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The global payments industry is to reach US$2tn by 2020, after posting record growth in 2017.

In its annual survey of the market, consultancy McKinsey found that global payments revenues soared by 11% last year, the biggest leap in the 12 years in which it has been reporting. It will surpass US$2tn by 2020 and US$3tn within five years, the US firm predicts.

Speaking to a full auditorium at Sibos in Sydney today, head of McKinsey’s payments practice, Phil Bruno, described the growth as “pretty incredible”.

The spurt happens at a time in which payments are accounting for more of banks’ revenue than ever. Whereas they traditionally provided around a third of income, that figure has shot up to 43% in 2017.

While the volume of payments arising from cross-border trade transactions is small, global transaction banking accounts for almost half of the total payments value. Trade finance and cash management solutions are at the core of this growth, with McKinsey expecting banks to focus on these products even more in the future.

Since the financial crisis of 2008, global fee-based revenue for transaction banking products has grown 9% per year. Asia Pacific is the largest market and has been growing at a remarkable 20% per year over the past five years.

In Asia Pacific, cross-border transactions (8%) account for more of the total industry than in any other region. Banks can generally command high fees for these sorts of payments, particularly in emerging markets. In Asia, payment costs account for 3.7% of regional GDP, second only to Latin America, where the ratio is 4.4%.

North America, by comparison, is driven mainly by credit card payments, a reflection of the mature and highly-leveraged consumer market there. Cross-border payments are cheaper in North America too, taking a 2.2% portion of regional GDP, where in Europe the figure is 1.5%.

While these figures are undoubtedly lucrative, they are also fragile: high margins like these are ripe for disruption. Fintech vendors can significantly trim the costs of payments in emerging markets.

In Asia, there are more and more payment providers entering the market, although the most significant penetration has been on the consumer end of the market. In Latin America, conversely, e-invoicing companies have become more prevalent in commercial payments.

These “digital attackers and other fintech firms are chipping away at barriers to entry”, McKinsey says, and will provide competition to banks in the future, particularly those which don’t provide fast and efficient services.

“There is significant risk that banks will cede important aspects of the business to emerging digital challengers if they do not take advantage of recent advances in technology, regulatory changes, and new partnership models,” the report reads.

It’s surely no coincidence that banks have been teaming up into consortia across the fintech spectrum. The view appears that by collaborating, and sharing resources and ideas, banks can essentially own part of the trade cycle.

An example of this is the Trade Information Network, previously known as Project Wilson, a cloud-based depository for invoicing and purchase orders.

While the services are not dissimilar to those offered by fintech providers such as GT Nexus or Tradeshift, the seven launch banks will be onboarding their own clients, who will be able to select from a range of banks from which to obtain financing. This network effect could provide cheaper funding and potentially rival fintech companies on price.