UK payments outlook 2024

Gareth Lodge

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Oct 21st, 2015

Our friends at PaymentsUK have released their latest forecasts, the ever excellent UK Payments Market 2015.

Whilst we don’t have a copy of the full report (hint, hint…), the press release does give us some interesting insights. For example, payments will hit 44 billion transactions a year by 2024. This is a net growth of 3.4 billion, which hides significant and continued declines in both cash and cheque usage (53% to 33%, and 1.1% to 0.4% respectively).

The table provided (and replicated below – the link above has a better quality version) shows that, for consumers at least, cards continue to drive the growth. There are obvious reasons for this: consumers switching from Oyster-like cards to contactless, and indeed, contactless generally, is just one good example.


Number of annual consumer payments made per adult
uk pay 3

One thing that really stood out for me is the final line before the total – the “other” category. Celent’s forecasts typically count prepaid and store cards into our debit forecasts. But what is notable is that PayPal is explicitly mentioned… and mobile payments aren’t. At all. We’ve not seen the full report, so it may be explained there, but given what we read in the press, this is hugely surprising. Recent examples include:

Actually, it’s not surprising. Firstly, what is a mobile payment? That in itself will cause heated debates! Secondly, for the latter to be true, I ought to know at least someone who is making those mobile payments – or rather, every other person I know! I’m being slightly tongue in cheek – read Zil’s post from a few weeks back about him at least trying. However, I’d still argue that even this wasn’t a true mobile payment – the mobile device is just holding the card credentials. I refer you to my first point!

So what are the takeaways?

Firstly, the growth may continue – but in reality is perhaps less strong than you may initially think. A 3.4 billion growth in 10 years is actually only a CAGR of c 0.5% a year. Compared to some developed countries (France for example) that’s good, but compared to some developing countries that’s low.

Secondly, there may be 101 new ways to pay, but they’re unlikely to make significant inroads, instantly. Current methods are deeply embedded in our every day life. Indeed, many of the “new” methods run on top of the existing rails, and the volume often gets counted as the old method. This doesn’t mean that there are no improvements to be made but that they are just that – tweaks to the existing.
Finally, perhaps the phrase of there are lies, damn lies and statistics, ought to be caveated that many of the issues seem to be with PR people and journalists. Many inadvertently misread the numbers, but some of the latest releases underline that we all ought to find the original source rather than necessarily solely relying on what’s being reported.

Sibos 2015: banks reacting to the threat of blockchain and other FinTech

Dan Latimore

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Oct 19th, 2015

Singapore hosted Sibos this year, and judging by the reported 8,000 attendees, transaction banking is alive and well. That also means there were 8,000 different experiences, impressions and takeaways. Here are mine:

Banks are fully aware of the threat of posed by technology and are beginning to act on it.

Two technology vendors I spoke to said that every single bank they met with asked about blockchain, an extraordinary change from six months ago when it was only beginning to be seriously discussed. It’s encouraging that banks have evolved their positions so quickly. While no one know yet what the killer blockchain uses will be, banks are ramping up experiments along all facets of the value chain. Celent will have more to say about that shortly.

Another facet of technology change is the need for banks to partner with FinTech innovators.

Based on my conversations with many of these vendors, banks were a lot more willing to discuss new ways of working together. There may even me some movement toward value pricing (that is, mutual sharing in beneficial outcomes), but it’s still very early days; banks seem loathe to give away upside and are unsure how to structure enforceable deals.

Sibos’ ambivalence about innovation manifested itself physically with Innotribe.

The space was relatively small, and every time I went by I was unable to get in because it was filled to overflowing. Innovation clearly needs to be given even more attention despite the threats it presents to the existing structure. Was this perhaps a physical metaphor of Banking’s relationship with and attitude towards FinTech?

Having had four straight nights of canapés for standing dinners, getting home to digest the whirlwind that is Sibos was very welcome. On to Geneva next year!

