Cash and the cheque continue to decline as methods of payment, but payments from mobile devices have surged.
The number of payments made from smartphones and tablets will grow by 60 per cent this year and next year across the globe, according the World Payments Report by Capgemini and Royal Bank of Scotland.
Philip Gomm, director of core banking at Capgemini and a co-author of the report, said the rate of growth of so-called M-payments may grow at an even higher rate in Australia given the deep smartphone penetration and take-up of technology.
Australia saw the number of electronic transactions in 2013 rise by 12 per cent, the report says, as consumers continue to move away from cash and cheques.
Financial services "is in a significant period of evolution, as we see compound growth rates in electronic transactions", Mr Gomm said.
These seismic shifts being brought about by technology are forcing all banks to elevate payments issues to board level and transform information technology systems in order to maintain customers, who are increasingly expecting slicker experiences in the digital domain.
"Renovating payments infrastructure is absolutely critical to defending the bank account, which is the new battle ground that is forming," he said.
"Innovation in customer facing transactions is now driving the need for transformation at the back end."
While a transaction and the payments have historically been separate steps, these are now converging and becoming intertwined.
The arrival of near field communication technology, which allows for contactless payments, is putting pressure on banks as credit card customers and potentially retailers using store value accounts seek to take business away from traditional bank accounts.
"The banks will argue that so long as the primary vehicle for their customer funds remains their bank account, they are less inclined to be challenged by the alternative solution providers. To a degree, that argument is sustainable, but over the long term, banks have to offer the same level of convenience to encourage you to stay with them and not risk disintermediation."
Apple is using its clout to take a share of bank revenue with its new iPhone 6 containing a payments system in the form of "Apple pay". Roy Morgan Research said on Monday that over 1.5 million Australians intended to purchase an iPhone in the next 12 months, and with nearly one-third of them likely to make payments through the phone, this could potentially have an adverse effect on bank fee revenue.
Apple Pay is expected to be available in Australia towards the end of 2015.
The World Payments Report said a large number of non-banks could enter the market and innovate around the customer-facing segments. The report also says that as the total number of non-cash payments might reach 800 billion by 2024 (up from 365 billion transactions in 2013) "banks' share of this total may continue to decline and could represent only half by that date".
"Banks may need to share more parts of the value chain with non-banks, as regulatory and industry changes brings a new landscape."
