Borderless by Design: Are Banks and Fintechs Ready for the Next Era of Cross-Border Payments?

Cross-border payments are now undergoing a quiet, yet steady transformation within financial services. The numbers speak for themselves — over $200 trillion in annual volume, expected to keep growing by 5% a year until 2027.

So, there is a clear shift happening in the industry, and players can feel it. Such technologies as blockchain, real-time transactions, and digital wallets are not buzzwords anymore — they notably affect how money moves across borders.

With this momentum, the real challenge for banks and fintechs is not to stay current, but to see what’s coming. And digital wallets are quickly becoming a central force in how the future of cross-border payments takes shape. So, how does it play out?

Banks Need to Move — And Fast

In the last couple of years, we have seen an obvious trend for collaboration. It is further confirmed by the fact that 62% of banks are actively chasing partnerships with fintechs to modernise how they handle cross-border flows. It is a promising sign, but partnerships alone can not be a silver bullet. What really matters is how forward-looking and profound these partnerships are.

The reality is that a majority of banks still operate within complex, outdated infrastructures. It is topped off with stringent regulations, from AML to KYC and cross-jurisdictional compliance, making innovation a heavy lift. So, that is where fintechs can rescue them. They are much faster at adopting new technologies, are more agile, and know how to meet customers’ expectations perfectly.

A great example here is the EU’s Instant Payment Regulation (IPR) that was passed in March 2024. It gave fintech companies direct access to SEPA payment systems, allowing them to bypass traditional intermediaries and speed up cross-border transfers. It is a breakthrough that kills two birds with one stone, benefiting both fintechs and banks. The only right thing for banks to gain a competitive edge — recognise the real value of partnerships.

If the role of bank-fintech collaboration is starting to make sense, the next question is: where do digital wallets fit into all this? Sure, they offer a fast, low-cost way to send money without relying on conventional banking systems. But can they really solve the deeper challenges cross-border payments face?

Digital Wallets Now Matter More Than Ever

Digital wallets are proving to be more than just convenient — in many regions, they are becoming an essential part of the infrastructure. This mainly refers to countries where banking access is limited or where geopolitical instability disrupts traditional systems. Wallets are helping people from these areas send and receive money in many ways that were not possible just a few years ago.

Take Africa and the Middle East. Expectations show that digital wallet usage in these regions will grow from 605 million users today to over 950 million by 2029. It is a serious jump, indicating that wallets could play a central role in making cross-border payments more inclusive and resilient.

Is this only about accessibility? Not at all. Wallets are also winning in user experience. A recent survey across the UK, Saudi Arabia, and Singapore found that 42% of consumers prefer wallets over traditional payment systems, largely because of transparency and ease of use. This case is a great reminder for all of us that people want speed, better visibility, and control, and they do not plan to wait around for the “old guard” to catch up.

What Will Shape the Path Forward for Cross-Border Payments?

If there is one thing the industry should pay closer attention to, then I think it is the ISO 20022 standard.

This is not just a technical upgrade — it is a whole new language for global payments. Not only does the ISO 20022 standardise how financial data is structured and shared, but it also helps streamline everything from compliance and fraud detection to transaction tracking and analytics. More importantly, it lays the foundation for emerging tech like central bank digital currencies (CBDCs) and instant settlement systems to work at a scale.

It is in many ways a connective tissue that could finally bring banks and fintech under the same umbrella — using compatible infrastructure and meeting the rising expectations of the digital-first world.

Still, let’s be realistic — a 100% digital cross-border system is so far just a sweet dream. Especially given the fact that over half of the most recent survey participants prefer traditional systems. Anyway, the shift is in motion, and we can expect a full-fledged landscape for completely digital payments to form within the next five years.

For banks, this means to embrace collaboration with fintechs, modernise infrastructure, and move away from systems that no longer match the speed of modern cross-border needs. For fintechs, the opportunity is to scale with purpose — to prove that regulation and innovation can easily coexist, and that trust is as important as tech.

And for everyone else watching? Now is high time to just pay due attention, because institutions that develop today will be the ones shaping the future of cross-border payments.