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Managing European Consumer Payments Businesses through the Euro Crisis

BY FERNANDO BETANCOR, LUCA DONDI, MARTIN SCHMIDT, AND MIKE SMITH

While it is much too early to predict exactly how the Euro crisis will ultimately be resolved, one thing is clear—we are entering a new economic reality in Europe: one that will profoundly shape the policies of governments, the behaviours of consumers, and the strategies of retail banks.

This report argues that financial institutions can leverage their payments business as a revenue and liquidity enabler and subsequently describes eight specific opportunities:

Cost reduction
1. Reduce funding costs through deposit growth
2. Reduce funding requirements through advanced credit line strategies
3. Reduce credit risk with data-driven risk management

Growth from targeted markets
4. Drive high margin payment growth within targeted segments
5. Capture growing bankable populations with payment-centric propositions
6. Extend electronic payments into the shadow economy

Enhanced profitability via innovation
7. Defend profitability by evolving the economic model of payments
8. Innovate in mobile payments