Top trends in Payments: 2020 highlighted the payments industry’s flux driven by new trends in technology adoption, innovative solutions, and changing consumer behavior. The pandemic has tested the digital mastery of players, who are already grappling with transition. Non-cash transactions are on a robust growth path, accelerated by increased adoption during COVID-19. Regulators are working to instill trust and address non-cash payments risk amid unparalleled growth as players collaborate to quell uncertainty. Regional initiatives, such as the P27 (Nordics real-time payments system) and the EPI (European Payments Initiative), are gaining traction in response to country-level fragmentation and competition. Investment in emerging technologies is looked upon as an elixir to mitigate fraud, data-driven offerings are being considered for providing value-added propositions, and distributed ledger technology is in focus for digital currency solutions, efficiency enhancement, and cost gains. New players, such as retailers/merchants, are integrating payments into their value chains while technology giants are upscaling their financial services game by weaving offerings around payments as a center stage. Constrained by budgets, firms consider business models such as Platform-as-a-Service (PaaS) to provide cost-effective and superior customer experience.

1. Top Trends in
Payments: 2021
November 2020

2. 2© Capgemini 2020. All rights reserved |Payments Trends 2021 | November 2020
Source: Capgemini Financial Services Analysis, 2020
Businessresilience
Customer
centricity
Intelligent
Bank
Regulatorsbeefupscrutinyofnewplayers
andofferingsastheecosystemevolves
OpenBank
Technology giants augment payments
offerings to attract new customers
Payments firms turn to DLT for
efficiency and economy
Super apps are emerging as the future
operating model even for players
outside APAC, thanks to one-stop
functionality stores and end-to-end CX
Evolving regional payment schemes are
poised to challenge the powerhouse
status-quo
Retailers leverage Digital ID for enabling
invisible payments
Data-driven offerings are the latest
winning propositions for payments
firms
COVID-19 is fast-tracking customer
adoption of alternate payments adoption
Top Trends in Payments for 2021 by Capgemini
Technologyinvestmentsurgesaspayments
firmsfortifytransactiondatasecurity
Go-to-marketagility
Payments-as-a-Servicegainstraction
amongsmall-andmid-tierinstitutions

3. 3© Capgemini 2020. All rights reserved |Payments Trends 2021 | November 2020
Trend 1: Payments-as-a-Service (PaaS) gains traction among small- and mid-tier firms
Top Trends in Payments for 2021 by Capgemini Intelligent
Bank
Open
Banking
Customer
centricity
Go-to-
market
agility
Business
resilience
Flexibility to provide a
reliable service quickly
based on evolving
customer needs
Reliable on-demand
service
New out-of-the-box
features can be
quickly configured
with a PaaS model
Reduced time
to RoI
Financial firms will
have the flexibility to
pick a best-in-class
PaaS provider for the
services they need
Best-in-class service
providers are available
Help fill the API banking gap
by bringing complementing
products to match
customers to needs
Fills the API banking gap
01
0402
03
Key
benefits

4. 4© Capgemini 2020. All rights reserved |Payments Trends 2021 | November 2020
Source: Capgemini Financial Services Analysis, 2019
4© Capgemini 2020. All rights reserved |
What are the benefits?
Gateway for orchestrating an
interoperable ecosystem
Ability to scale up as the
‘utility-of-utilities’
Affordable implementation
when compared with
infrastructure upgrades
Network effects and
reachability
Focus to simplify user
interfaces and
integrate value-
added services
offered through
mobile wallets
Increased post-
pandemic adoption of
mobile apps and
wallets
Strong market for
mobile wallets,
EUR6,400 billion by
2027
Key
drivers
Trend 2: Super-app operating models offer a path to one-stop functionality
markets and end-to-end CX
Top Trends in Payments for 2021 by Capgemini Intelligent
Bank
Open
Banking
Customer
centricity
Go-to-
market
agility
Business
resilience

5. 5© Capgemini 2020. All rights reserved |Payments Trends 2021 | November 2020
Source: Capgemini Financial Services Analysis, 2020
5© Capgemini 2020. All rights reserved |
COVID-19 pushed
central banks to
issue DLT-based
digital currencies
Federated digital
identity is emerging
as a DLT application
Promise of higher
efficiency in supply
chain financing
Key
drivers
Secure transactions
Fraud reduction
Payment transaction efficiency
Speed in cross-border payments
Low transaction cost
Trend 3: Payments firms turn to DLT for efficiency and economy
Top Trends in Payments for 2021 by Capgemini Intelligent
Bank
Open
Banking
Customer
centricity
Go-to-
market
agility
Business
resilience

6. 6© Capgemini 2020. All rights reserved |Payments Trends 2021 | November 2020
Source: Capgemini Financial Services Analysis, 2020
Trend 4: Data-driven offerings are the latest winning propositions for
payments firms
Top Trends in Payments for 2021 by Capgemini Intelligent
Bank
Open
Banking
Customer
centricity
Go-to-
market
agility
Business
resilience
Cyber threat during pandemic
Data analytics will play a crucial rate in
detecting and eliminating potential
threats as COVID-19 has accelerated the
need to prevent cyber threats
Changing customer preference
Ever-changing customer
preferences are spurring banks to
provide data-driven offerings
Need for real-time
compliance
Dynamic and real-time
compliance is possible through
big data and analytics
Increased competition
Intensifying competition from
BigTechs and FIs to provide
superior value-added offerings is
encouraging data analytics use
Reduction in operational cost
Data-driven analysis can help to reduce
operational cost while boosting efficiency
Key drivers

