Amid a delicate ecosystem of de-risking and reducing correspondent banking lines, how can the process of making cross-border payments be improved? Ruth Wandhöfer and Barbara Casu have researched market participant pain points and suggest seven scenarios for the future
The ability to transfer money across borders in a safe and secure way is an indispensable requirement for the global economy. Until now, the main method of executing money transfers globally has been via correspondent banking arrangements.
In this article, which is based on the SWIFT Institute paper published in October 2018,1 we develop the building blocks for a future blueprint for cross-border payments, with a particular focus on the wholesale aspects of these flows, as they constitute a systemically important area of business. Cross-border payments, notes McKinsey (2016), “represent 20% of total transaction volumes in the payments industry, yet they generate 50% of its transaction-related revenues” (i.e. transaction-related fees, float income and FX fees), which amounted to more than US$350bn in global revenues in 2014.
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