Can banks stem the exodus of clients?
The new World Payments Report 2026, published by Capgemini Research Institute, offers a sobering insight for banks attending this year’s Sibos. It uncovers a looming crisis for traditional banks, with 40% of small and mid-sized merchant businesses planning to shift their payment services to nimble PayTech companies within the next 12 months.
Merchants are reportedly losing approximately 2% of their total revenue to payment fraud and enduring up to nine hours of downtime annually due to unreliable systems. These frustrations are fueling the move towards PayTechs, which offer quicker onboarding – often under 60 minutes compared to banks’ seven-day average – and more advanced technological solutions. PayTechs are also leading the innovation race, with 60% adopting Generative AI across their operations, significantly outpacing the 41% of banks.
Despite 66% of merchants still preferring traditional providers for their broader financial needs, banks have deprioritized merchant services, citing margin compression and high operational costs. This has created a void that PayTechs have readily filled. While 70% of merchants prioritize high payment success rates and reliable infrastructure, only 19% of banks are confident in their ability to deliver these essential services.
Jeroen Hölscher, global head of Payment Services at Capgemini, warns, “With 40% of merchants on the move, the message is clear: banks risk falling out of the merchant ecosystem entirely.” He emphasizes the need for banks to eliminate friction, embrace Generative AI, and center their strategies around merchant needs to remain competitive.
The report also notes a significant global shift in payment methods, with instant payments and digital wallets gaining traction, rising from 13% in 2020 to 25% in 2024. Asia-Pacific is leading this surge, while the share of card transactions is expected to decline, even as the overall volume of non-cash transactions is projected to exceed 3.5 trillion by 2029.
Banks still have an opportunity to regain lost ground by leveraging their strong brand reputation, perceived stability, and broader financial product offerings. Merchants indicate a willingness to switch back if banks can provide embedded, industry-specific value-added services and match the cost-efficiency of PayTechs.