7. 7© Capgemini 2020. All rights reserved |Payments Trends 2021 | November 2020
Source: Capgemini Financial Services Analysis, 2020
Higher customer
conversion rate
Scope for hyper-
personalized
offerings
Integrated data
sharing among
multiple devices
Key
drivers
7© Capgemini 2020. All rights reserved |
Trend 5: Digital ID is becoming an invisible payments enabler for retailers
Top Trends in Payments for 2021 by Capgemini Intelligent
Bank
Open
Banking
Customer
centricity
Go-to-
market
agility
Business
resilience
Customer
identity and
access
management
solutions
implemented
by retailers
Secure identities
Unify identity data
Manage customer
preferences
Scale up CX

8. 8© Capgemini 2020. All rights reserved |Payments Trends 2021 | November 2020
Source: Capgemini Financial Services Analysis, 2020
Trend 6: COVID-19 is fast-tracking alternative payments adoption
Top Trends in Payments for 2021 by Capgemini Intelligent
Bank
Open
Banking
Customer
centricity
Go-to-
market
agility
Business
resilience
Customer
adoption
Market
readiness
Regulatory
push
Industry players have significant
opportunity in the alternative
payments space as consumers
seek speed, convenience, and
superior CX
The disruption in the payment
ecosystem due to COVID-19 is
accelerating adoption of
alternate payments and
changing the payments game
Cash is no longer king! Cash
transactions and cash in circulation are
declining and may plummet further

9. 9© Capgemini 2020. All rights reserved |Payments Trends 2021 | November 2020
Source: Capgemini Financial Services Analysis, 2020
Trend 7: With an eye on expansion, tech giants augment payments offerings to attract new
customers
Top Trends in Payments for 2021 by Capgemini Intelligent
Bank
Open
Banking
Customer
centricity
Go-to-
market
agility
Business
resilience
Leveraging banks and payments
infrastructure through partnerships
Platforms provide payments services
to consumers
Digital wallets offer multiple business
propositions
Phased market penetration approach such as
targeting small- and medium businesses to
foray into B2B payments

10. 10© Capgemini 2020. All rights reserved |Payments Trends 2021 | November 2020
Proliferation of digital
payments and the
adoption of
alternative payment
methods
Increasing magnitude
of cyber attacks
Open infrastructure
and data network
lead to vulnerabilities
Key
drivers
Trend 8: Technology investments surge as payments firms bolster transaction
data security
Top Trends in Payments for 2021 by Capgemini Intelligent
Bank
Open
Banking
Customer
centricity
Go-to-
market
agility
Business
resilience
85%
79%
67%
63%
Investing in new AI
and ML
and modern identity
methods to spot
suspicious activity
Strengthening
internal fraud
detection for mobile
payment apps
Enhancing third-party
due diligence to
reduce
data-related fraud
Improving cyber
resilience through
investment
in cloud
Source: Capgemini Financial Services Analysis, 2019

11. 11© Capgemini 2020. All rights reserved |Payments Trends 2021 | November 2020
Source: Capgemini Financial Services Analysis, 2020
Trend 9: Regulators keep a watchful eye on new players and offerings as
the ecosystem evolves
Top Trends in Payments for 2021 by Capgemini Intelligent
Bank
Open
Banking
Customer
centricity
Go-to-
market
agility
Business
resilience
Revise guidelines to recognize systemically
important entities
Formulate robust financial reporting and audit
guidelines
Establish a tribunal for contingency planning
and disaster recovery for firms in distress
Enhance initial onboarding/licensing
guidelines
Regulatory call to action: Scrutinize new players to maintain system stability
Fragmented
landscape demands
vigilant inspection
New players may
eventually emerge
as systemically
important
Balancing
innovation,
inclusion, and risk is
the need of the hour
Key
drivers

12. 12© Capgemini 2020. All rights reserved |Payments Trends 2021 | November 2020
Source: Capgemini Financial Services Analysis, 2020
12
How local and regional payment schemes are gaining global ground
Trend 10: Evolving regional payment schemes are poised to challenge the
powerhouse status quo
Top Trends in Payments for 2021 by Capgemini Intelligent
Bank
Open
Banking
Customer
centricity
Go-to-
market
agility
Business
resilience
Major
drivers
Regulatory
support
Efficiencies
Data
protection
Customized
Centralized support
Support from regulators/Central banks to
establish a single payments market and
promote healthy competition within the
payments network
Data protection
Customer information remains
protected because transaction
and customer data reside inside
the country
Cost effective
Transaction processing
handled domestically makes
each transaction cheaper to
clear and settle.
Customized offerings
Regional schemes can develop
products customized for their
regional market ‒ making
them highly effective

13. 13© Capgemini 2020. All rights reserved |Payments Trends 2021 | November 2020
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