Key Findings from 2025 Advanced Payments and Fintech Survey

Fintech and Payments Research Report | Nov 12, 2024

Image: Advanced Payments and Fintech Report 2025 (Edgar, Dunn and Co.)

Insights and Opportunities for Global Payments and Fintech Innovations 2025

Edgar, Dunn & Co. has just dropped the 17th edition of the 2025 Advanced Payments and Fintech Survey (103 page PDF report) digging into the latest innovations and momentum powering the global payments industry forward.  The report brings together insights from a 100 senior payment professionals from around the world who explore the influence of emerging technologies like AI, IoT, and blockchain, the rise of digital banking, and the impact of alternative payment methods and Central Bank Digital Currencies (CBDCs).

See:  2024 Global Payments Growth, Trends, and Fintech’s Edge

This post by NCFA Canada highlights the key findings from the payments survey and uncovers the latest data-driven and actionable insights to propel your business forward, providing a strategic roadmap for growth.

Key Findings from the Advanced Payments Survey

The survey was hosted between May and July 2024 with responses from 100 senior payments professionals around the globe.

1.  Top Use Cases for AI and Machine Learning in Payments

• 85% of respondents see AI’s primary role in risk management and fraud detection.
• 51% identified customer behavior analytics as a growing application of AI.
• 55% say automating operations for error-free and quicker payments is a priority.

2.  B2B Cross-Border Payments in Play

• 52% of respondents said B2B payments are the main focus for cross-border innovations given the demand for efficient and low cost international transactions.

See:  AI, Funding Shifts and Regulatory Hurdles in Fintech 2024

3.  Sectoral Growth in Digital Payments

• Retail and e-commerce are expected to lead digital payment adoption (65%), with remittances (48%) and travel (46%) also ready for growth.

4.  Future Growth in Payment Methods

• Digital wallets (88%) and bank transfers (57%) dominate the future payment landscape, a shift away from traditional credit card payments.
• Buy Now Pay Later (BNPL) solutions are also gaining traction, particularly among younger consumers.

5.  Mobile Solutions and Instant Payment Demand

• 68% of respondents expect instant payments to become standard, as consumers demand faster and more convenient transactions.

6.  Influence of Regional Trends

• Asia-Pacific leads in expected payment innovations (50%), with Europe following at 23%.  Canadian Fintechs can look to these regions for inspiration in mobile and instant payments.

7.  IoT’s Role in Enhancing Payments

• IoT devices for payments such as wearables and connected cars are gaining momentum, particularly in retail and automotive sectors.

8.  The Role of Security in Mobile Banking

• 63% of respondents stress the importance of biometric authentication to enhance mobile banking security.
• Real-time payment features are equally critical with 57% saying these as essential for consumer trust.

9.  Open Banking and Open Finance as Innovation Catalysts

• According to the majority of responders, Open Banking is remain a major driver for financial innovation that enables third party access to financial data, fuelling the rise of customer-centric financial ecosystems.  Open Banking is evolving into wider initiatives like Open Finance and Open Data, creating opportunities to enhance competition and improve customer experiences.  (See:  OECD 2023: Key Insights on Open Finance Policies | EU: MiCA, DORA, Open Finance Framework, and Digital Euro)

Image: Freepik/rawpixel.com

Strategic Insights from the Report

1.  Digital Banks and Profitability

• Digital banks have seen huge growth but most still aren’t profitable (some are).
• Around 85% struggle with high customer acquisition and operating costs.
• Cutting acquisition costs by using AI for targeted marketing can save them up to 25%.
• Automating manual processes can trim costs by 30%.
• If digital banks can get customers to make digital banks their primary accounts it can make a big difference since primary account holders contributing almost 70% more in revenue.

2.  AI and Machine Learning in Payments

• AI is transforming payments with powerful tools for fraud detection, personalization, and efficiency.
• Payment processors like Visa analyze millions of transactions per second with AI, catching suspicious activity instantly and reducing fraud-related losses by up to 30%.
• AI automation has been shown to reduce payment processing times by half, saving labour costs.

See:  How Real-Time Agentic AI Will Boost Fintechs

• Personalized AI-based customer service is another advantage (becoming a new standard) with approx 45% of consumers now expecting personalized digital experiences whe it comes to their financial services.

3.  Blockchain as a Cross-Industry Solution

• Blockchain technology reduces cross-border remittance costs by as much as 60%, thanks to its ability to remove intermediaries and process transactions directly.  This savings potential is huge for the $750 billion remittance market.
• Blockchain’s secure, decentralized structure has reduced fraud cases by up to 30% in companies using it.
• Its versatility also extends beyond finance to industries like supply chain management and insurance who use blockchain to ensure transparency and accuracy in their operations.  (See: Investing in the Future of AI and Blockchain)

4.  IoT Payments Transforming User Experiences

• IoT-enabled payment devices such as wearables or connected cars are set to reach $6 billion in transaction value by 2028 with roughly 20% of consumers adopting these options especially in the retail and automotive sectors.  See:  Autonomous IoT Transactions and Micropayments
• Visa’s connected car technology allows drivers to pay for fuel directly from their vehicles, while Samsung’s wearable devices make payments as simple as a tap.
• Businesses benefit from real-time data insights that can boost sales by up to 25% through personalized offers and loyalty programs.

