The challenges and opportunities associated with low-value cross-border payments was on the agenda at Sibos on Monday as a panel of industry players explored a host of models, from correspondent banking to DLT to interlinked national systems.
In 2021, Swift made its move into the low-value payments market with the launch of Swift Go, letting consumers and SMEs send funds quickly anywhere in the world direct from their bank accounts.
Jean-François Mazure from Societe Generale told a packed audience that while Swift has long proved itself when it comes to B2B payments, now is the moment to push its value in the B2C and even C2C arena.
JP Morgan's Gayathri Vasudev admitted that low-value cross-border payments were largely ignored by banks until recently, providing an opportunity for non-banks. Banks have traditionally been put off of low value because expensive wire payments were the only game in town. However, Swift Go has gone a long way to addressing this, providing a cheaper and faster option.
Petra Plompen from EBA Clearing raised an alternative programme, immediate cross-border payments (IXB). EBA Clearing, Swift and The Clearing House teamed up last year to pilot IXB with the support of banks from both sides of the Atlantic. The service promises to improve cross-border payments by utilising the fastest domestic payment options.
Plompen said that the technology involved in IXB is not an issue and that the system's success will rest on cooperation with the user banks and strong alignment between regulators.
Simon Ong from DBS provided the perspective from Asia, where the interlinking of national instant payment systems is underway. Again, technology is not a problem but the diversity of regulatory models between countries makes the agreement of bilateral deals a slow process.
Ong also pushed back on the notion that real-time payments are always necessary. For many use cases involving consumer and SME payments, near real-time is sufficient, he suggested. EBA Clearing's Plompen agreed but noted that real-time's 24/7 nature is often a vital benefit in the cross-border arena.
The panellists saved their most impassioned opinions for an audience question on the banks versus fintechs debate.
SocGen's Mazure looked forward to the day when both parties play by the same rules: "Same animal, same cage".
JP Morgan's Vasudev said that fintechs' success in low value cross-border payments was in part down to banks sleeping on the job. But, she warned, this has changed and the big firms are putting in the kind of investment that will ensure their success.