Corporate cross-border payments are coming under increasing pressure as businesses compare their banking experiences with the speed, convenience, and transparency available in consumer payment apps. Corporate treasury teams managing complex international payment flows increasingly expect their financial institutions to provide similarly intuitive and efficient services.
Traditional correspondent banking remains central to global money movement, but its delays, limited visibility, and complicated fee structures can frustrate corporate customers. As expectations change, banks and payment providers are developing new technologies designed to make international B2B payments faster, more transparent, and easier to manage.
When one quickly reads the title of this particular article posting in Bloomberg, you might reach a hasty conclusion that Venmo has launched a global corporate payments app, which is not the case (although everyone wants ‘in’ on the massive B2B market so keep your eye out). What the article’s author is getting at with the provocative headline would be what is further explained in the posting; a growing level of frustration with bank capabilities amongst corporate payments practitioners/end users (most specifically financial professionals) around the lack of speed, functionality and transparency in cross border payments.
‘General Electric Co.’s Kristen Michaud is a top client in a business that generates $1 trillion a year for banks — and she’s deeply frustrated. Michaud helps run GE’s cash-management system, using 200 banks and 8,000 accounts to move money to remote corners of the world. When sending cash, she doesn’t always know how much intermediaries might nibble away in fees, or when it will reach suppliers. Payments can pass from bank to bank, arriving in strange amounts with memos erased, leaving recipients confused.’
Consumer Payment Experiences Raise Corporate Expectations
So the point is that workplace expectations for ongoing interaction with bank corporate payments solutions (and other services) is changing as the ‘consumerization’ effect unfolds; the ease with which people now utilize apps in their personal lives creates demand for similar experiences in the workplace. The author points to the example of WeChat and Alipay in China, where to a large extent consumers have essentially bypassed bank payment solutions in favor of tech company phone apps that combine social, commerce and financial services in one place, executed with relative ease. While the Chinese market is certainly unique, the lesson and implied warning is that corporate banks better watch their ‘six’ or risk losing lucrative customer relationships to solutions designed to capitalize on this frustration.
‘Corporate treasury officials such as Michaud have been expressing growing exasperation at industry conferences, sometimes contrasting the slow, opaque system they use with Chinese apps and services such as PayPal Holdings Inc.’s Venmo that beam money almost instantly between consumers and retailers. If technology can help millennials split a restaurant bill in seconds or let tourists tap phones to pay taxis abroad, why must companies sometimes wait three to five days to confirm their money reached its destination?’
Payment Providers Modernize Cross-Border Infrastructure
This increasing demand is certainly not going unnoticed by banks and payment service providers across the globe, as we have seen with numerous recent product announcements by payment networks that support banks (i.e.; Visa B2B Connect, Mastercard Send, Amex-Ripple) financial messaging leader SWIFT (gpi), as well as JP Morgan’s INN, all designed to create better cross border payment experiences. So the opaque spaghetti network of traditional correspondent banking, which still works and central to cross-border liquidity, will eventually fade as the next gen capabilities gain further adoption.
“The innovations of consumer payments in Asia are redefining the entire payments landscape,” said Manish Kohli, global head of payments and receivables inside Citigroup Inc.’s treasury management business. “This will have an impact on the world of business-to-business and institutional payments.”
The evolution of corporate cross-border payments represents both a challenge and an opportunity for banks. Corporate customers increasingly expect greater visibility into payment status, predictable costs, faster settlement, and digital experiences comparable to the services they use outside the workplace.
New payment networks and enhanced financial messaging services demonstrate that the industry recognizes these demands. As these capabilities gain adoption, banks will need to modernize the traditional correspondent banking experience while preserving the global reach and liquidity it provides. Financial institutions that deliver greater speed, transparency, and usability could be better positioned to maintain valuable corporate payment relationships as expectations continue to evolve.
Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group
