Partnerships Key to Unlocking Value in Payments Space: KPMG International

Why It Matters

Coordinated ecosystems are crucial for firms to avoid falling behind competitors and to meet growing consumer demand for fast, low‑friction payments.

Key Takeaways

• 54% retailers view modernization as critical
• Only 45% say banks deliver tailored solutions
• Banks plan 5‑9% budget hikes this year
• Legacy systems hinder 66% of banks, 69% retailers
• Partnerships seen as key to future payment winners

Pulse Analysis

The payments landscape is undergoing a seismic shift driven by consumer expectations for instant, secure, and frictionless transactions. As digital wallets, contactless cards, and real‑time settlement become the norm, traditional banks and brick‑and‑mortar retailers face pressure to upgrade legacy systems that were designed for slower, paper‑based processes. Fintech innovators and large technology firms have accelerated this evolution, forcing incumbents to either adapt quickly or risk losing market relevance. In this context, payment modernization is no longer a nice‑to‑have project but a strategic imperative for survival.

KPMG’s "Partnering for payment modernization" report highlights that collaboration across the ecosystem is the most effective way to overcome the high costs and technical debt that plague both banks and retailers. The survey of 500 banks and 500 retailers reveals a modest budget uplift—2.5 % for retailers and up to 9 % for a subset of banks—but also shows a disconnect: only about half of retailers feel their banks understand their modernization goals, and less than half report proactive, tailored solutions. Legacy infrastructure remains a pain point for 66 % of banks and 69 % of retailers, while fraud prevention and customer experience dominate the strategic agenda as firms mature their capabilities.

For industry leaders, the findings translate into a clear action plan: build open, multi‑party partnerships that include technology providers, fintech startups, and regulators. Such ecosystems can spread risk, accelerate time‑to‑market, and unlock shared expertise, ultimately delivering the cost efficiencies and innovative payment experiences consumers demand. Companies that prioritize ecosystem development are poised to become the next winners in the payments arena, while those that cling to siloed, vendor‑centric models risk obsolescence.