Heightened customer expectations for value-added services, increased competition from emerging FinTechs, new payments-enabling technologies, and an ever-changing regulatory landscape are driving the development of an open and collaborative payments ecosystem. Within this new environment, the traditional payments-processing intermediary function is anticipated to fade, as payment vendors consolidate or collaborate to stay relevant by opening their systems. Payment infrastructure will now require next-generation tools such as instant payments and distributed ledger technology to enhance customer experience. At the same time, alternate channels such as contactless payments and wearables continue to gain traction. However, an open and collaborative environment introduces vulnerabilities related to cybersecurity and data privacy. Industry stakeholders need to take measures to mitigate these risks. The report explores the top ten trends that are expected to impact the payments industry in the coming year.

1. Top 10 Technology Trends in
Payments: 2018
November, 2017

2. Payments Trends 2018 | November 2017 © 2017 Capgemini. All rights reserved. 2
Banks are evolving into platform players to facilitate
collaboration and to remain central entity in the industry
Changes to Operating
Models
Investments Made in
Existing Infrastructure
Developer Portal and
AppStore
Data Lake and Payment
Hubs
Source: Capgemini Financial Services Analysis, 2017; World Payments Report, 2017
 Collaborative platform model will help banks to
generate new revenue streams by leveraging the
data available with them
 Bank Assets
 Bank Challenges

3. Payments Trends 2018 | November 2017 © 2017 Capgemini. All rights reserved. 3
Payments infrastructure across the globe is being
transformed to become faster and inclusive to drive
true value of the new offerings
Account and Invoicing
Management
Unified User
Experience
Online Payment
Channel Integration
User Data Analytics
Source: Capgemini Financial Services Analysis, 2017; Capgemini World Payments Report, 2017
Payments intermediaries are expected to converge or evolve
leading to infrastructure rationalization
Rationalization
Benefits

4. Payments Trends 2018 | November 2017 © 2017 Capgemini. All rights reserved. 4
Improved Compliance
Better Operational
Efficiency
Reduction of Costs
Greater Focus on
Strategic Initiatives
Reducing Risk of
Fraud
Source: Capgemini Financial Services Analysis, 2017; https://www.ovum.com/the-consolidation-rush-in-the-payments-industry-highlights-the-need-for-scale-and-differentiation-through-value-added-services
Payment vendors and banks are expected to consolidate their
operations to form larger groups
Payments vendors with good digital capabilities
could become strong targets for acquisition as the
incumbents are looking to scale up their operations
Key Drivers

5. Payments Trends 2018 | November 2017 © 2017 Capgemini. All rights reserved. 5
APIs aid development
of customized services
Enables stakeholders to
play roles such as AISP
and PISP
Regulations such as
PSD2 to foster
partnerships
APIs to facilitate data
sharing in secure
manner
Source: Capgemini Financial Services Analysis, 2017; World Payments Report, 2017
 However, there are concerns regarding the lack of
harmonization due to the absence of a centralized
API infrastructure
Open APIs enable stakeholder collaboration
Key Drivers and Benefits

6. Payments Trends 2018 | November 2017 © 2017 Capgemini. All rights reserved. 6
174.1%
$95
Billion
Estimated annual
mobile and wearable
contactless payments
in 2018
Growth of contactless
transactions in the
UK in 2016
More than 15 billion connected
devices by 2021
Increased customer demand for
faster, convenient, and seamless
experience
Increasing processing power and
availability of high-speed internet
U.K., Canada, Singapore, and
Australia are experiencing high
adoption of contactless cards
Major fitness trackers integrate
payments service into their
devices
Alternate payment channels such as contactless and
wearables gain acceptance
Source: Capgemini Financial Services Analysis, 2017; World Payments Report 2017; https://goo.gl/R5P4iD; http://www.theukcardsassociation.org.uk
Key Drivers

7. Payments Trends 2018 | November 2017 © 2017 Capgemini. All rights reserved. 7
DLT Can Be Explored for Cross-
Border Remittances, B2B
Payments, and Interbank
Settlements
Challenges Due To Scalability
And Lack Of Standardization to
be Addressed
Current Corresponding Banking
Model Is Inefficient
DLT Provides Faster,
Inexpensive, and Efficient
Services
Source: Capgemini Financial Services Analysis, 2017
Banks and FinTechs explore distributed ledger technology
(DLT) to transform cross border payments
Incumbents are either partnering with FinTechs or
collaborating with players such as SWIFT to
experiment with DLT for cross-border payments
Key Takeaways

8. Payments Trends 2018 | November 2017 © 2017 Capgemini. All rights reserved. 8
Source: Capgemini Financial Services Analysis, 2017; http://eastandpartners.com/publications/banking-news/npp-delayed-to-early-2018; https://www.euromoney.com/article/b14r6x3pgbg5vc/real-time-payments-forcing-
transaction-flow-rethink; https://www.finextra.com/blogposting/14484/getting-real-with-real-time-payments
Increasing Demand From Retail and Corporate
Customers For Agile Services
Corporate domain is slow to adopt IP due to
challenges of investments in legacy systems
and inertia to upgrade batch-processing
systems to real-time
Countries Are Either Creating New IP
Infrastructure or Leveraging Existing
Infrastructure
26th
January
2018
New Payments
Platform Australia,
real-time payments
platform to go live
Post PSD2 implementation, merchants can
become PISPs and can start offering IP
services to the retail and corporate customers
Instant payments (IP) likely to become the ‘new normal’ for
corporate treasurers, industry at large
Key Takeaways

9. Payments Trends 2018 | November 2017 © 2017 Capgemini. All rights reserved. 9
1.9
Billion
Data records
exposed in 918
publicly reported
Cybersecurity
breaches
Regulators are bringing
in new regulations and
standards
Lack of harmonization
in cybersecurity laws is
posing a challenge for
multinational firms
Collaboration between
payments stakeholders
is affecting banks’ data
and security
Cybersecurity
incidents escalate in
frequency and impact
Source: Capgemini Financial Services Analysis, 2017; http://breachlevelindex.com/assets/Breach-Level-Index-Report-H1-2017-Gemalto.pdf
As global cyberattacks rise, regulators focus on data-privacy
law compliance
ImplicationsKey Drivers

10. Payments Trends 2018 | November 2017 © 2017 Capgemini. All rights reserved. 10
$31.26
Billion
Expected annual
Global card fraud
losses in 2018
Frauds can be identified and
analyzed in near real-time
Improved security and
reliability while driving
down costs
Machine learning to
continuously monitor the
ecosystem network
Source: Capgemini Financial Services Analysis, 2017; https://www.nilsonreport.com/upload/content_promo/The_Nilson_Report_10-17-2016.pdf
Robotic process automation, machine learning help payment
service providers in fraud detection
Benefits

11. Payments Trends 2018 | November 2017 © 2017 Capgemini. All rights reserved. 11
81%
Hacking-related
breaches leveraged
weak or stolen
passwords in 2016
Multi-factor authentication
to mitigate the cyber
threats
Behavioral analytics in
combination with
biometrics to reduce fraud
Biometrics Digital Identity Secure Element Geo-location
Interoperable
Cryptographic
Source: Capgemini Financial Services Analysis, 2017; Data Breach Investigations Report, Verizon, 2017; http://www.businesswire.com/news/home/20170807005537/en/Multi-factor-Authentication-Market---Top-Trends-
Forecasts
Payments firms continue to invest in advanced authentication
technologies to fight fraud and data breaches
Advanced Authentication
Technologies

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