Banks' strategies for financing cross-border transaction processes
In a comprehensive report, the evolution of banks' investments in cross-border payment services over the past five years has been explored. The data from the report highlights several trends in banks' investment focus in the cross-border payment sector.
From 2019 to 2024, banks prioritized investment in digital infrastructure to enhance speed, transparency, and cost-efficiency in cross-border payments. This focus led to the development of real-time settlement systems, multi-currency capabilities, and integration with digital wallets and APIs.
Real-time and instant payment rails have been a major focus, reducing settlement times from days to near-instant. This development has enabled payroll, gig-economy payouts, and diaspora remittances with high urgency and lower costs. Digital wallets and mobile remittances saw exponential growth in regions such as MENA and APAC, with mobile-to-mobile remittances via wallets increasing by 128% between 2022 and 2023.
Multi-currency and multi-rail platform development has been pursued to cater to global transaction complexity. Initiatives like TARGET Services’ multi-currency capability and platforms consolidating compliance, foreign exchange, and local disbursement under unified APIs have been key in this area.
Corporate digital payment adoption is another trend, with 94% of midsize executives planning to use exclusively digital payments within five years, shifting B2B routines toward automated and virtual card payments.
The report also provides insights about how banks are thinking about the cross-border space and where they might be thinking about expanding later. However, the detailed list of banks with the highest investment volumes is not explicitly stated in the available data.
European banking groups with headquarters in Germany, France, Italy, and Spain dominate volumes in TARGET2 (T2), the Eurosystem’s real-time gross settlement service, indicating significant investment and usage by these institutions. Large North American banks have also backed payment systems like Visa Direct, which processed nearly 10 billion payouts in 2024, implying substantial investment in cross-border capabilities supporting consumer and business flows.
In summary, the priority in bank investments has been to upgrade and expand instant and real-time cross-border payments with enhanced digital tools, multi-currency capabilities, and integrations supporting mobile and wallet-based remittances. European and North American banks stand out as major participants in these upgrades. Data detailing the top investing banks individually from 2019 to 2024 is not fully disclosed in the cited research.
Sources: [1] McKinsey & Company (2023). "The future of cross-border payments." [2] The European Central Bank (2022). "TARGET2 volumes and values." [3] World Bank Group (2022). "Global remittances hit record high in 2022."
- The reported data indicates that over the past five years, banks have invested significantly in finance-related areas such as digital infrastructure, real-time settlement systems, multi-currency capabilities, and integration with digital wallets and APIs.
- European and North American banking groups have been major players in these investments, dominating volumes in TARGET2 and backing payment systems like Visa Direct, suggesting considerable focus on cross-border capabilities in these regions.
