The explosive growth in payments as the industry steadily moves to electronic and mobile platforms is attracting many new players and business models, but the winners ultimately will be those that can leverage payments on a massive scale, a Citigroup Inc. executive says.
In the keynote speech April 28 at the 23rd Annual Card Forum and Expo, sponsored by PaymentsSource and American Banker, Paul Galant, Citi's chief executive for global enterprise payments, said that succeeding in the rapidly changing ecosystem of digital payments is "not a niche play," despite the numerous startups and entrants touting new mobile and alternative payment technologies.
For every 1% of transactions that move from cash and checks to electronic platforms such as cards, online or mobile payments, forecasts show that the revenue pool available to existing U.S. banks could increase by some $30 billion, Galant said.
"That is revenue that will disproportionately go to larger companies that have the scale to take advantage of that shift," he added.
But even banks that are succeeding today with large operations "cannot go it alone" in the future payments marketplace, Galant said.
"Companies like Apple, Google and Facebook are really gifted at engaging with consumers, and some of those same consumers want to engage with" banks, Galant said.
Banks, however, "have a long way to go," he said. "Our rules of the road do not resemble those that consumers are most excited about."
Choosing the right partners for software development and access to consumer networks will be far more important than betting on specific types of payment hardware options, Galant said. "Hardware is not going to drive consumer payments," he said.
