In a fast-changing macroeconomic environment, financial institutions looking to deliver superior payments experiences must adapt quickly. Clients expect fast, efficient, transparent transactions with minimized risk and maximized security.
Three emerging megatrends across payments, technology and risk will transform the international payments landscape and create new opportunities. To remain competitive, financial institutions (FIs) must deliver faster, cost-effective and more secure cross-border payments to their clients.
Here are three cross-border payment trends for FIs to consider in 2024 and beyond:
Megatrend #1: New payment methods
New payment methods can be more cost-effective and faster for consumers. As a result, expectations for cross-border transactions have increased, necessitating transformation for financial institutions. Fintechs, digital banks, big tech, artificial intelligence, payment service providers (PSPs), card networks, close-looped networks and other non-traditional players are helping drive growth in global cross-border transactions which are expected to reach over $290T by 2030.1
Examples of new payment methods include:
- Payment rails: New methods of payment rails are developing quickly, including account-to-account payments, pay-to-wallet and real-time rails. In the future, AI may help existing rails improve speed and security.2
- Central bank digital currencies (CBDCs): Central banks developing digital currencies aim to decrease settlement times and cost while improving visibility into payments status for cross-border payments.
"To remain competitive, companies must leverage infrastructure that supports instant payments, lower costs and greater transparency to make them adept in the realm of cross-border payments."
Kiat-Seng Lim
Global Head of Financial Institutions Group, J.P. Morgan Payments
J.P. Morgan Payments solutions:
- Coin Systems can serve as a payment rail that provides a domestic network with multicurrency clearing capabilities. It can enable clients to make real-time, multicurrency payments and increase the utility of cash by optimizing working capital and liquidity to support the same volume of transaction activity.
- Programmable payments can allow clients to automate deposits and withdrawals, thereby reducing operational risk and decreasing manual tasks, freeing up internal resources.
Megatrend #2: New tech
New innovations continue to improve cross-border payment processes, creating more visibility, transparency and efficiency. Financial institutions should prioritize purposeful innovation by adopting the right technology and establishing the right partnerships to meet customers’ expectations.
Technology advancements to consider include:
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Application programming interface (APIs)
- Provide an agile and flexible digital infrastructure that enables businesses to keep pace with the change of innovation by helping to decrease costs and time-to-market for new solutions.
- Offer financial institutions increased flexibility, transparency and control over the integration of data, empowering their clients to connect in their preferred channels and accessing information (e.g., real-time FX rates).
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Artificial Intelligence (AI)
- Helps to improves operational efficiency by automating manual, labor-intensive tasks like populating or correcting information found in select SWIFT message fields.
- Can reduce manual intervention in payment processing and enhances straight-through processing (STP) rates while also mitigating fraud with validation services.
- Enables accurate cash flow forecasting to help optimize cash usage and efficiently deploy or pool funds.
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Blockchain
- Increases speed and reduces transactional costs in cross-border payments, enabling seamless, transparent and secure information exchange.
- Helps to improve financial inclusion as companies use the technology to develop new products and tailored solutions for their clients.
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Cloud
- Can create a secure cross-border payments ecosystem that streamlines transactions for faster, more transparent payments.
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Enriched Data
- Helps financial institutions identify new efficiencies, develop new products and services and mitigate fraud.
- Offers tailored solutions based on a data analysis of critical information like remittance flows and disposable incomes.
"No matter what your current payment functionality is, adopting emerging technology, like APIs, can positively impact your business, allowing you to meet your clients’ needs in the most efficient way possible."
Peter Zotos
Global Head Clearing Product Solutions Specialists, J.P. Morgan
J.P. Morgan Payments solutions :
Take advantage of the latest technology in cross-currency solutions and foreign exchange to find efficiencies for your global business.
- Liink, a peer-to-peer blockchain-based network covering more than 20 countries3 , connects banks and enables faster information exchange that can help validate account ownership and status before making cross-border payments. Additional network applications can help treasurers optimize their intraday flows and deploy cash efficiently.
- API developer tools can help financial institutions create seamless connected experiences with greater flexibility, transparency and control over data integration.
- Cash Flow Intelligence powered by J.P. Morgan’s top-ranked4 AI/ML technology, which enables clients to strengthen cash flow accuracy, increase cash availability return and find previously invisible patterns.
Megatrend #3: Risk management
New risks around cybersecurity and fraud will evolve as the industry continues to innovate. Multiple players, jurisdictions, systems and regulations make cross-border payments increasingly complex in nature. Fraudsters will continue to develop new schemes to take advantage of this system.
For financial services institutions at the forefront of risk management, there’s an opportunity to create strong partnerships with clients as a strategic advisor. 80% of organizations are most likely to seek assistance from their banking partners for guidance regarding the steps to take to minimize the impact of payments fraud5.
“As cross-border payments continue to grow and technology evolves, so will the risk around cybersecurity and fraud. As an industry we all need to come together making security a critical, and shared, responsibility. We must take preventative measures to maintain trust and security in the payments system."
Vijay Lulla
Executive Director, Cross-Currency Payments, J.P. Morgan
J.P. Morgan Payments solutions:
Named the World’s Best Bank for global security, resiliency and stability6, our solutions are built with trust and safety in mind.
- Validation Services is a suite of solutions that verifies the authenticity and accuracy of bank, account and document information at the point of payment to prevent payments fraud, reduce errors and boost defences.
- Payment Control Center is a set of customizable solutions that allows clients to proactively block irregular payments, customize payment rules and quickly respond to fraud alerts in real-time- all through the Greenwich Award-winning7 Access® platform.
- Confirm, a Liink application, enables businesses to validate account status and account name before sending a payment—creating greater transparency and a seamless end-to-end experience.
Keeping up with cross-border complexity will help set financial institutions apart, and J.P. Morgan Payments’ simplified integration, enhanced speed and global footprint can help FIs achieve their goals. With payments capabilities in 200+ countries and territories and 120 currencies8, connect with your J.P. Morgan representative to leverage our digital innovations and unmatched scale in cross-border payments for your clients.
Learn more about how J.P. Morgan Payments helps financial institutions achieve their goals.
References
https://www.jpmorgan.com/payments/payments-unbound/magazine/articles/visual-timeline-payment-rails
J.P. Morgan Internal Data, 2024
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