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Are the G20 targets enough to revolutionise cross-border payments?

Are the G20 targets enough to revolutionise cross-border payments?

30 October 2023 | 4 min read

Experts at Sibos 2023 agree that we need to unite behind shared goals to meet ambitious G20 targets designed to enhance cross-border payments.

“Today we live in a world of fragmentation,” says Thierry Chilosi, Chief Strategy Officer at Swift. “This is the biggest obstacle to optimising payments across the globe. While the pace of change has increased dramatically, payments must remain trusted for growth to continue.”  

In 2020 the G20 set quantifiable targets of speed, cost, access and transparency which the public and private sectors can both get behind. “The social and economic importance of trade is undeniable,” argues Chilosi. Indeed, in four of the last five decades the value of global trade has doubled.

With the 2027 goal date fast approaching, John Orchard, Chief Executive Officer, OMFIF, and debate moderator, argues that the G20 targets have mobilised competition in the industry. 

Obstacles to cross-border payments

Fragmentation of payments isn’t optimal, suggests Takis Georgakopoulos, Global Head of JP Morgan Payments, JP Morgan. “Systems that aren’t interoperable are inefficient for everyone,” he says. Over time, it’s hoped that rules and collaboration will help us evolve into a more interoperable world with further resilient payment options.

There are several surmountable obstacles surrounding infrastructure and regulation that must be considered. “Frictions include time zone differences and different types of technologies used across borders,” explains Victoria Cleland, Executive Director, Payments, Bank of England. While some things are outside of our control, other things require engagement with the relevant authority.

Legacy platforms are also an issue, especially with costs. “All banks are probably examining their old architecture,” explains Sanjay Sethi, Senior Managing Director, Head of Global Transaction Banking, First Abu Dhabi Bank.

What’s more, speed doesn’t have to be in conflict with quality and compliance. “We can do both simultaneously,” [WJ1] says Georgakopoulos. However, currency rules, capital controls and payment errors remain a significant barrier – adding time and cost to transactions.

“But staying focused on goals means cost and speed can happen at the same time – in a virtuous circle,” explains Cleland.

Central banks: a conduit to change in industry

The responsibility of the central bank is a privilege rather than a burden, explains Cleland. Its role is to provide the utility – the core infrastructure – with best practice guidance for the industry.

Thomas Lammer, Deputy Head of Secretariat, Committee on Payments and Market Infrastructures, Bank for International Settlements, suggests that the role of central banks is threefold. “The central bank is a payment systems operator, an overseer ensuring safety and efficiency, and a facilitator to improve systems and force change,” he explains. 

Banks are joining the track to faster and more efficient payments at a different pace in each country. “It’s hard to streamline the entire process until everyone is completely involved,” says Sethi.  

Going far, going fast

The industry has many hills to climb, which is why putting the building blocks in place is key. “We have to go far and fast, and not alone – the market needs to identify what we can do as stakeholders to move this agenda forward,” says Lammer.

Moreover, global progress will depend on development at home. “It’s important that domestic payment systems are up to speed before streamlining cross-border payments,” urges Lammer.

Georgakopoulos argues, “harmonisation is the key to transparency – it will lower barriers to entry and increase competition.” What’s more, increased adoption of ISO rules across countries will create more value for consumers globally.

Transparency will depend on each party participating in the payments flow homogenously. “At this point, it’s not all completely transparent. But as instant payments ramp up, it will improve,” explains Sethi.

“We don’t need a revolution in payments, we’ve got all the right ingredients to meet the targets,” argues Cleland. Meanwhile Lammer argues that “the North Star is set.”

Georgakopoulos agrees: “I am optimistic about these targets – the adoption of technology is very encouraging.”

Sethi echoes the other panellists’ optimism: “We’re well on our way. All this is going to lead to a far easier experience for consumers. Differences between countries will ultimately ease.” 

If you have a Sibos digital pass, you can watch the full debate here

The views expressed on these pages are those of the authors and/or the institution they represent, and not necessarly those of Swift.