#United States #San Francisco #Celent #Cross-Border Payments #Nium

The Shift in Cross-Border Payments: Business Expectations Exceed Bank Offerings

In a recent study conducted by Nium, a leading provider in the global money movement sector, in collaboration with Celent, a financial services research and consulting firm, it has become evident that expectations surrounding cross-border payments are greatly outstripping the realities of what banks currently provide. The research presents a detailed panorama of how a plethora of payment options influences what businesses expect when transferring money internationally.

Key Findings from the Research

The survey involved 210 businesses and an equal number of banks, encapsulating insights from 17 markets across North America, Europe, Asia-Pacific, Latin America, and the Middle East. The findings shed light on several critical aspects:

• - Speed Expectations: A striking 65% of businesses expressed a desire for cross-border transactions to be processed within minutes or even instantly. Conversely, only 18% of those surveyed reported that their banks could meet these demands. This discrepancy emphasizes the urgent need for banks to enhance their offerings significantly.

• - Perception Gap: Interestingly, just 29% of banks believe that their corporate clients are looking for such rapid transaction speeds, showcasing a lack of synchronization between what businesses want and what banks think they provide.

The Competitive Landscape

The competitive environment for cross-border payment services is intensifying as businesses begin to explore alternative non-bank payment methods. Approximately 64% of businesses have now engaged with at least one non-bank approach for their international payment needs, resulting in over 15% of total cross-border payment volume being processed through these alternatives.

However, despite the growing range of options, banks still play a pivotal role in the cross-border payment landscape. Roughly 69% of business respondents acknowledged the necessity for bank networks to adapt to evolving cross-border payment requirements. Yet, a significant 49% anticipate relying less on banks in the future, indicating a shift towards diversification in payment methods.

Speed vs. Certainty: What Businesses Prioritize

While speed is a critical factor, it is not the only consideration for businesses when deciding on cross-border payments. The study revealed that 32% of respondents prioritized ease of payment options above all, whereas only 19% viewed cost as the primary concern.

Respondents also pinpointed several critical areas requiring improvement, including cut-off times for transactions, enhanced visibility regarding payment processing timelines, and increased transparency regarding fees. These preferences signal a growing demand for businesses to have a clear understanding of when their payments will arrive, the associated costs, and the likelihood of successful processing.

The Consequences of Payment Failures

The repercussions of failed cross-border payments extend beyond direct financial loss. Among those surveyed, 34% noted that delayed or unsuccessful transactions could lead to dissatisfaction and retention issues with vendors or partners. Additionally, 28% cited disruptions in supply chains and delayed orders as significant outcomes. Based on collected data, Celent estimated that failed payments could cost an average business around $108,823 annually.

Opportunities for Banks Amidst Challenges

Despite facing these challenges, 50% of banks surveyed view cross-border payments as a significant growth opportunity. With the integration of new technologies and partnerships in the pipeline, 53% of bank respondents indicated plans to expand their service offerings.

Corporate loyalty can be nurtured, as 58% of businesses expressed that additional services from their banks could solidify their allegiance.

Regional Insights

The study's findings varied substantially across different regions:

• - North America: 78% of U.S. businesses believe that added services from banks could enhance their loyalty, markedly higher than the global average of 58%.
• - Europe: Only 60% of European businesses expressed a wish for near-instant payment processing.
• - Middle East: A notable 65% of banks in this region believe emerging financial technologies will bolster their offerings.
• - Asia Pacific: An impressive 73% of businesses desire speed, yet only 10% experience such service.
• - Latin America: 67% of banks here aim to leverage new technology to enhance cross-border payment capabilities.

Conclusion

The research encapsulates a momentous transition in how cross-border payments are perceived and executed. As customer expectations outpace bank offerings, it highlights the necessity for financial institutions to evolve their strategies and embrace innovation to remain relevant in the face of increasing competition and diverse payment methodologies. For further insights, the full Nium and Celent report titled 'The Value of Certainty in Uncertain Times' is available on Nium's website.