Canada, other developed economies to usher in the digital banking wave – report

The global digital banking market is predicted to exceed US$30 billion in five years

Canada, other developed economies to usher in the digital banking wave – report

Canada is anticipated to be one of the main drivers of growth in the global digital banking market over the next five years, according to a new report by Global Industry Analysts.

“Personal cheques and hard currency are becoming less popular, while increasing investments in fintech solutions have pushed up innovations such as PayPal, Square, Apple Pay, and cryptocurrencies, thereby boosting the cashless age,” GIA said. “Contactless card payments have made even smaller value transactions/payments faster and easier.”

The global digital banking market is projected to reach roughly US$30.1 billion by 2026. Substantial growth is expected to be seen in Canada (13.1%) and Japan (11%) over the next five years, while the United States and China are expected to hold the largest shares in the global market, at 28.78% and 19.9%, respectively.

Read more: Is the reality of open banking in Canada just beyond the horizon?

Another strong segment that will propel digital banking is investments, with the sector expected to reach $5 billion by 2026, GIA said.

“In the global investment banking segment, the US, Canada, Japan, China, and Europe will drive the 13% [compound annual growth rate] estimated for this segment,” GIA said. “These regional markets, accounting for a combined market size of US$1.8 billion in the year 2020, will reach a projected size of US$4.2 billion by [2026].”

This evolution will come about as a result of the growing burdens of cash usage, GIA said. These hindrances include costs such as currency printing and the deployment/maintenance of ATMs.

Physical money also brings with it a “high risk of money laundering, higher ability to manipulate cash transactions for tax avoidance, breeding of large unorganized sectors that create ‘shadow economies’ that make no contribution to a economy’s GDP growth, inability of the government to impose fiscal controls, reduced productivity of the banking sector in terms of foregone interest, reduced corporate dividends, and high counterfeiting costs, among others,” GIA said.

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