Capgemini reports on the major 2017 trends in the payments industry which revolve around three core areas of payment instruments, regulatory and industry initiatives, and key stakeholder strategies. Currently, the global payments industry is undergoing a paradigm shift with an influx of technology, demographic, and regulatory dynamics. While the customer facing part of the value chain continues to witness high levels of innovation, service providers are still grappling with back-end infrastructure enhancements. Trends such as new opportunities in the payments industry in terms of adoption of Open Application Programming Interfaces (APIs), growth in digital payments, innovation in cross-border payments, and challenges from the entry of alternative service providers are impacting the industry in terms of fostering competition, nurturing innovation, and enhancing process and system-related efficiencies.

1. Global Financial Services Market Intelligence
Strategic Analysis Group
Top 10 Trends in Payments – 2017

2. 2Global Banking and Payments Trends_v1 0
Global Financial Services Market Intelligence
Adoption of digital payments is on the rise with
wallets, cards, and mobile becoming
mainstream
$426.3
Billion
$12.2
Billion
Volume of contactless
payments is
forecasted to grow
nine fold by 2020
Projected global
digital payment
volumes in 2015
Increased Adoption of
Contactless Payment
Enabled DevicesRetailer/Merchant
Obligations
Customer Demand for Speed
and Convenience
Source: Capgemini Financial Services Analysis, 2016“Digital Disruption Brews In Financial Data, Digital Identity, And Payments, 2015,”, Forrester; "Global Digital Payments to Reach $36
Trillion", Juniper Research, 2016

3. 3Global Banking and Payments Trends_v1 0
Global Financial Services Market Intelligence
Instant payments are potential alternative to
existing instruments while a few challenges
still exist
Euro Instant payments will revolutionize
payments across 338.3 million people
and 19 countries
Changes to
Operating Models
Investments Made in
Existing
Infrastructure
Cross-Border
Interoperability
Handling Inter-Bank
Settlement Risk
Source: Capgemini Financial Services Analysis, 2016; "Instant Payments-The Longer View", European Payments Council, 2016, http://www.europeanpaymentscouncil.eu/;
http://www.treasury-management.com/article/1/362/2987/instant-payments-the-longer-view.html

4. 4Global Banking and Payments Trends_v1 0
Global Financial Services Market Intelligence
Banks need to adopt a transformational
approach to address the dynamics of
regulatory landscape
Transformational approach will help banks to
move towards integrated risk and governance
models
Provide Value Added
Services to Clients
Enhanced Decision
Support Systems
Slower Progress in
Holistic Compliance
Complexity in
Regulatory
Compliance
Source: Capgemini Financial Services Analysis, 2016; “Building a transformation vision”, 2016, http://www.bankingtech.com/250742/building-a-transformation-vision/; World Payments
Report, Capgemini and BNP Paribas, 2016

5. 5Global Banking and Payments Trends_v1 0
Global Financial Services Market Intelligence
RegTechs and regulatory sandboxes emerge
as key themes
Increased Focus of Banks towards Holistic
Compliance Initiatives
Emergence of Niche Firms within FinTech
Segment with Technology Solutions for
Regulatory Compliance
Change in Regulatory Approach Globally,
with a Focus on Fostering Innovation and
Reducing Cost of Compliance
$118.7
Billion
Global demand for
regulatory, compliance,
and governance
software expected by
2020
Source: Capgemini Financial Services Analysis, 2016; "Regulatory sandbox", Financial Conduct Authority, November 2015, https://www.fca.org.uk/news/regulatory-sandbox; “Regulatory
Sandbox: Discussion Paper”, July 2016, http://www.bnm.gov.my/guidelines/50_others/dp_regulatory%20sandbox_July2016.pdf

6. 6Global Banking and Payments Trends_v1 0
Global Financial Services Market Intelligence
Instant payments and Basel III norms could
trigger changes in liquidity management of
banks
Instant Settlement
Arrangements
FX and Money
Market Management
Improve Liquidity
Shorter
Reconciliation Times
70%
Target LCR Ratio for
2016 is set at 70% with
phased implementation
for 100% by 2019
Source: Capgemini Financial Services Analysis, 2016; “Key Emerging Trends in the Payments Industry”, July 2016, https://www.trxservices.com/blog/key-emerging-trends-payments-industry/

