When the technology innovators arrived the traditional established banks got kind of caught flat footed and are now playing catch up. Global payments are a big piece of the banking business and with so much competition in the sector (Facebook is one…..a big one) that partnering with some fintechs may be an alternative to internal build out. This may mean, acquisitions are being looked at. Terrific insight.
With increasing globalization, cross-border, or global, payments have become a very big piece of the banking business.
The space is also a hotbed for competition as a number of non-banks are offering the multicurrency payment processing capabilities that businesses need more efficiently and at a better value than the big banks.
Needless to say, banks are feeling the pressure on all fronts to get their capabilities aligned with what the innovators around them are already providing.
Currencycloud’s latest white paper, Global Payments: How FinTech Partners Are Helping Banks Transform, lays out the complexities that banks face in trying to keep up with the rapid pace of globalization and how partnerships with FinTechs may be an alternative path to success.
Mike Laven, CEO of Currencycloud, told Karen Webster that banks are now realizing how critical digital transformation is, but they are struggling with how to get there.
Turning payments challenges into opportunities isn’t easy, but there are four key points to keep in mind when observing how banks will address the impact that globalization is having on business-to-business (B2B) payments:
1) Globalization is fueling incredible growth in multicurrency transactions, particularly from small and medium-sized enterprises (SME), which is driving the demand for faster, digital services.
2) Managing costs and finding revenue opportunities within a low-interest rate environment is a huge challenge for banks, many of which can’t afford to take on the cost of innovation.
3) A big part of being successful in multicurrency payment processing is building a solid compliance regimen, which adds on another layer of complexity for a highly regulated banking industry with ever-changing regulations.
4) Banks must be able to do this all in a way that is both efficient and maximizes revenue….”
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