Strategy& - Getting ready for the future of payments

The report highlights that payments firms and investors are actively embracing innovative technologies to shape the future of payments. "Innovation" was the strategic rationale for almost 50% of deals in 2022, and this trend is expected to continue in 2023. However, the trend of integrating winning technologies varies by region. While the average deal value in the Americas and EMEA remained below the 2018 peak, deals in the Asia-Pacific (APAC) region have been growing in size and number. To stand out from global competitors and regional behemoths, payments firms should critically review their value proposition and identify their scaling potential or unique differentiating capabilities. They can participate in the global scale game or find their sweet spot in an increasingly integrated global payments ecosystem. Financial inclusion is a significant opportunity for payments firms. They can leverage their capabilities in domestic payments, cross-border remittances, and SME-focused SaaS solutions to participate in accelerating financial inclusion. However, they should be aware that ongoing upgrades of cross-border payments rails may impact the demand for fintech remittance solutions in the future. Payments firms can create incremental portfolio value by applying a cross-industry lens and identifying areas where smart integration of payments technologies can generate additional value. They can also expand their capabilities through focused M&A. Geopolitical developments have a significant impact on the payments industry. Payments firms should constantly monitor these developments and incorporate scenario-based thinking and geopolitical foresight into their business models and M&A strategies. These takeaways provide insights into the current trends and strategies in the payments industry, helping firms and investors navigate the evolving landscape.