Dispatch from Vegas: Capital One places big bet on AWS

Oct 16th, 2015

If it’s October, it must be conference season.  Old DominionThe month started innocently enough: a visit to Nashville for the Computer Services, Inc. annual client conference.  By virtue of endless industry consolidation over the past 30 years, CSI has been initiated as a full member of the Big-5 fraternity of core banking systems providers, and Celent will be adding their flagship NuPoint banking solution to our pending updated coverage of core banking systems solutions.  I was pleased to be invited to speak to CSI’s clients about innovation in banking (more about that in a future blog post).   Entertainment was provided by an up and coming country group Old Dominion — I’d never heard of them, so was surprised at their excellent performance of songs that they had written for established acts like Blake Shelton (“Sangria”) and Tyler Farr (“Guy Walks Into A Bar”).

After Nashville, it’s been back-to-back trips to Las Vegas for the Amazon Web Services re:Invent developers conference followed by the Bankers Administration Institute’s Retail Delivery Conference (BAI-RDS).

BBKingFor a long time, BAI-RDC has been the premiere conference for retail banking.  When I was busy digging up acquisition opportunities for Metavante in the 2000s, BAI-RDS was a “can’t miss” opportunity to take the temperature of fintech, to see what competitors were up to, and especially to keep tabs on the many startups that had emerged from the shadows to lead the way in internet-enabled banking services.

Those were very heady days for BAI-RDS.  I have vivid memories of packing into the House of Blues in New Orleans as Chip Mahan, founder of online banking pioneer S1, invited a few hundred of his industry friends to a private performance by BB King.  It was November 29th, 2000, a Wednesday evening and yet the party went on well after BB finished up his performance at 11 PM.

Back to Vegas.  Since I also cover cloud services for Celent, I decided to check in on what AWS was up to these days.  Their annual developer’s conference is called re:Invent and since AWS has only been doing this for the past four years, I didn’t quite know what to expect.  BAI-RDS regularly draws 3,000 attendees, and while I knew re:Invent 2012 drew about twice that number, I was still not prepared for the crowd of nearly 20,000 developers and AWS partners that converged on the Venetian Hotel and Sands Expo.  The many specific education sessions were scattered over the five floors of ballrooms in the Venetian while the Expo Hall and Key Note presentations were held at the adjacent Sands Expo.

While I didn’t see many bankers wandering the halls of AWS re:Invent, the one banker I did see grabbed my attention:  Capital One appthat was Rob Alexander, CIO of Capital One, who shared the stage with AWS SVP Andy Jassy during the Day One Keynote address.  Rob was there to announce that Capital One is deploying its new flagship mobile banking app on the AWS Cloud — I found that nothing less than startling in that Capital One only started experimenting with AWS last year, running a few mobile app development projects and bank-sponsored hack-a-thons in the AWS Cloud.

Based on its initial success, Capital One began migrating development and testing work to AWS at the beginning of the year, and nine months later it was sufficiently happy with their experience that the bank made the bold decision to shift part of its production environment to AWS, beginning with its new mobile banking app.

The new app essentially melds Capital One’s existing online and mobile banking applications, with a uniform look and feel, and changes to user preferences made on an iPhone or iPad automatically flow to the user’s online banking experience.  Capital One’s API gateway and 80 individual banking services are in the process of moving to the AWS Cloud as part of the mobile banking services launch, initially on the iPhone and later this fall expanding to the iPad and Android platforms.

What’s The Hurry?   Surely Capital One is no start-up — with more than 70 million cards and $80 billion in card balances, Capital One is a top-four credit card issuer.  When combined with its direct banking operations, Capital One is in fact the sixth largest bank in the United States, with $350 Billion in assets.  Even as a proponent of the long-term impact that cloud services will have on the banking business, I was nothing less than astonished that Capital One has progressed from cloud newbie in 2014 to going “all in” on AWS in 2015.

