The Future of Payments and the Digital Economy

1. The Search for Simplicity Drives the Rise of the Orchestration Economy

With the increasing complexity of business and growing concerns over fraud, businesses are embracing orchestrators who connect a portfolio of relevant features that they assemble with customers.

These "uber orchestrators" provide access to those capabilities seamlessly and make simplicity a source of monetary value.

Payments orchestration was the warmup act for the orchestration economy, but it is evolving into more than a giant gateway for local routing and payment options.

We observe credit intermediaries aggregating access to multiple lenders, data orchestrators connecting item-level data from merchants with issuers and money mobility and embedded banking orchestrators, all using a "front door" approach.

2. Consumers, Not Banks, Force Convergence of Payments and Identity

Consumer priorities have shifted from convenience and efficiency to robust fraud protection and innovative security measures due to alarming fraud statistics.

Banks have reported that fraud losses have more than doubled since 2023, highlighting the escalating threat.

This is forcing banks to make a passwordless future more than a talking point and use advanced technologies to make identity an embedded part of the payments and banking experience.

Over half of consumers now indicate they would consider switching banks if scammed, signaling a fundamental change in how financial institutions are perceived.

3. FinTechs Fight With Walmart Over Banking the Middle Class

About one in every four U.S. consumers has an account with a FinTech bank, and roughly 47% of those use it as their primary bank account.

In 2025, these challenger banks will have a new challenger: Walmart, with One.

Walmart's hope with One is to turn its customer base into a mobile ecosystem, leveraging its 100 million weekly customers.

One can use the connectivity Walmart has with brands to disrupt how FinTechs make money by offering a business model that doesn't rely on investor checks to cover up shortfalls.

4. Logistics Become the Digital Economy's Silent Disruptor

The rise of ultra-efficient logistics will turn physical stores into relics for many product categories as same-day delivery evolves into same-hour delivery.

Amazon and Uber are two examples of companies significantly investing in logistics, AI, and transportation management systems to make their core businesses more efficient.

Self-driving technology is also capturing investor attention, with companies reimagining every aspect of how goods move between endpoints.

5. Regulation Gets Rightsized

The incoming administration's approach to regulation is expected to create a more favorable environment for businesses, particularly small enterprises.

This shift towards a pro-business stance could lead to a more dynamic business landscape and force a commitment to regulation that helps businesses operate efficiently while protecting consumers.

Regulators are expected to respect the difference between providers that align consumer and business incentives and those who disregard the law.