PAYMENTS
industrial revolution and they have to change
their business models. This is difficult for
many banks because they have approached
their corporate clients sector by sector.” This
is no longer relevant, said Henry, because
such clients are setting up “new ecosystems”
and revisiting how they cooperate with
suppliers and with their own clients. “Banks
must understand this and be able to offer
tailor-made services.”
One of the notable new trends in cross-bor-
der payments is the large number of
low-value payments, said Jennifer Boussuge,
treasury fulfilment, service and operations
executive at Bank of America Merrill Lynch.
Largely driven by the so-called ‘gig economy’
(where employment is increasingly on a ze-
ro-hour, low wage basis), financial institu-
tions and their clients are looking for lower
cost cross-border payments options.
Club @ Sibos
regulatory oversight, and evolving consumer
expectations born from a hyper-connected,
technology-centric world.
Reinhard Hoell, an associate partner at
McKinsey, said new areas in cross-border
payments, such as e-commerce and retail
payments were “exploding”. Increasingly,
consumers are ordering online, often gener-
ating a cross-border payment. The payments
rails being used can change during a transac-
tion and be transparent to the consumer.
Wim Raymaekers, head of banking market,
Swift, said banks must understand the new
revenue generation streams if they want
to avoid the same fate of mobile telecoms
operators when roaming and SMS revenue
shifted to Whatsapp. “Banks also have to shift
their thinking on how to engage on custom-
er experience. They have to be where the
customer is even more than before and build
the provision of real-time data for cash
positioning and forecasting. Other services
could include fraud mitigation applications
and currency calendar information that could
streamline payment processes and eliminate
the need for repairs.
Naveed Sultan, global head, treasury and
trade solutions at Citibank, said digitalisation
was a “profound phenomenon”. Participation
in the global economy was no longer the sole
preserve of multinational companies but
“everyone” including SMEs and individuals,
were participating in the global economy. “It
is imperative that the constituencies that are
part of that are reimagining business models
to stay relevant,” he said during a televised
interview at Sibos.
To tap into this revenue stream, the US bank
is investing in improving its client experience,
becoming more scalable, improving agility
“Legacy systems mean you have made it in life. Banks can
embrace that legacy, work with fintechs and create new
partnerships, bringing new business models and the legacy will
adapt.”
SASKIA DEVOLDER, SWIFT
Low-value payments are a focus for
China’s Ant Financial. During the session
on reengineering international payments,
Clara Shi, a senior director in the company’s
International Business Group, assured her
fellow panellists that the company had no
intention of “eating the banks’ lunch”. Rather,
Ant’s focus is to bring the unbanked into the
financial system via electronic wallets. When
entering a market, Ant Financial always first
looks at the percentage of unbanked people
and works with local partners. The company
works with banks in “collaboration, instead of
as an enemy”, she said.
While delegates felt the inability to tap into
new revenue streams with legacy systems
was a challenge, understanding what those
new revenue generation streams are is also
important. A joint Swift and McKinsey white
paper, A vision for the future of cross-bor-
der payments, says the industry is facing
increased pressure from emerging tech-
nologies, rising challenges and costs from
more collaborative experiences,” he said.
Hoell agrees banks must be careful not to
lose market share to the likes of Alipay or
PayPal, but he believes it will be “more likely”
that more payment methods will emerge.
“Some payments will always be made on tra-
ditional payment rails and there always will
be a place for Swift. However, there will also
be ecommerce platforms and the payment
channel may shift back and forth without the
user realising it,” he said.
Tom Durkin, head of global digital channels
GTS, at Bank of America Merrill Lynch,
spoke to Club@Sibos about how his bank is
utilising different digital channels to improve
the payments experience of its clients – from
large corporates through to small and medi-
um enterprises (SMEs). Digital channels “sit
at the forefront” of what the bank’s corporate
treasury team offers to clients via a platform
approach.
“The mobile channel is having a big impact
right now and the user base is growing,” he
said. “We are bringing the environment of
alerts and notifications via mobile channels
into the payment experience for corporate
treasurers.” A large corporate may use the
mobile channel for contingency, whereas an
SME may use it to view balances and transac-
tions for its day to day processes.
Over the longer term, Durkin believes APIs
will evolve and become a dominant channel.
Reflecting Rowe’s comments during Sibos,
he said APIs will enable banks to tap into
information within the treasury department
and bring it to corporates. APIs can improve
and ensuring “continuous innovation”. By
doing so, he said, it would help Citi to “to stay
relevant to clients”.
There has been a convergence of con-
sumer and institutional client expectations,
where both parties want real-time response,
transparency, efficiency and a frictionless
movement of financial and commercial flows.
“That is relatively easier to deliver on the
consumer side. On the institutional and cor-
porate side, it is more difficult.” Such entities
are global or regional and have several legal
entities and different legal and economic
environments. To tackle such challenges the
bank taps into its global presence and inhouse
staff as well as working closely with fintechs.
“We can integrate fintech solutions into ours
to create better solutions,” he said.
One of the challenges for banks is that
while they know everything is changing in
payments, they don’t know where it will land,
said Michael Spiegel, global head of cash
management at Deutsche Bank. “We all know
we have to do something about it.” Spiegel
said this would involve working with fintechs
and would also be an iterative process.
Delegates at Sibos heard plenty about one
very topical piece of collaboration – Austra-
lia’s New Payments Platform, which Leila
Fourie, chief executive of the Australian
Payments Network, said involved “enormous
collaboration” between all participants,
including regulators and fintechs. Such
collaboration was the most important aspect
of meshing technology together to enable the
NPP environment, she said.