As technology continues to rapidly shift the way individuals and corporations handle their financial transactions worldwide, the ability to move money across borders promptly remains difficult for banks and other financial institutions. Systems have remained archaic, closing many of them off from keeping pace with modern technology.
Historically, customers have been required to either open bank accounts in other countries or use expensive bank drafts, wire transfers, or currency exchanges to settle such transactions, all of which come at a steep cost and with added inconvenience to all parties involved. Therefore, sending remittances from one country to another has been far from swift – as well as expensive – due to the involvement of multiple third parties required to complete the process. According to the Economic Times, during the first quarter of 2021, the average cost worldwide of sending funds, for example, USD 200, stood at 6.38%. Not only were individuals and organisations met by hefty fees but crossing time zones meant frustrating delays with settlements leaving the process and its parties at risk.
Globalisation has provided an incredible and lucrative opportunity for advancement within this segment, and the demand for a sharper, more affordable system continues to grow. In their 2021 study, market specialists in high growth, Juniper Research, revealed that this increasing use of ecommerce market platforms had driven the demand. They also showed that across all payment types of the cross-border segment, B2B payments are set to exceed USD 42.7 trillion in 2026, rising from the current 2021 figure of USD34 trillion.
The need for a double-ended solution
Cross-border payments require a double-ended solution. If the necessary technology is not yet functional in the recipient country, the status quo of legacy systems remains the only option. This is costly not only to the sender and recipient but to the global economy. This lag slows the entire pace of international commerce, causing ripple effects throughout the process, impacting both businesses and the end consumer. We know that the requirement is a system by which users can send money anywhere in the world instantly and, at the same time, send these funds through a safe, secure, and convenient ecosystem.
Customer expectations are also shifting rapidly as consumer habits change. Individuals and corporations alike have grown accustomed to the ease and convenience of holding an entire banking ecosystem in their hands, enabling them to complete various financial transactions with the push of a button. As such, they have every right to demand the same functionality for international remittances.
Digital real-time solutions are imperative
Improved cross-border payment capabilities can help businesses grow by expanding their scale while decreasing costs associated with transaction fees and exchange rates. But this cannot come to fruition when, in some cases, it takes less time for international goods to be shipped than it does to pay for them.
And yet, financial institutions have lagged in solving this piece of the payments puzzle, primarily due to the overwhelming minutiae required to enable recipient countries one by one. With each new nation come different currencies and regulatory landscapes to navigate, making the process impractical and tedious.
If banks cannot implement viable and economical solutions, they risk being eclipsed by financial technology companies working to do the same. A few fintech companies are already well established in the payments space, with large tech firms like Google and Apple moving into the industry simultaneously. Banks are falling behind, as these and other tech behemoths continue to blur the lines between traditional and modern payment solutions.
Fortunately, it doesn’t have to be an ‘either/or’ proposition. As financial institutions struggle with this problem, fintech organisations, such as Buckzy Payments Inc, offer integrated solutions that they can adapt for themselves to better service their individual and corporate customers.
In the light of the shifting demographics and the ever-increasing demand for instant payments, financial institutions and fintech businesses should see this as the right time to partner. Combining their strengths, both parties can bring solutions to market quicker, through the perfect model, more efficiently than either could have ever achieved alone.
This editorial was first published in our Cross-Border Payments and Ecommerce Report 2021–2022, which taps into the fast-growing cross-border market and provides a comprehensive overview of trends and developments that are pivotal in this space, being the ultimate source of information for ecommerce businesses interested in expanding globally.
About Abdul Naushad
Abdul Naushad is a highly accomplished and proven business leader, with deep expertise in payments and enterprise financial software, with a track record of growing growth stage companies into later-stage companies. Today, Mr. Naushad is the Founder and CEO of Buckzy Payments Inc, a Canada-based global fintech innovating and shaping real-time cross-border payments. At Buckzy, he is responsible for setting the vision, shaping, and executing the global business strategy to take Buckzy to market. His exceptional ability to motivate and foster a performance-oriented culture across the organisation is delivering the growth performance at Buckzy.
About Buckzy Payments
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