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The future of frictionless, instant cross-border payments

Paul Jennekens

Manager Marketing Worldline Financial Services

12 October 2021

The future of frictionless, instant cross-border payments

The payments landscape continues to change and evolve, accelerated by the pandemic. But also, competition from emerging entrants, transformative technologies such as API and DLT, new monetary mechanisms like stablecoins and CBDCs expand the focus on digitisation. The pace at which the landscape is changing is rapid.

Change to collaborate
This context is one of main reasons why three experts from the financial services industry joined a virtual panel on the first day of Sibos 2021. Moderated by Joy McKnight, Editor at The Banker, they discussed the evolution and future of frictionless, instant cross-border payments. One differentiator certainly arose during the panel session: having the ability to quickly adapt to changing circumstances, as well as collaborating within the ecosystem, is very important in this new world.

“There's been a fundamental shift to digital at multiple levels. Consumers move to embrace digital payments to a greater extent than we'd ever seen,” said Charlotte Hogg, CEO of Visa Europe. She mentioned that the move to contactless has been huge in Europe. I agree in that sense that the pace of change is fundamentally accelerated. But it’s also important to keep in mind that consumers need to trust the payments they make. A rightful question that was also raised by Hogg later.

It is safe to say that instant payments, as well, are gaining more ground. And not only on the European continent. Michael Gorriz, CIO of Standard Chartered Bank, mentioned an example of their activities in the Asian market. Where it once started in a national environment, instant cross-border payments have grown exponentially in Singapore. So now the real question is: how do they take it from there? For Gorriz, new solutions should easily span between retail and wholesale as a holistic answer.

Challenges and opportunities
In order for the industry to keep innovating the customer experience and the technology available, collaborations and partnerships are a necessity. A strong ecosystem makes it possible to offer new services to participants and, the biggest asset of all, the customer. For Ather Williams, Head of Strategy, Digital and Innovation at Wells Fargo, those alliances are a distinctive factor: “We have ramped up our partnerships in the past two years to cater to our customers even better.”

Through legislation, the payments landscape also further evolves. The G20 made enhancing cross-border payments a priority last year and the Financial Stability Board released a road map to reduce the friction in payments. Important steps, as we need to set apart as to what the expectations for the future should be. “Is everyone using the right kinds of data, and can they protect that information? Therefore, I think it’s a very proper space for the G20, central banks, and policymakers to be involved with,” Hogg stated.

The digital identity – and the friction around it – is another driving factor behind the evolving landscape, according to the panellists. One with no definite and clear answer. It raises challenges for the present and the future, but also brings along new opportunities to further innovate frictionless, instant cross-border payments. There is a local benefit in being global – and now it is time for the complete ecosystem of the financial industry to take away the friction and collaborate to connect all payments across the globe in just a slight millisecond. The panel today showed a small, but promising look into what’s ahead of us.