The cross-border payments landscape is undergoing a rapid change as it transforms to become ever more efficient, transparent, and customer focused. Experts from HSBC and SWIFT explain the latest evolutions.
The international payments industry is booming. Payment volumes continue to rise, but with that comes increased customer demands and new competition, meaning that whilst the established players have a host of new opportunities, they also face great challenges to stay ahead of the curve.
“The modern digital user experience is shaping client expectations, which banks now have to meet,” says Nadine Lagarmitte, Global Head of Financial Institutions, Global Liquidity & Cash Management at HSBC.
Nadine was speaking alongside colleague Noor Adhami, Head of Middle East, North Africa and Turkey, Global Liquidity and Cash Management, on a recent webinar hosted by SWIFT and HSBC entitled ‘Evolutions in cross-border payments,’ which looked at the trends shaping the cross-border payments landscape today.
Clients are expecting solutions which are bank agnostic, not just in payments; they expect us to join the ecosystem and network to help them support their own customers.
“Clients are expecting solutions which are bank agnostic, not just in payments; they expect us to join the ecosystem and network to help them support their own customers; they expect interoperability rather than a lone service; they want to be in control, they don’t want to call us with a question; and most importantly they want transparency,” says Nadine.
The rise of new technology, such as APIs and other fintech, has created intense pressure for banks to improve their time-to-market with new products and services, enhance their data handling and reduce costs.
Innovation is also prevalent in the infrastructure space, with banks needing to respond to more agile and rapid clearing and settlement systems courtesy of real-time and instant payment initiatives.
New technology inevitably brings new regulatory challenges, with cyber-crime, and anti-bribery and corruption firmly in the sights of regulators, putting the emphasis on banks to make sure their conduct and processes are water tight.
Addressing the pain points of corporate treasurers
For banks to respond to these challenges, they must be able to respond to their clients’ demands in the most efficient and transparent way possible.
Domestic real-time payments initiatives, for example, have raised global expectations of the speed of payments, says Wim Raymaekers, Head of Banking Market at SWIFT. “In the past, payments could take two or maybe three days. In today’s world, with everybody connected in real-time, the expectation is payments will be much faster.”
Retail payments are now coming up to speed, but corporates are increasingly expecting the same for cross-border payments, he adds, requiring collaboration globally to ensure nobody is left behind.
Transparency, both in fees and in the journey of payments, is now also a must for corporate treasurers. People are used to experiencing at what stage their takeaway pizza is in the assembly and delivery pipeline, or how far away their taxi is, and they expect this kind of experience for their treasury operations as well.
This means that when customers send a payment, they expect to be able to track it throughout the lifecycle, recall it if they suspect a fraudulent transaction before it’s too late, and most importantly see that the payment has been credited on the beneficiaries account. Treasurers also want to be able to track how much they are charged at each point in the chain, to find the best and most efficient route for their payments.
And corporates want clear and accountable remittance information, so invoices can be cleared promptly and business between buyers and sellers doesn’t grind to a halt due to bad credit lines.
APIs and fintech changing the landscape
“The new wave of API technology has really changed the game,” comments Nadine. “Companies are delivering new products and services faster, and this is really where the race is on for competition.”
“The opportunities for banks to leverage this kind of technology is great,” adds Nadine, “especially when it comes to traditionally slow tasks such as onboarding and of course in payments, where API technology is already delivering more transparency for customers.”
“‘Data also plays a big role,” adds Noor Adhami. “Banks have large customer databases, they have unmatched network coverage and they have access to data. All of that is important for us to be able to launch API solutions.”
“There is a huge opportunity for banks, once they decide to join the API journey.”
As for fintech, the massive investment in this industry has helped banks to transform their front, middle and back offices to deliver innovative experiences to their clients. But what about competition from these players?
“Competition has traditionally not been a bad thing for the economy and the industry, we like that competition, if we didn’t have the push for new entrants, we would have a pace different today,” says Nadine.
“Collaboration will also be important,” adds Noor, “as both fintech players and banks attempt to solve some of the customer challenges together by leveraging each other’s strengths.”
Using SWIFT gpi to meet the challenge
Why has HSBC adopted gpi? The answer is very simple, it’s because customer experience is at the very heart of what we do.
HSBC is one of the growing number of banks around the globe adopting SWIFT global payment innovation (gpi) to provide their customers with transparent, fast and efficient payments. The first HSBC branch went live in April 2018 in the United Arab Emirates, and the bank has plans to have all of its branches connected to the service by the end of 2019,” says Noor. “Why has HSBC adopted gpi? The answer is very simple, it’s because customer experience is at the very heart of what we do,” she adds.
One of the key focuses for HSBC is to empower its customers to take control of the payment journey, and tailor the experience to meet their specific needs.
“What we’re looking at now is how we integrate all this information in customer-facing channels, whether they’re logging in through customer portals or on mobile devices, and asking how we can pass on the benefits of gpi directly to them.”