It didn’t take long to see what Capital One was up to.  By leveraging AWS for DevOps and (over time) production, Capital One is on track to reduce the number of data centers it owns and operates from 8 in 2014 to 5 by 2016, to only 3 by 2018.  Capital One intends to redeploy the capital it will recoup from data center consolidation into its core businesses while increasing the scope and pace of innovation at the bank.

Capital One is betting that an AWS-based mobile banking platform will allow the bank to support the level of real-time scalability needed to cope with demand spikes such as occurs on Black Friday and Cyber Monday.

But what about security?  Security is the most commonly cited reason why most banks are not embracing cloud services, so I was interested to hear Capital One’s take on security.  According to Rob, “Of course, security is critical for us.  The financial services industry attracts some of the worst cybercriminals.  So, we work closely with the Amazon team to develop a security model which we believe enables us to operate more securely in the public cloud than we can even in our own data centers.”

More securely in the cloud?  Either Capital One has gone rogue (very doubtful) or it knows something that most banks have yet to reconcile:  when it comes to security, it’s much less about where your sensitive data sits and much more about how you secure your data from pranksters and thieves.

AWS Party

AWS’s re:Play evening entertainment was provided by Zedd, a Russian-German musician and DJ who I also had never heard of (although my 18-year old college student did).  Chip Mahan was nowhere in sight, but I might have missed him in the crowd of 19,000 AWS converts in the audience.  Zedd was no BB King for sure, and unlike Old Dominion I didn’t know any of his songs, but nevertheless his techno-pop performance was hypnotically entertaining.

I could have gone back to Las Vegas for a third consecutive week, where the ever-growing Money 20-20 conference beckons, but alas I’ll be in Denver for the Association of Financial Professionals annual conference.  Dan Latimore and Zil Bareisis will be at Money 20-20 and I’m eager to hear about their experience.


Musings from the airplane

Oct 16th, 2015

I am not writing this literally on the plane, but I might well be – this is a conference season, so many of us are on the road. My colleagues have already been blogging from SIBOS, Finovate, Finnosummit and other events. I wanted to share my own observations from the events I attended.

EMV, tokenisation, mobile, Blockchain – these were just a few major themes discussed in depth in Las Vegas at PayThink. This used to be known as ATM, Debit and Prepaid Forum and remains THE event to go to discuss these topics in the United States. It is organised by PaymentsSource and chaired (for the last 12 years!) by Tony Hayes, my colleague and Partner at Oliver Wyman. Thank you to the organisers for inviting me to moderate a panel on lessons learned from cards platform transformations, and many thanks to my panelists – senior executives from FIS and e-Global for sharing their insights. We talked about the drivers forcing processors and issuers to upgrade their processing platforms, such as growing transaction volumes and types, need for flexibility and speed when adding new products, and how the processing proposition changes. Processors are now moving away from out-of-the box to componentised solutions, are changing how they package and price their services, and are re-thinking the business terms how to engage with clients. When working with software vendors, our panelists stressed the importance of “soft aspects”. Of course, the technology matters and must meet the requirements to get you on the short list. However, often it will be your people that will win or lose you the deal – flexibility and commitment they demonstrate during proof of concept and other advanced stage interactions are often major factors when clients make a final decision.

Last week I was in Lithuania, the country I grew up in and left over 20 years ago… I go back every year, but this was the first time I went there as an analyst. The Central Banks of Lithuania and Sweden jointly organised a conference on the role of Non-Banks in the Payments Market. I was kindly invited to join the panel to discuss “what’s in the future.” As our clients know, our view at Celent is that the disruption in banking is real and that, as a result, banking will change, however, banks will not disappear. Of course, some of them will, but others will adapt, and some of the today’s non-banks will become banks. The challenge for all is how best to manage that tension and the ongoing evolution of the industry.

In between travels, I also published a new report on tokenisation, a hot topic in the industry at the moment. The speed of tokenisation evolution in the last 12-18 months has been remarkable, and there are no signs of slowing down. Celent clients can access the report here.

