- What’s different about new international low-value payments networks like SWIFT GO, IXB, and Nexus, and how are they already revolutionising cross-border payment practices for consumers, businesses, and financial institutions?
- What should banks be including in their investments on domestic instant payment development now, to take advantage of these new global interconnections in the future?
- What kinds of cost savings and revenue enhancement opportunities are available to financial institutions willing to expand their horizons to meet rising customer demands for international real-time payment solutions?
- How will the simplicity and speed accompanying new ISO20022 standards and richer data-exchange functionality offer new opportunities to compete – even for medium-size and smaller institutions?
- What’s to gain and what’s to lose by financial institutions ‘taking the plunge’ now to embrace the costs as well as potential benefits of these changes, rather than waiting ‘til later?
Back in 1969, when mankind had just stepped foot on the moon, the banking world was creating its own moon landing, a global network for moving money based on unified standards and the power of network banking. This has served the industry and its clients well, resiliently ensuring that global commerce became a reality. But, just as moon landings are no longer the province of a single agency, the same is becoming true of cross-border payments.
Three major evolutions are driving this next phase of cross-border: ISO 20022 adoption; proliferation of domestic real-time payments; and the global communications backbone joining hyperscalers through lightning-fast networks. ISO 20022, driven ironically by the Swift network that the challengers seek to replace, is an interoperability enabler. While variances exist in mandates, timelines and even data from country to country, alignment with a common data language allows these transactions to be switched rapidly and new networks to serve global markets have appeared.
Indeed, it’s a brand-new world for payments now, powered by the explosion of ecommerce and international trade, yet it’s still changing all the time. Consumer and business customer expectations are mounting, with everyone demanding higher speed, perfect execution, zero-downtime, and 24x7, 365-day support. Financial institutions are faced with tough decisions on where and how much to invest to ensure their systems are capable simply of processing and supporting ‘local’ instant payments and playing by all the new rules in their home territory alone. SEPA members, for example, face an estimated cost just for Instant Credit compliance preparation of around EUR3-5 million per institution.
What if spending all that money wasn’t just viewed as a cost, but instead as a ticket to open up new and exciting opportunities for financial institutions to expand revenue and extend their customer base? That’s exactly what the new SWIFT Go, IXB, and Nexus alliances now being developed are promising those brave enough to lead the way by interconnecting domestic instant payment capabilities with emerging, more efficient, customer-pleasing regional and global real-time networks. Like during the video format wars of old (VHS v Betamax v V2000), questions remain as to which of these three powerfully-backed upstarts will ultimately succeed. However, they will all offer member banks dramatically lower cross-border transaction costs than current standards, and that’s just one of many potential ‘pluses’ available for taking the long view on current system enhancement investments. Or not, in which case, the question is: are domestic-only financial institutions prepared to be left behind as the payments world keeps getting smaller, and customer expectations for simple transaction and network interconnections keep growing as projected?
Sign up for this Finextra webinar, hosted in association with CGI, to join our panel of industry experts who will discuss the compelling benefits of financial institutions making the most of required domestic instant payment system investments.