7. 7Global Banking and Payments Trends_v1 0
Global Financial Services Market Intelligence
Technology and regulatory initiatives are
inducing transformation in Cross-border
payments domain
$582
Billion
$85
Trillion
Global trade flows are
expected to triple by
2025
Global international
remittances in 2015
Thriving Opportunity in
Emerging Markets
Focus on
Payouts/Settlements
Shift Away from
Manual/Batch Processing
New Operating Models in
Trade Finance
Alternative Solutions for
Network Rails
Source: Capgemini Financial Services Analysis, 2016; “Trade in goods and services has fluctuated significantly over the last 20 years”, World Trade Organization Statistics, 2015; “Bringing
Emerging Markets Into the Flow”, www.thefinancialist.com

8. 8Global Banking and Payments Trends_v1 0
Global Financial Services Market Intelligence
FinTech activity in corporate and retail domain
can disrupt payments analytics and
authentication
Focus on
Authentication &
Data Security
Decision Making
Capabilities
Demand for
Innovation
Need for Analytics
Based Solutions
79%
Bank executives view
FinTechs as partners as
per WPR 2016
Source: Capgemini Financial Services Analysis, 2016; “Yodlee’s FinTech Influencer Survey”, https://www.yodlee.com/blog/global-fintech-survey-results-51-experts-reveal-2016-
trends/February 2016; Executive Interviews for WPR 2016 ; Online Survey for WPR 2016 ; Total 124 responses received

9. 9Global Banking and Payments Trends_v1 0
Global Financial Services Market Intelligence
Adoption of Open APIs is Leading to Paradigm
Shift in Payments
Demand to Build
Innovative Solutions
(SVB)
Win-Win Situation for
both Banks and TPPs
Regulatory and
Industry Push (PSD
II, OBWG)
Improved User
Interface for
Customers
Commoditization of
Bank Offerings
Reduced Cost for
Providing New
Services
15000
Number of Registered
Public APIs grew more
than double in 2015
from7000 in 2012
Source: Capgemini Financial Services Analysis, 2016; “APIs – what do they mean for payments?”, April, 2016, www.paymentsuk.org.uk; “Indian banks testing blockchain, AI, biometrics,
open API and payments”, September, 2016, www.biomtericupdate.com

10. 10Global Banking and Payments Trends_v1 0
Global Financial Services Market Intelligence
Security and Authentication are the Top Priority
for Firms
Increased Card
Fraud
Higher Adoption of
Digital Payments
Open Banking
Initiatives
Increased Threat of
Cyber Crime
$16.3
Billion
Losses from worldwide
fraud on credit cards,
debit cards, and
prepaid cards in 2015
$7
Billion
CNP based fraud in
the U.S. is expected to
reach $7 billion by
2020
Source: Capgemini Financial Services Analysis, 2016; “The True Cost of Data Breaches in the Payments Industry”, 2015, Smart Card Alliance, http://www.emv-
connection.com/downloads/2015/03/The-Cost-of-Data-Breaches.pdf

11. 11Global Banking and Payments Trends_v1 0
Global Financial Services Market Intelligence
Real-Time
Processing
Requirements
Convergence of
Payments
Instruments
Front-End
Innovation
Legacy
Infrastructure
Modernization
25
So far, only 25 countries
representing 45% of
global credit transfers
have begun to modernize
infrastructures
Transformation of back-end payments systems
is still high priority
Source: Capgemini Fin ancial Services Analysis, 2016; “The Payment Processing Industry is Undergoing Seismic Change”, 2016, https://www.vantiv.com/vantage-point/payments-
basics/current-trends-in-payment-processing-industry

12. The information contained in this presentation is proprietary.
© 2013 Capgemini. All rights reserved.
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