Finally, it’s not long before we board the plane to go back to Vegas to Money 2020. The meteoric rise of this event has been absolutely amazing – fours years ago there were about 1,200 of us; this year, the organisers expect 10,000! My colleague Dan Latimore and I will again be there as well. My diary is already full, but if you are a client and would like to say hello, do reach out to your account managers and we’ll do our best to meet up. With everything going digital, the physical handshake remains as important as ever! Safe travels!

Increasing headwinds in corporate banking?

Patty Hines

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Oct 13th, 2015

This week I’m in Singapore, which provides a beautiful backdrop for Sibos 2015, the annual conference that brings together thousands of business leaders, decision makers and topic experts from a range of financial institutions, market infrastructures, multinational corporations and technology partners.


This year’s conference theme is connect, debate and collaborate and takes place at a time of increasing headwinds from a slowing global economy, higher compliance costs, increasingly global corporates, and competition from both banks and nonbanks alike. I spent the past few months taking a deep dive into corporate banking performance over the past 10 years–a period of both tremendous growth and unprecedented upheaval. As expected, corporate banking operating income and customer deposit balances have experienced healthy growth rates over the past 10 years. But surprisingly, despite increases in customer deposits, corporate banking income was largely stagnant over the past few years.

Corporate Banking Income and Deposits

Corporate banking plays a dominant role for the largest global banks. In 2014, corporate banking was responsible for 33% of overall operating income and 38% of customer deposits across the 20 banks included in this analysis.

As outlined in the new Celent report, Corporate Banking: Driving Growth in the Face of Increasing Headwinds, this critical banking sector is shaped by four external forces: economic conditions, the regulatory environment, business demographics, and financial technology. These same factors are slowing corporate banking growth and creating an environment in which banks are overhauling client offerings in the face of regulatory pressure, re-evaluating geographic footprints in response to shifting trade flows, and investing in technologies to ensure a consistent, integrated customer experience.

Much of the discussion at Sibos is on exploring transformation in the face of disruption. As they look to an unsettled future, corporate banks that are flexible, adaptable, and creative will be the ones that succeed. Changing time-tested ways of doing business is painful, but critical for future success.

Helping build the fintech ecosystem in Latin America

Juan Mazzini

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Sep 30th, 2015

A few weeks ago, Dan Latimore and I had the chance to attend Finnosummit in Mexico City.

IMG_1341 While Dan was the one really working (he presented on “How Big Data can change Financial Services”) I mingled around the participants of this vibrant ecosystem encompassing entrepreneurs, financial institutions, investors, and regulators among other stakeholders. It is amazing how the ecosystem continues to grow and how fintech start-ups are booming.IMG_1349





Celent has been collaborating to help create the fintech ecosystem in the Latin American region since its inception and I had the honor, for 2nd time, to judge the fintech start-ups participating in the BBVA Open Talent, which brought the Latin American finalists into town as part of Finnosummit. They had their 5 minutes of glory (or suffering) by pitching their venture to the audience and two winners were selected at the end of the day. Discover the finalists of all regions here.

In Latin America two chilean start-ups were the winners:, aiming to financial inclusion by creating a credit scoring based on utility payments; and Bitnexo which enables fast, easy and low cost transfers between Asia and Latin America, using Bitcoin.

In the US & RoW the two winners were: ModernLend enables users with no credit profile to create one in just 6 months by using alternate metrics; and LendingFront which facilitates short term commercial lending through a simple platform.

In Europa the winners were Everledger, specialized in anti-fraud technology for financial services and insurance; and Origin an electronic platform that facilitates bond issuing in the capital markets.

Many fintech startups that made it to the finals focus on Blockchain technology and payments. These seem to be the areas of major investment for the last two years. If you are interested in these themes I suggest that you follow my colleagues John Dwyer, Zilvinas Bareisis and Gareth Lodge.

Coming back to Dan’s presentation, he made a very interesting observation around the need to move from the old paradigm (Customer response optimization) to a new paradigm (Anticipate and shape customer intent) based on the use of big data and analytics, but also warning that disruptors are out there applying the new paradigm today.

