Payments shift from utility to growth driver, KPMG report finds

MUMBAI: Money may talk, but in today’s economy, it’s also thinking, learning and demanding better. A new report by KPMG International suggests that payments are no longer just a backend function but a frontline growth lever, as banks and retailers rethink how money moves in an increasingly real-time, digital-first world. Titled Partnering for Payment Modernisation, the study draws on insights from 1,000 banking and retail executives globally and highlights a clear shift: payments are now central to customer experience, operational resilience, and competitive differentiation.

For India, where real-time payments already operate at population scale, the conversation is moving beyond access. The focus is now on building systems that are resilient, interoperable, and ready for innovation capable of handling rising transaction volumes and more contextual, embedded commerce.

The data points to growing investment momentum. Around 60 per cent of banks expect to increase spending on payment modernisation over the next year, while 54 per cent of retail executives see it as critical to their future. Yet alignment remains a challenge only 53 per cent of retailers believe their banking partners fully understand their modernisation goals.

Collaboration is emerging as the new currency. About 51 per cent of banks say future leaders in payments will be those with the strongest partner ecosystems, while 47 per cent of retailers expect to work with multiple payment service providers over the next five years.

Still, the path forward is far from frictionless. Around 66 per cent of both banks and retailers cite legacy infrastructure and cost constraints as the biggest barriers to transformation. In response, organisations are increasingly turning to modular, API-driven systems and partnership-led models to balance agility with reliability.

In India, this shift is already visible. Banks are positioning themselves as platform enablers, while retailers are using modern payment tools to reduce checkout friction, improve conversion rates, and build trust in a crowded digital marketplace.

Budget trends reflect cautious acceleration. Retailers expect their payment modernisation budgets to rise by 2.5 per cent, while one in five banks anticipates a sharper increase of 5 to 9 per cent.

The report also underscores a broader reality: modernisation is no longer just about technology. Leading organisations are aligning business, tech, and risk functions to deliver seamless omnichannel experiences and unlock richer data insights.

As Dr Puneet Mansukhani of KPMG notes, consumer expectations are setting the pace leaving little room for delay. In a payments landscape where speed, convenience, and choice are non-negotiable, the message is simple: adapt quickly, or risk being left behind at checkout.