The global financial services sector continues to grow as more progressive organizations seek to gain a meaningful competitive advantage from their digital transformation initiatives.

Across the globe, many regions are seeing a significant rise in ‘instant issuance’ activity from a physical and digital perspective, from both traditional and emerging innovative banking institutions.

Digital Payments Market Development

Customers increasingly demand instant access to banking services, with physical instant issuance enabling them to leave their branch equipped with a ready-to-go payment card.

According to the latest worldwide market study by ABI Research, the market for instantly issued physical payment cards will increase from 243.2 million shipments in 2022 to a forecast of 471.1 million in 2027.

“Critically, instant issuance of payment cards is no longer limited to the physical,” said Sam Gazeley, industry analyst at ABI Research.

Indeed, the growing digitization of payments, increasing data security, shifting nature of business spending patterns stemming from the pandemic, and educating around their advantages is causing instantly issued digital-first payment cards to gain traction.

According to the ABI assessment, the so-called new NeoBanks are providing an agile and flexible approach to online financial services by offering compelling and innovative digital-first solutions.

The payments market is converging with other smart card verticals related to ticketing and access control in markets like retail, travel, and education.

This is driving new entrants into the payments market by players for which instant issuance experience is already common.

“However, ABI Research believes that neither the physical nor the digital side of the market is taking share from the other at this point, and they are not expected to become competitive over the forecast period ending in 2027,” Gazeley explains.

What ABI analysts refer to as ‘Phygital banking’ is a clear and emerging payment and financial services trend.

Combining the separate physical and digital offerings into an interconnection of incumbent and digital business services opens an experience that places the customer at the top of their minds.

Outlook for Emerging Payment Applications Growth

The resulting customer journey across various banking channels — both physical and digital — enables financial institutions to protect their relationships with customers, as it relates to traditional banking.

Furthermore, ABI believes that they can potentially remain in competition against Neo and Challenger bank brands through their respective customer acquisition strategies.

That said, I anticipate card vendors and financial service organizations can map out current and future product requirements as it relates to new instant issuance projects. Moreover, ecosystem service providers can make informed decisions related to product development investments by aligning with regional requirements.