If you want to get deeper into any of the subjects covered here, please let me know. By the way, is there any fintech start-up you believe has great potential? Share with us please!

Customer experience for financial services

Patty Hines

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Sep 30th, 2015

Service Design. Journey Maps. Customer Stories. Mood Boards. Experience Recovery. These are a handful of the topics discussed at this week’s Customer Experience for Financial Services (CXFS) Conference, organized by Worldwide Business Research in Charlotte, NC. As an analyst currently immersed in research on corporate banking financial performance, regulatory environment, economic conditions, business demographics, and financial technology, the CXFS event was a welcome change of scenery.

Journey Mapping

Journey Mapping

The CXFS conference was all about the “voice of the customer” (VoC) and how financial institutions (FIs) can improve their customer “listening” skills. One of the sessions mentioned that FIs are listening to anywhere from four to ten channels including web site, call center, e-mail, Internet, customer surveys and social media. But as one presenter stated, having more VoC channels doesn’t automatically result in a better customer experience.

For example, in recent years many global banks fully integrated their major lines of business with product, operations and technology grouped organized under one segment leader. These integrated groups have created silos which create a highly verticalized client experience (CX), preventing consistency across a firm. Event attendees were encouraged to “climb over the silos and create a collective story to make things change”.

Customer experience strategy and technology have gone a long way since I was involved in online banking user interface design in the early 2000s. Technology providers at the event are enabling banks to digitize and tag unstructured data such as call center recordings, agent notes, e-mails, and social media posts. This enables firms to mine and analyze the data to inform customer-centric innovation. Other firms specialized in market research including voice of the customer and voice of the employee surveys. Customer experience consultants are helping firms to understand how customers are thinking, feeling, seeing, saying doing and hearing so that people, processes, products and technology can be improved.

The event featured discussions on how to build CX into people, processes and products by creating centralized information stores, centers of excellence, customer councils, and shared KPIs. Most of the FIs at CXFS were early in their customer experience journey and still working out a comprehensive solution. My favorite quote of the event was advice from Ingrid Lindberg, CXO of “Have the patience of a saint, the heart of a lion, and the tenacity of a street fighter because it is one giant game of Whack-a-Mole.”

Why banks should pay attention to “Assistant as an App”

Stephen Greer

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Sep 22nd, 2015

Last week I had the pleasure of going to Finovate, a biannual event (at least in NA) where startups and established vendors show off their newest creations. My colleague Dan Latimore wrote an in-depth piece about it last week. It’s usually a good temperature read of where the market is and what banks are thinking about. PFM used to be hot, now it barely makes an appearance. Mobile account opening and on-boarding was massive. Each year you can count on a few presentations tackling customer communication, whether it´s customer service applications or advisory tools. While this year was no different, I didn´t see any presentations representing an emerging trend in mobile: assistant as an app.

What is assistant as an app? Basically, it puts a thin UI between two humans: the customer and the service provider (e.g. retailer or bank). The UI layer enhances the interaction by allowing each party to push information back and forth, whether its text, pictures, data visualization, etc. There are a wide range of possibilities.

Apps are already starting to incorporate this idea. For a monthly fee, Pana offerings a human personal travel assistant who will take care of any travel related need. The concierge books restaurants, hotels, rental cars, and flights, all via in-app communication.


Vida Health allows users to push dietary information to a health coach that can then send back health plans, ideas to diagnose health issues, or create a weight loss regimen. The dating app Grouper uses a concierge to coordinate group dates. EasilyDo is a personal assistant that can manage your contacts, check traffic, schedule flights, etc. The app Fetch uses SMS to let users ask the concierge to buy just about anything.

