Debit Cards + High-End Savings: Global Market

Part
01
of four
Part
01

Global Market Size: High-End Savings

After an exhaustive search, the size of the global consumer high-end savings products market was not found and could not be estimated. However, the research team has provided the related findings that were gathered in the course of this research. In 2018, the total assets of the global banking industry were worth $122.8 trillion, return on capital (ROC) was 13.7%, and return on equity (ROE) was 9.6%.

Related Findings

  • According to the Banker, the total assets of the banking industry worldwide was $122.8 trillion in 2018.
  • The ROC of the global banking industry was 13.7% in 2018. While the ROE was 9.6%.
  • Ten of the best high-yield savings accounts based on annual percentage yield (APY) in April 2020 are:
    • Live Oak Bank — 1.75% APY
    • Vio Bank — 1.75% APY
    • Marcus by Goldman Sachs — 1.70% APY
    • HSBC Direct — 1.70% APY
    • Comenity Direct — 1.70% APY
    • Citizens Access — 1.70% APY
    • Popular Direct — 1.70% APY
    • UFB Direct — 1.70% APY
    • CIT Bank — 1.70% APY
    • BrioDirect — 1.65% APY

Research Strategy

To determine the size of the global consumer high-end savings products market, the team commenced with a thorough search through industry reports from leading consultancy firms such as Deloitte, expert analyses, and publications by leading companies in the consumer banking industry such as Citibank, Bank of America, Capital One Bank, and others. However, we did not find any relevant information on the size of the global consumer high-end savings products market. All we could find were reports on the best high-yield savings accounts. Since there is no publicly available information on the size of this market, we attempted to triangulate the size of the market. First, we sort to determine the share of the different market segments of the global banking industry since high-end savings is a segment of the banking industry. We hoped to use the share of the market segment to determine the size of the market from the global size of the banking industry. However, while we found useful data related to the global banking industry, no data on the share of each market segment of the industry was publicly available. As such, we could not proceed with this attempt. We also searched for market reports specific to retail/consumer banking to find any hint on the segmentation of this market but did not find any useful information related to high-end savings. After an exhaustive search, the reason for the unavailability of useful data on the size of the global high-end savings products could be that no consultancy has analyzed this market. Where there is a consultancy that has, they probably have not made such data available to the public.
Part
02
of four
Part
02

Global Market Size: Consumer Debit Cards

The market size of global consumer debit cards, including purchases for goods and services, and withdrawals is estimated to be about $26.14 trillion in 2018. The number of consumer debit cards in 2018 is estimated to be about 13.67 billion and is forecast to reach approximately 14.76 billion by 2020.

Global Market Size of Consumer Debit Cards

  • The Business Research Company defined consumer debit cards as "payment cards that are linked directly to a customer’s bank account and can be used to make purchases and withdraw cash."
  • As of 2018, the market size of global consumer debit cards, including purchases for goods and services, and withdrawals is estimated to be about $26.14 trillion ($33.73 trillion * 0.775).
  • The current number of debit cards worldwide is estimated to be about 14.76 billion.
  • In 2018, there were about 13.67 billion (17.64 * 0.775) debit cards globally.
  • From 2017 to 2018, the number of debit cards increased by 1.03 billion.
  • In 2016, there were approximately 9.94 billion (14 billion * 0.71) debit cards worldwide.
  • The share of debit cards in the total number of payment cards in circulation worldwide grew from 76.89% in 2017 to 77.46% in 2018.
  • In 2016, the debit card segment accounted for 71% of the total card volume worldwide, up from 70% in 2015.

Global Consumer Credit and Debit Cards Market Statistics

  • The market size of global credit and debit cards, including purchases for goods and services, cash advances and withdrawals, was $33.73 trillion in 2018, it grew by 19.1% from 2017.
  • The number of payment cards worldwide is forecast to grow from 14 billion in 2016 to 17 billion by 2022 at a CAGR of 8%.

Research Strategy

After an extensive review of industry reports and media articles on global consumer debit cards market by reputable research firms and media houses such as Nilson Report, Market Watch, Payments Industry Intelligence, the Business Research Company and Market Research information on the market size of the global consumer debit cards industry not could in the public domain, the information is available behind paywalls. However, we have triangulated a proxy for the size of the global industry using data points (global consumer payment cards size in terms revenue and volume of cards, and market share of consumer debit cards) readily available on the public domain as outlined below:

Global Consumer Debit Cards Market Size Estimation

Global consumer debit cards market size = global consumer payment cards size * global consumer debit cards market share
Global consumer debit cards market size (2018) = $33.73 trillion * 0.775 = $26.14 trillion.

