A royal wedding, the FIFA World Cup, predictions of an extremely close midterm election in the US and the on-going negotiations for the UK to exit the European Union are all set to make 2018 a very interesting year on the world stage. In the financial services arena, cross border payments innovator, Saxo Payments Banking Circle has made its own predictions for the coming 12 months.
The demise of traditional, slow, expensive cross border payments
The correspondent banking network has for some time been under pressure, and 2018 will see that trend continue. Financial utilities, including Banking Circle, will step in to pick up the slack.
Banking Circle is leading the rise of a super-correspondent banking network which is able to facilitate cheaper, faster and more secure core banking services. Allowing a third party to handle non-core activities enables financial institutions to innovate and expand their core domestic offering, whilst focusing its own energies on improving and maintaining the all-important customer relationship.
PSPs will help merchants to expand internationally
Many barriers to cross border trade are coming down, and payments must follow suit by removing cost and time barriers sooner rather than later. Payment Service Providers (PSPs) must work harder to provide new global payment methods, which meet the merchant’s needs – fast payments, low fees, good FX rates, transparency, compliance, security. Otherwise, merchants will be forced to seek alternatives and PSPs will be left behind.
Tech giants move into banking
The current vertical separation of the value chain in the financial industry has created an opportunity for large tech businesses to monetise their user base by delivering financial services. Which is why 2018 is being tipped as the year of the Bank of Amazon or Google Bank.
These trusted household brand names are perfectly placed to provide banking services. Not only do they have the funding and ambition to rapidly increase scale and reach international markets, but they have enormous customer bases who already trust them with huge amounts of their personal data, so using them for banking is not such a big step.
“Tech firms moving into Banking, the emergence of Financial Utilities and the need for merchants to operate globally, will have a dramatic impact on the financial services industry”, said Anders la Cour, Founder and Chief Executive Officer of Saxo Payments Banking Circle.
“By 2020, the banking industry will be more fragmented than we see today, with a broader range of methods for delivering ‘banking services’.
“With the help of financial utilities providing non-core services, challenger banks, FinTechs and alternative payment providers will be able to compete alongside traditional banks, improving the overall offering available to consumers and businesses. Crucially, financial utilities provide access to a global account infrastructure which meets the needs of internationally trading merchants, helping them to reach their potential in all the markets within which they want to trade.”