Andy Elliot is the Vice President of Product Strategy at EvonSys.
When I needed to transfer funds internationally a few years ago, my bank’s timeline was five days (with high fees) and the exchange rate didn’t exactly favor me. Looking for alternatives, I found a fintech service that made the transfer much faster, with a better rate and lower fees. Like many consumers, I opted for the fintech route.
That experience shaped my view on traditional banks and cross-border payments. It’s not just about competing with fintechs—it’s about delivering an experience that truly meets customer needs. Having worked in the cross-border payments space, particularly in retail banking, I’ve seen the complexities that continue to impact consumers and financial institutions alike. Cross-border payments are still bogged down by regulatory demands, technological gaps and transparency issues.
But Juniper Research suggests that the percentage of instant cross-border B2B payments will rise by over 40% by 2028, amounting to $124 trillion in B2B payments alone. The adoption of digital payments in developing countries is a main contributor to this rise.
One thing is clear: It’s time we look at how banks can rise to meet the challenge of cross-border payments.
Challenges With Cross-Border Payments In Traditional Banking
If you’ve ever sent money internationally through a wire transfer, you know the drill: Once you hit send, you have little to no visibility on your payment’s journey. It’s like shipping a package without tracking; the payment vanishes until it reaches the recipient days later. The process is also costly; fees can easily hit $40–$50, a steep price when you’re only sending a few hundred dollars. Banks also give vague delivery windows, often “three to five days,” which doesn’t exactly inspire trust.
Compliance is the other significant hurdle in cross-border payments. Regulations to prevent money laundering and financial crimes are necessary, but they add layers of complexity that make processing cross-border transactions slow and often expensive.
Adoption of the new standard ISO 20022 allowed banks to move from end-of-day batch file processing to “instant” payment processing, but the enhanced analytics these improvements can provide aren’t yet being fully utilized. Why?
The amount of data that banks often require for cross-border transactions places a lot of pressure on consumers. For certain countries, just a few data points are enough, but many banks request 20 or 30 pieces of information, making the process overly complex and frustrating for users. As such, 12 new standard data requirements were recently added to help bring the improvements of ISO 20022 to consumers.
Banking Innovations And The Rise Of Fintech
Banks have taken steps to modernize cross-border payments, investing in tools to make these transactions quicker and more reliable. Real-time payment systems, such as FedNow in the U.S., aim to deliver transfers almost instantly rather than over several days.
Service level agreements (SLAs) within the Swift network (full disclosure, Swift is a partner of EvonSys) have set timeframes that help improve overall processing efficiency. But even with these advancements, fintech companies have gone a step further, transforming customer expectations around convenience and cost.
Platforms like Venmo and PayPal have taken domestic transfers to a new level, offering nearly instant, hassle-free and often no-cost person-to-person (P2P) payments. Their innovative approach is evident in how they settle payments: rather than handling each cross-border transfer individually, fintechs group transactions and settle them all at once at the end of the day. This strategy saves time and keeps fees low for consumers, which could be part of the reason why Swift reports that 75% of consumers say they would consider alternatives, despite looking to their bank as the first option for cross-border payments.
Now, these fintechs are expanding to cross-border payments, introducing more affordable, faster options that meet the demand for speed and transparency in international transfers.
How Banks May Respond To The Fintech Challenge
The success fintechs have had in cross-border payments presents a significant challenge for banks, but it also opens the door for banks to evolve. There’s a real opportunity for banks to leverage their back-office capabilities in a way that directly enhances the consumer experience.
Traditional banks could make a simple addition like real-time account validation that would allow users to catch errors immediately, reducing the chances of a failed transaction. Small changes like these could improve customer confidence and make the process more seamless.
Transparency is another area where banks could make strides. Banks already have access to tools like Swift’s GPI tracker, which shows payment locations at every stage of the transaction. If banks made this tracking available to consumers, it would restore transparency, allowing customers to see exactly where their payment is in real-time, much like tracking a FedEx package. That’s the kind of visibility that builds trust.
Looking ahead, banks are also beginning to introduce faster processing through enhanced SLAs. Swift Go, as an example, promises that certain payments can reach their destination in just a few hours. If banks prioritize cross-border advancements, they could gradually close the speed gap with fintech, meeting consumer expectations for both speed and reliability.
Fintechs have undoubtedly carved out a significant share of the cross-border payments market—but this shift is also a call to action for banks. By delivering greater transparency, speed and affordability, banks can meet evolving customer expectations and create a more competitive market that embraces the future of digital payments. It’s clear that both sectors will continue to innovate in cross-border payments, but banks have the opportunity to bring unique strengths to the table and win back consumer confidence in the process.
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