Estimation of the Number of Debit Cards Worldwide

Firstly, we determine the number of global payment cards for 2019 and 2020 (final value) to be approximately 17.64 billion and 19.05 billion, respectively using an online Omni calculator, 14 billion (2016) as the initial value, 8% as the CAGR, three years (2019 – 2016) and four years (2020 – 2016) as the number of periods for 2019 and 2020, respectively.

Then, to triangulate the total number of debit cards worldwide in 2020, we assume the debit card segment of the global payment cards industry maintained its market share of 0.775 from 2018 through 2020, since the segment was forecast to be the fastest-growing segment and drive the growth of the global payment cards during this period. Hence, determine the number of debit cards in 2020 adopting this formula:
Number of debt cards = total payment cards * market share of debit cards
Number of debt cards in 2018 = 17.64 billion (2018) * 0.775 = approximately 13.67 billion.
Number of debt cards in 2020 = 19.05 billion (2020) * 0.775 (2020 assumed market share) = approximately 14.76 billion.
Part
03
of four
Part
03

Market Growth: High-End Savings

After an extensive search through industry-related websites, third-party research reports, and industry statistic portals, details about the global growth rate for consumer high-end savings products do not appear to be available in the public domain. However, the research team was able to gather valuable insights about the global growth rate of consumer banking (of which high-end savings products are a part), factors that support the industry growth, most popular high-end savings products, and key players that have introduced high-end savings products for their clients. We have presented below a detailed overview of these useful findings.

Helpful Findings

  • The global consumer banking industry, also known as retail banking and which includes consumer high-end savings products, is forecasted to grow at a CAGR of 4.2% from 2018-2025. Historically, the industry has grown at a CAGR of 4.3% from 2011 to 2017.
  • Asia-Pacific region is expected to be the fastest-growing market for consumer banking and is forecasted to grow at a CAGR of 6.0% from 2018-2025. This is followed by the Latin American consumer banking market which is expected to grow at a CAGR of 5.9% followed by the Middle East and Africa at 4.6%.
  • Relative to other regional markets, the Western European consumer banking industry is expected to witness the least growth rate. The market is forecasted to grow at a CAGR of only 1.9% from 2018 to 2025.
  • In recent years, there has been an increasing trend among global community and regional banks to leverage high-yield savings account and other high-yield savings products to build a national presence and perk up their deposit base. This trend is likely to underpin the growth of consumer high-end savings products.
  • The recent outperformance of high-yield savings products as compared to stock markets is also likely to add on to their popularity and growth. In 2018, the consumer high-end savings products such as CDs and high-yield savings accounts outperformed the US stock market for the first time in over a decade. These products yielded 2.9% to 4% returns as compared to negative returns from the stock markets in 2018.
  • In Canada, the high-interest savings ETFs, a high-end savings product that primarily invests in high-interest deposit accounts with Canadian banks, credit unions, or trust companies, witnessed a 130% growth in AUM in 2019 as compared to 2018 and a 460% growth as compared to 2017.
  • As per the data from Bankrate, the top five high-yield savings accounts in the US based on annual percentage yield (APY) in April 2020 were from Live Oak Bank (1.75% APY), Gateway First Bank (1.75% APY), Vio Bank (1.75% APY), CIT Bank (1.75% APY), and Comenity Direct (1.70% APY).
  • Raisin, a Germany based fin-tech, is expected to introduce an online marketplace in the US that aggregates high-yield savings accounts and CDs. The model witnessed a huge growth in Europe and managed to garner 13 billion euros ($14.5 billion) in deposits brokered across 75 partner banks since 2013.
  • Credit Karma, an American personal finance company, also launched a high-yield savings account in 2019 in order to leverage the increasing growth opportunities in the consumer high-end savings products market. The savings account "offers a savings rate of 2.03 percent APY, which is about 22 times higher than the average of national accounts". In addendum, it does not have any fees or minimum balance requirements.

