Payment services innovation: Incumbents rise to the challenge

With the recent technological developments, many opportunities and challenges arise in the financial sector. This is especially the case in the field of payment services that are not capital intensive and where incumbents are challenged by often very fast and flexible newcomers. Tech giants like Google, Apple and Facebook are swiftly entering the retail payments market. New business models are reinforced by expanding availability of mobile devices, fast adoption of new technologies and have many common characteristic features. Introduction of financial services into existing platforms and networks whilst exploiting pre-existing customer bases allows economies of scale. In addition, the PSD2 directive widely opens the gate for competition in the payment services and account information. Related risks and changed user expectations are also important factors. In our opinion, incumbents will have to adapt their business models to stay in the market.