Regulation, compliance and legacy systems have, for so long, been the stumbling blocks for financial institutions to capitalise on the new digital age where there are few barriers to international trade.
Cross border payments, clearly essential when trading internationally, go to the heart of the conundrum currently facing tier two and three banks and Financial Tech businesses. Bringing higher costs than local transactions, they inevitably mean additional costs being passed onto customers – and that can mean lost opportunities.
The average operational cost for a bank to execute a cross border payment, via legacy correspondent banking agreements, is currently between US$25 and US$35 – more than ten times the cost of the average domestic Automated Clearing House (ACH) payment. Plus, the FX rate varies based on size of the transaction, time of day, current volatility level, future implied volatility, quality of the customer, current market price action, and even competitor quote levels. As a consequence, banks’ B2B cross border payment revenue and profits are under pressure.
But times are changing. And the new white paper from Banking Circle is throwing the spotlight on how emerging financial utilities can make the difference. Published by Burnmark, the white paper examines the role financial utilities can play and how they are opening up the global market for financial institutions to meet 21st Century demands and expectations.
To obtain a copy of the white paper, ‘Reimagining global banking services in the connected digital marketplace’, please click here.