Research Strategy

The research team began with scouring through the various third-party industry reports from Deloitte, Mckinsey, Business Insider, Market Radar, and Grand View research to search for data on the global growth rate for the consumer high-end savings products market. However, all the information found was for global consumer banking (of which high-end savings products are a part) industry as a whole and no pertinent growth data specific to consumer high-end savings products could be found. The team then searched through the various media articles such as Forbes, WSJ, Bloomberg, Live Mint, Reuters, PR Newswire; statistical databases such as Statista, and finance industry blogs such as 'The American Banker', 'Financial Brand', 'Finance Grab', among oters but again no relevant data could be located. All the information found was centered around the best high-yield saving accounts and their features.

In the absence of any pre-compiled information, we tried to triangulate the same using the current and forecasted consumer high-end savings products industry market size and leverage the same to determine the industry growth rate over the next 3-5 years. For example, if the current industry size is $X million and is projected to reach $Y million over the next 5 years, the 5-year industry growth rate (CAGR) can be computed as [(Y/X)^(1/5)-1]*100. However, extensive research through the above-mentioned sources did not reveal any market size data for the consumer high-end savings products industry. We were able to just locate information on the market size of the overall global consumer banking market and hence this triangulation attempt did not materialize. We also tried to alternatively triangulate the same by using data from the players with the highest market share in the global consumer high-end savings products market. The idea was to aggregate the revenue growth rate from consumer high-end savings products' segment for these players and then compute an average CAGR for the top players and use it as a proxy for industry growth as top players are most likely to lead the bulk of growth in any market. While the team was able to successfully determine some key players in the consumer banking industry, no information specific to the revenues from the consumer high-end savings products segment could be found for them and hence even this triangulation attempt did not prove fruitful.
Part
04
of four
Part
04

Market Growth: Consumer Debit Cards

Research findings show that the number of global payment cards, forecasted to reach 17 billion by 2022 is driven by the growth of debit cards. International Visa and Mastercard debit cards in force are growing at a CAGR of 6.88%. Debit cards are expected to account for 73% of all global payment cards by 2022.

Consumer Debit Cards: Market Growth

  • According to the Global Payment Cards Data and Forecasts to 2022 study, the number of payment cards (debit, credit, charge, and prepaid) globally was 14 billion in 2016 and is forecasted to reach 17 billion by 2022 driven by the growth of debit cards.
  • Study findings show that debit cards are the most common payment card type by far, accounting for 71% of the global total in 2016 and is expected to increase up to 73% by 2022.
  • A report summary from Card Flash states that Visa and Mastercard international debit cards in force (CIF) increased by 5.5% YOY to 2697 million in Q3 2019 from 2556 million in the previous year.
  • It further states that Visa and Mastercard international debit CIF (owning roughly 48% of the debit card market) is growing at a CAGR of 6.88%.
  • The World Payments Report 2019 has reported that "debit cards were the fastest-growing non-cash payment instrument, with transactions up by 17% in 2017, ahead of credit cards (11%) and credit transfers (10%). "

Other Findings

  • While the adoption of debit cards is accelerating, credit card growth is declining as a result of economic instability and the negative impact of interchange fee regulations on banks.
  • The high expected growth rate of debit cards is mainly due to financial inclusion initiatives in developing regions such as the Middle East, Asia-Pacific, Africa and Latin America. Business Insider states that according to the World Bank, 2 billion lack access to banking services, indicating a massive market opportunity.
  • A report by The Payers states that while India and China are leading e-commerce expansion, there is low penetration of debit and credit cards, making it challenging for merchants to access these markets. However, according to Mckinsey and Company estimates, nearly half of all global debit card spending now occurs in China alone.
Sources
Sources

From Part 02
Quotes
  • "In the recently published Global Payment Cards Data and Forecasts to 2022 study, it reveals that the number of payment cards worldwide increased by 8% to 14 billion in 2016. This is forecast to rise by 22% to 17 billion by 2022, driven by an increase in bank account holding in large but developing markets such as China and India."
  • "According to the study, debit cards are by far the most common card type, making up 71% of the worldwide total, up from 70% in 2015. This share will rise further, mainly as a result of financial inclusion initiatives in developing markets in Asia-Pacific, the Middle East and Africa and Latin America."
Quotes
  • "The global cards market was valued at over $250 billion in 2017. North America was the largest region in the cards market in 2017, accounting for around 60% of the global market. The USA was the largest country in the market in 2017, accounting for nearly 55% of the market."
Quotes
  • "The number of debit cards in circulation grew by 1.03 billion. The market share of debit cards of total cards in circulation was 77.46%, up from 76.89%."