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Feb 24

Wanted: Greater STP, security in foreign payments

Posted by dbedell in RiskCash


Controlling cross-border payments risk is ever more important, as companies deal with volatile FX markets in managing their global ventures. As they reach out to banking partners for help, businesses are demanding better solutions, greater STP, and a focus on security and regulatory compliance.

Companies with foreign interests are increasingly turning to their banking partners to help with risk management in international payments. Plus, they are demanding more from those banks that they choose to partner with on cross-border payments.

Such are the findings of a study by consultancy Aite Group. Multinationals—regardless of size--expect less manual intervention and greater straight-through-processing (STP) of both domestic and international payments, they expect banks to use industry standard solutions that take advantage of developing and new payments market standards—such as ISO 20022—and they expect that their banking partners will without questions offer solutions that adhere to local legal and regulatory framework.

Those banks that want to compete in the global payments business must be cognizant this and continue to invest resources in ensuring these client needs are met. Those that do not risk losing out on market share of the payments landscape.

According to the Aite Group report, those banks that have really recognized the importance of their fee-based payments business—particularly during the economic crisis, when many other lines of revenue dried up—are stepping up to the plate for their corporate clients.

“Globally, banks continue to focus on their payments franchises,” says Nancy Atkinson, senior analyst with Aite Group and author of this report. “Payments are fee-based, and were strong contributors to bank revenue during the economic crisis. By implementing the key solutions most sought after by business customers, banks will achieve cost savings and greater revenue opportunities going forward.”

This need and desire to hold onto or grow their chunk of the payments business shows that companies are starting to once again be in the driver’s seat with their banks. For those with the leverage to do so, the next bank relationship meeting could present an opportunity to ensure that a particular bank is indeed doing its best to provide high-end foreign currency payments solutions—and complementary products—to best meet the company’s needs.

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