, and international remittance payments. Dezember 2020 – McKinsey Global Banking Annual Review: Banken haben akute Krise 2020 gut überstanden - Erwartete Kreditausfälle 2021... lassen Eigenkapitalrendite auf 1,5% schrumpfen - Mitte 2020 wurden drei Viertel aller Banken unter Buchwert gehandelt Large and small markets alike are experiencing rate cuts of 100 to 300 basis points. Overall, in retail, the impact was not a decline but a shift in buying behavior. Also, McKinsey, Bain, BCG report tear downs. In Europe, differences in shopping behavior among geographies were strongly reduced and differences among age groups eroded as many consumers (in particular, older shoppers) turned to online shopping for the first time. 4. McKinsey analysis reveals potential shifts of as much as $4.6 trillion of global trade flows over the next five years. Applying the A1 scenario to global payments, we forecast that most categories of payment transactions are poised for sharp and rapid rebounds as lockdowns are lifted and behavioral shifts from cash to electronic payments are largely sustained. Based on our analysis, the largest subscription e-commerce companies generated $7.5 billion in sales in 2018, up about 30 percent over the prior year. Boards and management should actively consider strategic moves now instead of the cycle forcing it on them in a downturn.”. A recent report from McKinsey on the global banking industry addressed the threat banks face from technology firms. Unleash their potential. Twelve highlights from our 2020 research McKinsey Global Institute. APMs have particularly gained traction in China, where they generated about $43 billion in 2019 revenues, far exceeding the approximately $22 billion for the rest of the world collectively (exhibit). Alternative payment methods (APMs), such as e-wallets and instant-payment-based solutions, continue to play a key role in accelerating cash substitution, particularly in developing countries. Created in partnership with McKinsey & Company, the report anticipates that, due to the pandemic, companies will post a 90 percent drop in profit by … The pandemic has accelerated the move from physical to virtual banking. Still, the current global context removes many of the long-standing impediments to embracing transformation. Considering credit cards are the largest source of the region’s payments revenue, at roughly 44 percent, the decline in outstanding balances alone will outweigh the benefits of increased use of digital channels. Overall, the greatest recovery opportunities reside in countries with low electronic penetration (such as Brazil, India, Indonesia, and Thailand), as the next normal provides impetus for electronification. Europe may be poised for a swifter rebound, for two reasons. Chapter 3: Supply-chain finance: A case of convergent evolution? However, countries starting from a high level of digitization (such as France, Germany, and the United Kingdom) are also seeing pandemic-induced behavior push cash usage to the minimum—fueling payments-revenue growth. In Latin America, which is characterized by a significant unbanked population, cash usage will likely remain resilient. But more recently, many in the financial industry have faced a less certain employment outlook. We use cookies essential for this site to function well. Final 3R information for the individual market for 2014 was released on November 19, 2015. These accelerated behavior changes in response to the COVID-19 crisis caused a fundamental shift in adoption of technologies, such as real-time account-to-account payment infrastructures, that had been developed over recent years. Discretionary spending initially sank by 40 percent globally. Our forecast uses McKinsey’s nine macroeconomic scenarios for the impact of the COVID-19 crisis. Get Posts. How payments can adjust to the coronavirus pandemic—and help the world adapt. The rate of Asia–Pacific payments growth continued to moderate from its double-digit rates of a few years ago, given margin compression on current-account balances across the region and China’s GDP expansion receding to a more sustainable rate. In India, banks stepped up their digital propositions, integrating bill payment, e-commerce links, and Unified Payments Interface (UPI)—the nation’s local real-time payment system—into mobile banking apps to present three digital options in a single customer interface. © Copyright 2020 Verdict, a trading division of Progressive Digital Media Ltd. McKinsey’s global banking annual report highlights industry struggle, October 22, 2019 (Last Updated October 22nd, 2019 11:58). US Financial Services Industry 2020‑2024 . Chapter 4: A burning platform: Revamping bank operating models for payments Many companies are realizing the strategic weaknesses in their existing global supply chains, given trade frictions and potentially recurring public-health disruptions, leading to the exploration of nearshoring and other rebalancing. As we indicated, not all players, countries, and products will arrive at the same end state (see sidebar “A regional overview of the year in payments”). 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