For a small fee (sometimes free, subsidized by business or premium services) these companies provide value-added premium services to customers through a mobile device. The applicability for banks is obvious. Finances can be complicated; most people aren´t good at managing money, and according to Celent research, consumers still prefer to speak to a human for important money matters. Assistant as an app would offer institutions a clear path towards monetising the mobile channel, moving interactions away from the branch, and capturing a growing base of digitally-directed consumers. I predict this will be a major trend in financial services in the future.

What do you think? Feel free to comment below.

Mobile, onboarding among dominant themes at FinovateFall 2015

Dan Latimore

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Sep 18th, 2015

When I’m feeling a bit flip, I tell clients that Celent goes to a lot of conferences so that they don’t have to. Don’t get me wrong: conferences are worthwhile, and you have a lot of serendipitous conversations. But they’re also time away from the office, and, to be honest, not every minute is completely productive. With that in mind, I’ll describe my very-high level takeaways of Finovate Fall 2015, held earlier this week at the New York Hilton.

As I listened to each of the 70 7-minute pitches (2 presenters scratched), I tagged them in an unscientific way. Each company received two to eight words describing the space the problem they were solving and how they did it. Here’s the resulting word cloud:

Finovate Word Cloud

Mobile, unsurprisingly, dominated. I was astonished, however, at the prominence of “onboarding,” a term I used to cover a wide variety of solutions pertaining to account opening, from ID verification to assisted form filling. Many talked about eliminating friction, and creating a platform to support a particular service. Security and Fraud were prominent, as was the concept of components, often enabled by APIs.

The biggest surprise: only two companies addressed Blockchain technology – perhaps that will change at FinovateSpring.

Somewhere around the 60th presentation, I was struck by the variability in presentation skills and solution excellence. Being a consultant, I had to create a 2×2, below. What did we miss because the product or service was presented sub-optimally?

Finally, a big thanks to the folks at Finovate – Celent values our partnership with this great event. If you’d like more detail, check out their blog, which describes the best in show winners.

What did you like at Finovate?

Viewing mobile payments strategy holistically

Sep 17th, 2015

As the one year anniversary of Apple Pay approaches, banks have to make more decisions about their mobile payments strategy. Android Pay launched in the US a few days ago, and Samsung Pay is expected to be available there soon as well. Should a bank just stick with Apple Pay or enable their cards with all the “pays?” Should they consider alternative options, such as their own HCE-based, or depending on the market, even SIM-based NFC solutions?

The answer is that banks have to view their mobile payments strategy holistically. Apple Pay, good as it is, is only available for the latest iOS devices, and only for in-store and in-app payments. Android ecosystem offers more choice: Android Pay, Samsung Pay, HCE and SIM for NFC, but what about P2P and other payments?

Barclays in the UK announced this week that it will be launching its own version of mobile payments for Android-based phones. Barclays was a notable absentee when Apple Pay launched in the UK, and are forging ahead with Pingit and bPay wearables. As a result, some view this latest move as yet another indication that the bank “appears to be adopting a go-it-alone strategy with its roll-out of mobile payments, preferring to retain the primary contact with the customer rather than providing the rails for interlopers like Apple, Google and Samsung to hitch a free ride.”

I wouldn’t read too much into it. Barclays has since said that it would support Apple Pay at some point in the future. In my view, Barclays is doing what all banks should do – think about mobile payments holistically, i.e. how they will support mobile payments across different platforms and use cases (e.g. in-store, in-app, P2P, etc.).

Yes, Android Pay has been launched in the US, but it’s not yet available in the UK. Yet HCE technology has given banks around the world an opportunity to launch their own branded NFC solutions for Android, irrespective of whether Android Pay is available in their market or not. Rather than waiting for Android Pay or Samsung Pay to come to the UK, Barclays is joining the growing list of banks such as BBVA in Spain (read the case study of BBVA Wallet, our Model Bank winner here), RBC in Canada (who were granted a patent for their Secure Cloud payments earlier this month), and others that are taking a proactive stance in developing mobile offerings for their Android user base.

I have a new report coming out soon that covers key digital payments issues, such as Android Pay and tokenisation in more detail. Watch this space!