A fresh and provactive must-read if you’re a bank or FI subject to being “de-risked” from cross-border payments and international money transfers or a regulator keen to ensure safety and soundness

New technology transforms the safety, efficiency and economics of cross-border payments through financial institutions while enabling better experience that delight senders and receivers – enabling banks to protect their turf in this $160T market under attack from fintechs and digital innovators.

In an age where digital transformation has touched every industry, financial institutions around the world still send and receive money internationally the old-fashioned way—if they are willing (or allowed) to take the "risk" at all.

For the shrinking number of banks, credit unions and building societies that offer or clear cross-border payments, international transactions are slow, expensive, opaque and frustrating for their customers.

In a new whitepaper, “De-Risking Cross-Border Payments: Software vs. Sledgehammer,” author and payments expert Jonathan Tyce, explores the regulatory environment, as well as the profitability challenges and market realities squeezing U.S.-based correspondent banks that clear foreign-initiated payments. While his analysis primarily pulls examples from the U.S. market, his takeaways offer a path forward for any bank around the world supporting foreign banks with their cross-border payments to reclaim their position in this fast-growing $160 trillion market.

Why it matters: Combatting unintended consequences, increasing competition and consumer access

As many banks pull out of cross-border payments for fear of skyrocketing costs or fraud, money laundering and terrorist financing threats—not to mention the possibility of quite substantial regulatory fines—some have no choice but to leave.

But de-risking is not only a threat to the financial institutions shut out of this potentially lucrative market. It’s also a threat to competition, innovation and access for millions of consumers worldwide.

The paper suggests that these unintended consequences are avoidable if banks adopt—and their regulators support—automation tools that can slash costs by 50% and compliance violations by 90%.

With insights from a long-time correspondent banker and a former senior advisor and financial crimes expert with the U.S. Treasury and the private sector, the whitepaper reveals:

  • The most common failures in meeting Bank Secrecy Act requirements and how to overcome them.

  • How an architecture central banks already use today could be a model for solving KYC and KYT challenges; and

  • Why rebuilding trust between the regulator and regulated is so important for banks to thrive in the cross-border space.

Ready to embrace the future of cross-border payments?