The growth of international ecommerce has resulted in the world’s markets becoming more entwined than ever before. Though banks have stepped up to the challenge of facilitating an ever-growing volume of international payments, they face increasingly stiff competition from card networks, remittance providers, and non-traditional financial institutions, particularly for the lower fees they charge and the efficient cross-border transactions that they facilitate.
More banks are now finding success in these market spaces by choosing a digital payment solution that helps remove different friction points in local and international payments. Here’s how choosing the right digital payment system can help your bank remain competitive.
Removes the Roadblocks in International Payments
It’s no longer unusual for product and labor supply chains to have links in several different countries. Today, even small-to-medium enterprises (SMEs) and microbusinesses can reap the benefits of having such setups. Choosing the right digital payment solution can enable your bank to tap into the growing demand for secure but straightforward cross-border cash transfers and payments.
A good payment solution should offer better efficiency and help the bank and customers get around the roadblocks typical of outdated systems. To begin, it should help lower transaction fees, instantly do foreign exchange conversions, and reduce processing turnaround times. Additionally, the system should automatically account for any service level agreements (SLAs) a bank has with other financial institutions.
Improves Your Bank’s Competitive Edge
Being able to remove the different hassles of international transactions will allow your bank to offer better value services to a wider market. For instance, remittance and card providers have historically been the preferred payment and cash transfer solutions for international transactions with low value. This put these types of businesses in a position to thrive in the then-nascent global ecommerce market.
Thanks to new digital payment solutions, banks are now able to offer more competitive value propositions to individuals, microbusinesses, and SMEs that historically relied on banking alternatives. This means a properly selected and configured payment system may be the key to allowing your bank to benefit from the growth in international online commerce.
Commercial banks can benefit as well. Larger businesses are always on the lookout for ways to further reduce the expense of maintaining complex global supply chains. Banks with updated payment systems may be in a better position to help larger firms facilitate payments and further bring down the cost of doing business internationally.
Helps Maximize Current Tech Investments
Good digital payment solutions can integrate seamlessly with the bank’s current software ecosystem. Poor integration can potentially lead to problems, such as additional manual processing for reports, unexpected costs for developing ad hoc fixes, and less data transparency. A solution that works with the bank’s current ecosystem, on the other hand, not only saves time but allows the bank to get more use out of all their other systems.
Allows Better Innovation
Adopting the right solution can also be key to helping a bank meet its innovation goals, especially when it could be integrated into the bank’s current ecosystem, as mentioned earlier. For instance, a digital payment system that integrates seamlessly with the bank’s blockchain system, billing solutions, or risk management software may permit them to offer a wider array of services.
Another way digital payment systems can help innovation is by providing useful data. The data gathering capabilities offered by current generations of digital payment solutions allow banks to gain insights into customer behavior through their payment patterns. The uses for this type of data are virtually limitless. For instance, a bank that also offers insurance can use this information to help develop client risk profiles. It could also be used to send targeted offers that could help in customer retention and remarketing projects.
Improves Standards Compliance
Due to the especially sensitive nature of their services, banks have to constantly stay on top of current and upcoming legal requirements and industry standards. Any digital payment software adopted by a bank should not only meet current standards but ones that are likely to be implemented in the future as well.
ISO 20022, due to be adopted in November 2022, is especially relevant for banks that want to be able to continue making cross-border payments through the SWIFT system. Complying with ISO 20022 is likely to create multiple benefits for banks and other financial institutions, vastly improving efficiency, permitting new services, and improving overall customer experience.
Of course, ISO 20022 is not going to be the only standard banks will have to comply with. Even now, they may be expected to comply with a long list of requisites for every international payment. Using software that facilitates these not only helps banks maintain legal and service level compliance but also helps their clients enjoy safer, hassle-free services.
Finding a Better Way to Let People Pay
Up-to-date digital payment solutions are the bare minimum a bank needs to meaningfully participate in the growing global ecommerce market. Picking one that matches the bank’s set goals and current software landscape will take it to the next level. By considering your options carefully, you can ensure that your next digital payment system helps your bank remain competitive in the foreseeable future.
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