Strategy that Banks should consider in 2025 to outpace fintechs and MTOs in Cross Border Payments

Banks currently hold approximately 25% of the global international remittance market, compared to fintechs and MTOs, which have grown rapidly to command the remaining share. Traditional Money Transfer Operators (MTOs) such as Western Union hold about 15%, while digital-first fintechs like Wise and Revolut are gaining ground, claiming approximately 10% of the digital remittance market. These players are growing because they offer lower fees, faster processing, and greater transparency, leaving banks struggling with high costs and legacy systems that slow innovation.

The global payments ecosystem is undergoing unprecedented change. With the G20 driving a roadmap for enhanced cross-border payments (CBPs) and fintechs setting new benchmarks for speed, cost-efficiency, and user experience, banks face a pivotal moment. To maintain relevance and dominance, banks must embrace modernisation, leveraging their inherent strengths in trust, liquidity, and global reach.

Why Modernisation Matters

Banks continue to manage the majority of global payment flows, yet their dependence on outdated systems is becoming increasingly problematic. Today’s customers demand faster, transparent, and cost-effective solutions. To remain competitive, banks must adopt scalable, interoperable systems that address these needs.

Key Modernization Priorities

1. Infrastructure Overhaul
   • Upgrade payment rails with API-driven systems for real-time processing.
   • Adopt global standards like ISO 20022 for improved interoperability.
   • Leverage initiatives like SWIFT GPI and Project Nexus to deliver faster cross-border transactions.
2. Customer-Centric Innovations
   • Integrate blockchain, AI, and cloud technologies to automate processes and reduce delays.
   • Enhance user interfaces with real-time payment tracking and seamless currency conversions.
   • Offer virtual accounts for simplified multi-currency management.
3. Maximising FX and Liquidity Advantages
   • Use dynamic FX engines for real-time rate updates and competitive pricing.
   • Optimise liquidity pools for large-scale, high-value transactions.
   • Employ AI and DLT for risk mitigation and efficient fund settlements.

The Way Forward

Banks are empowered and trust to lead in assisting CBPs, but they need to move quickly. Banks can meet the needs of today's global economy for speed, transparency, and efficiency by updating their infrastructure, adopting innovations inspired by fintech, and making the most of their strategic benefits. Those who do will make sure they have a place in the future of payments as important players.

For detailed insights, pls read my blog, "Key Priorities for Banks in 2025 to Compete with FinTechs and MTOs by Modernising Cross-Border Payments."