FinTech LIVE Singapore: Wise Explores Cross-Border Payments
Cross-border transactions are evolving rapidly, but challenges remain.
At FinTech LIVE Singapore, Samarth Bansal delved into the complexities of instant payments and the role of financial institutions in shaping the future of global money movement.
The difference between real-time and instant payments
Samarth unpacks the nuances of cross-border payments and the challenges involved in making them instant.
He began by distinguishing between real-time and instant payments, explaining that while real-time payments grant access to instant payment schemes, true instant experiences involve multiple layers, including liquidity management, compliance and treasury operations.
Samarth highlights the growing demand for international payments, enhanced by retail remittances and supplier transactions in an increasingly globalised economy.
He points to the staggering $3.9 trillion opportunity in low-value cross-border payments across Asia and how consumer expectations for seamless, instant transactions - mirroring domestic experiences - are shaping the industry.
Despite advancements, achieving an instant experience is no small feat.
Samarth notes that in the past year, Wise had increased the percentage of transactions processed in under 20 seconds from 61% to 65%, a testament to the focus on removing bottlenecks in global payment flows.
Overcoming legacy infrastructure and regulatory barriers
When asked about the barriers preventing instant cross-border payments, Samarth points to legacy banking infrastructure as a significant hurdle.
Historically, banks were designed to serve domestic markets, and as international transactions became necessary, they relied on correspondent banking networks - partnerships between financial institutions to facilitate money transfers across borders.
However, these networks remain largely unchanged, introducing inefficiencies and delays.
Another critical issue is treasury operations.
While financial markets now operate around the clock, many processes in foreign exchange and compliance remain batch-based, slowing transactions down.
Compliance checks, which often involve manual reviews, add further delays, particularly for low-value transactions under $100,000.
Regulation also plays a major role. Samarth discusses the efforts of the G20 in pushing for improved cross-border remittance solutions, noting that greater direct access to instant payment schemes is crucial.
Wise, for example, has integrated with six payment schemes worldwide, but these integrations require extensive collaboration with regulators.
He cites Japan as an example, where gaining regulatory approval for direct access was a multi-year process.
The role of technology in enabling faster payments
Despite these challenges, modern technology is paving the way for faster and more efficient transactions.
Samarth details how Wise employs AI and machine learning to optimise key processes.
Liquidity and treasury management are major areas of focus.
Wise works with more than 90 banking partners globally and uses AI to predict currency needs accurately, ensuring liquidity is available before payouts occur.
This eliminates the need for manual fund transfers, which can slow down transactions.
Compliance and security are also enhanced through technology.
Samarth reveals that Wise runs 150 machine learning algorithms, conducting 80 compliance checks per second to detect fraud, sanctions violations and other risks.
This automation reduces delays while maintaining regulatory standards.
Another innovation is the use of natural language processing (NLP) to address incomplete transaction data, a common issue in cross-border payments.
Wise has developed an automated repair system that identifies missing information and communicates with partners and customers to resolve discrepancies in real time.
The future of instant cross-border payments
Looking ahead, Samarth emphasises that while traditional financial institutions play a key role in global payments, they must embrace partnerships to accelerate progress.
Many banks are reevaluating their correspondent networks and exploring collaborations to improve efficiency.
As global businesses demand faster money movement, financial institutions must evolve to stay competitive.
Samarth’s insights at FinTech LIVE Singapore underscore the ongoing transformation of cross-border payments.
While challenges persist, technology and regulatory efforts are pushing the industry closer to truly instant global transactions.
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