The Future of Cross Border payments and the digital customer experience.
It’s safe to say that the pandemic changed a lot of things and will continue to do so for business, government, health care, society, and individuals. One category that accelerated beyond its normal rate of evolution (Moore’s Law) was, and continues to be, technology. With the payments industry, the changes have been at a whip-lash intensity. Not only did we need to rely on and improve the technology, but customers making money transfer decisions also demanded more: multiple platforms and channels, speed, flexibility, transparency, and security.
They were empowered and quick to change payment and financial service providers at the slightest dissatisfaction, be it a delayed transaction, or a downed website. Because the power shifted to the customer, we must serve them like never before, investing in new, innovative customer experiences, while at the same time, protecting them from fraud.
“Cyber-criminal groups specifically target cross-border transactions because the process is opaque and convoluted, with little standardization. There are 26,000 global rules that affect cross-border payments. There is no single regulatory body as each country’s banking system has its own regulations and security policies.” — Onyx by JP Morgan
2023: Real-time cross border payments become more real.
“Cross-border payments are inherently more complex than domestic payments and are often slower, less transparent and more expensive due to the lack of an end-to-end system or rule set, and the need to transact in different currencies and time zones and comply with different regulatory requirements.” – The Federal Reserve
Even those in the industry underestimate the complexity of moving money and information across the world. With the growth of these activities and the needs of a changing global population and increased migrations, it’s become even more complex. In the case of a legacy payer like Western Union, there exists over 20,000 corridors of payments that they serve. It benefits the entire industry when a giant like Western Union is making strides towards speed and compliance.
But when you talk about speed you have to use the tech time-tested word “real-time.” In the decade, innovating towards cross-border payments that are immediate, affordable, universal, and secure will be the ultimate deliverables to satisfy the demands of customers and increase the margins from cross border payments.
Moving forward to define the future.
Technology always advances faster when adopters find a necessary and immediate human and market need to satisfy. When the tech proves itself in that arena, it scales. The payments sector has been the driver of innovation. At the risk of sounding like Spiderman, with great speed of innovation comes great responsibility. We must ensure that consumer protections and transparency run side by side, hand in hand with innovation, or the promise will be hollow. This is where practical-minded and private sector positive policy makers need to review chokepoints in regulations so that new technologies can operate and serve populations in a safe secure environment. This balance is especially true of Europe.
Finding the balance between digital capabilities and human needs.
The payments sector needs to invest in dynamic second generation omnichannel experiences for customers, governments, retailers, across all platforms and emerging technology. It will be essential to continue to deliver on flexibility and ease for customers. These are table stakes right now and what customers demand.
Simplified single solutions that continue to blur the lines between digital and retail are being pursued. Ecosystems will have to be expanded, giving customers more options to interact and complete their transactions. The technology must also delight, so that it becomes more quickly adopted. As an industry, the digital experience must be a human experience, and we have to develop the technology to treats customers like humans and not just transactions.
Digital inclusion: Banking on the unbanked.
“Using these alternative financial services also accumulates the indirect cost of being unable to build a credit history, which can negatively affect the ability to get a car loan, rent an apartment, qualify for a down payment on a home, and can even influence potential employers.” – US Postal Service
Financial inclusion must be a top priority for our industry. The needs of hundreds of millions of underbanked or unbanked peoples must be answered. The benefit is nothing less than positive societal impact and global political and economic stability. Increased migrations must not exclude substantial numbers of these populations from access to affordable and fair financial services.
New technologies foster financial inclusion. In Africa, mobile telephony enabled millions to have access to financial services and helped the continent innovate technological development at light speed.
Financial inclusion reduces extreme poverty and boosts prosperity. The G20 have begun the push towards a continued national, regional, and trans-national effort at leveraging the joint power of governments and financial providers, a focus on financial education, and digitization of social payments, all delivered at scale.
What does the future of payments look like?
Digital remittances, digital and mobile wallets, single click payments, QR codes, cryptocurrencies, blockchain, convenience, the convergence of FinTech and the pandemic, and governmental regulators will all influence, shape and perfect the future of cross-border payments. The promise is large, and fraught with speed bumps. But, working together, financial services and global governments, the promise is also a massive benefit to global stability and shared prosperity.
Howard Davidson is the CMO at AlmondFinTech.
Almond FinTech is a blockchain-based funds transfer network connecting financial institutions globally. Almond’s infrastructure is built for speed, security, and accessibility, enabling users worldwide to send money across borders using their existing financial institutions. Additionally, Almond uses a combination of psychometric and financial data to provide fast, low-risk, ethical loans to communities with unconventional or limited credit histories.