5.  Alternative Payment Methods (APMs) and Mobile Wallet Growth

• Alternative payment methods, especially mobile wallets are on track to overtake credit cards as the primary payment choice by 2028.
• Mobile wallets already account for nearly 60% of online transactions in Asia, showing their global growth potential.  However, the lack of compatibility between wallets (especially cross border) will limit usage until interoperability.

See:  The Role of Fintech in the Circular Economy

• It’s estimated that increasing wallet interoperability could boost transaction volumes by around 30% with companies like Apple Pay and Alipay leading the charge in wallet expansion.

6.  Central Bank Digital Currencies (CBDCs) in Cross-Border Payments

• Central banks are exploring CBDCs but most retail CBDCs face slow adoption.
• Wholesale CBDCs show promise in reducing cross-border transaction costs by 50% according to central bank estimates.
• China has issued over 180 million digital yuan wallets reaching $250 billion in transactions, while the European Central Bank is aiming for a digital euro by 2027.
• These efforts illustrate how countries are exploring CBDCs to make international payments faster and more cost effective.

7.  B2B Cross-Border Payments and Fintech’s Role in Efficiency

• Traditional B2B cross-border payments face high costs, delays, and FX fees, often adding up to 8% in extra expenses.
• Fintech solutions are addressing these inefficiencies by cutting out intermediaries and offering better exchange rates.
• Companies like Ripple and Wise save businesses around 20% in transaction fees.
• The B2B cross-border market is projected to reach $56 trillion by 2030, and fintech solutions are essential in making these transactions more efficient and affordable.

8.  Open Banking’s Evolution to Open Finance

• Globally, open banking is expected to grow to a $123 billion market by 2031, with platforms like Plaid and Moneyhub demonstrating the potential for open finance to enhance financial services.
• Data from a recent PwC study indicates that 72% of global Fintech investors favor open finance ecosystems due to their potential for customer retention and revenue growth.

See:  Canada’s Innovation Paradox – Strong Start, Missing Impact

• Canada lags behind in open banking adoption limiting its fintech sector’s growth as investors are beginning to look outside Canada for open finance opportunities. Embracing open finance could boost competition and consumer choice, opening doors for more innovative financial products.
• 63% of Canadian consumers are interested in services that aggregate their financial data for streamlined financial planning. However, only 15% of Canadian banks currently offer comprehensive data-sharing capabilities.
• The UK has led the way with over 7 million open banking users and a 15% year-over-year growth in payment transactions linked to open finance. Canada’s hesitant rollout could place it at a disadvantage if regulatory and technical hurdles are not addressed quickly.

9.  Digital Remittance Transformation

• Digital remittance solutions like Remitly and Xoom have significantly lowered transfer fees from traditional methods 7-10% to around 2-3% rates.
• Digital remittance is growing 10% annually, especially in areas with high migration rates such as Canada, offering an affordable alternative for underserved populations.
• Digital remittance platforms support financial inclusion by reducing fees which enables remittance families to retain more income for daily needs or investment.

10.  Financial Inclusion Through Innovative Payment Solutions

• Roughly 24% of the global population is still considered unbanked (typically in emerging markets).
• Mobile money and digital wallet services are addressing this gap.

See:  How Fintechs Are Tackling Financial Inclusion in Canada

• Greater financial inclusion through digital payments could add $3.7 trillion to emerging markets’ GDP by 2025.
• Kenya’s M-Pesa service exemplifies how mobile finance can provide essential banking services without traditional banks.  Other countries can follow suit by improving digital infrastructure.

11.  Insurtech and Embedded Finance Driving Financial Innovation

• Insurtech is growing rapidly with the market expected to hit $152 billion by 2030.
• Advanced data analytics let insurers offer custom policies, adjusting based on real-time user data.
• The offering of financial services by non-financial platforms via embedded finance is helping companies improve user experiences. For example, Shopify’s embedded financing options make it easier for small businesses to access funds directly on its platform with integrated services.

12.  Evolving Retail and Gig Economy Payment Models

• Personalizing retail experiences increases purchase likelihood by about 40%, making social commerce and omnichannel strategies more essential.
• Gig economy workers and small businesses want real time payments.  Half of gig workers prefer platforms offering instant payouts.
• Real-time payments also reduce administrative work for platforms so transactions run more smoothly and offer a better user experience.

13.  The Resilience and Decline of Cash Usage

• Cash is losing ground worldwide as digital payments rise with some countries seeing cash used in less than 5% of transactions.
• Having said that, cash still plays a key role in areas with limited digital access or where people have less trust in banking institutions.
• While cash usage may continue declining, local economies and infrastructure gaps mean it won’t disappear anytime soon.

Closing Thoughts

The convergence of emerging technologies and their adoption globally reveal major shifts in global payments representing significant opportunities for fintechs as AI, IoT, blockchain, digital banking, open and embedded finance broaden access to financial services, making corss-border transactions faster and easier than ever before.

See:  Industry Reports and Research

For fintech founders and investors, the survey uncovers prime areas for growth.  Companies need to prepare for a more connected financial ecosystem and high bar for speed and inclusiveness to meet today's demand. Integrating these technologies and tools is about building a future of finance that's user-friendly, secure, and accessible.

The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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