Banks Fight Back: How Cross-Border Technology Is Challenging FinTech Disruptors

Global financial messaging network Swift said earlier this year that it was working with 25 financial institutions (FIs) and application providers on a “proof of value” initiative focused on improving front-end interactions, where the lower-end value transactions (defined as payments below the $100,000 threshold) is worth as much as $12 million.

Andy Elliott, vice president of strategy at EvonSys, and Costa Hagidimitriou, senior manager at the National Bank of Canada, told PYMNTS that the drive to integrate Swift services into their front-end channels — through websites and apps — can help traditional FIs compete directly with the digital upstarts, especially in cross-border remittances.

Banks may dominate commercial cross-border payments, said the duo, but there’s still opportunity for innovation.

A Fragmented Landscape

“But in the P2P space, it is very fragmented, and there’s a lot of opportunity for someone to emerge and dominate that space — or help banks improve the service that they offer,” Elliott said.

EvonSys, he added, is choosing the latter path to help modernize retail payments for banks, as digital-only players such as Wise or Remitly seek to disrupt the market. Banks are not going away, Elliott said, adding that there is still much work to be done to improve those front-end experiences.

“When individuals log into their online banking accounts or mobile apps, the processes that we’re taken through to make a cross-border payment are not very transparent,” Elliott said. “It takes too long. It’s relatively expensive and unnecessarily complex.”

Swift, he said, has a number of solutions that are available that already being used in the back office and now can be transposed to the front end.

Hagidimitriou’s National Bank of Canada, the country’s sixth-largest bank, has partnered with EvonSys amid the Swift initiative.

“We’re in the process of a large transformation — both digitally and in terms of our payments infrastructure,” Hagidimitriou said. “This was an opportunity to test some of the key Swift features that we are hearing so much about — like Swift Reference and pre-validation.”

A Package of Swift Features

Elliott added that packaging five Swift offerings integrated into the company’s payments platform — including the aforementioned cross-border features, the GPI Tracker and Swift Go and Swift Observer — makes it easier to improve the customer experience in the front office channel.

Hagidimitriou noted that there’s value already being realized through making it easier for clients to complete beneficiary and cross-border payment details digitally, and getting delivery of payment estimations in hand.

“The proof of value,” Elliott said, “has convinced us that there is an opportunity for banks to recapture lost market share [that’s been ceded] to FinTechs.”

The Swift Observer option allows EvonSys to inform banks’ end customers at the time that they want to initiate a transfer how long it will take and how much it will cost, he added.

“We can anticipate these things based on historical payments,” Elliott said.

EvonSys has packaged the Swift offerings together with an end-to-end business process that is country specific. In countries that are more heavily regulated, the EvonSys “package” has the ability to ask for more information to support those cross-border transfers.

The movement to reuse what the banks have already invested in saves the FIs time and money while transferring those lower value payments across borders free of charge, Elliott said.

“Our goal is to continue to educate banks to help them imagine what their front-end experience could be for their retail banking customers by leveraging some of those services, and hopefully leveraging the EvonSys payments platform,” he said. “Leveraging the existing investments and promoting them in the front office will help improve the customer experience.”