In November 2020, the G20, a forum for the world’s largest economies, endorsed a roadmap designed to tackle the challenges of cross-border payments. Specifically, this roadmap addresses high costs, slow speeds, insufficient access and transparency in three priority areas: payment system interoperability and extension; legal, regulatory and supervisory frameworks; and cross-border data exchange and message standards.
A series of quantitative targets helps assess progress for these areas—the majority of which have a deadline of 2027.
A voice for community banks
The Financial Stability Board (FSB), an international body that coordinates the work of national financial authorities and international standard-setting bodies, brings together cross-border payments experts from around the world to provide feedback on ways to harmonize global legal, regulatory and supervisory payments frameworks in support of the roadmap.
Earlier this year, Brian Laverdure, ICBA’s senior vice president of digital assets and innovation policy, was appointed to the FSB’s taskforce on legal, regulatory and supervisory matters, guaranteeing U.S. community banks’ input as cross-border payments are debated on a global scale.
“We are the only voice for community banks in that forum,” says Laverdure. “Making any sort of adjustments or recommendations to legal, regulatory, supervisory frameworks, [the FSB needs] to consider the impact on community banks and in turn their customers, who are interacting with businesses around the world.”
ICBA’s cross-border payments advocacy
ICBA has established a cross-border payments working group to help identify pain points that community banks and their customers face with cross-border payments. Specifically, the working group has three main goals:
Identify specific pain points and concerns (such as BSA/AML, technical aspects, etc.).
Develop ideas to improve the cross-border payment experience for community banks and their customers.
Support ICBA advocacy on issues related to cross‑border payments.
“We’ve brought this group together to learn about community banks’ cross-border pain points, because we can’t really accept something as a solution if we don’t know what we’re trying to solve for,” says Brian Laverdure, ICBA’s senior vice president of digital assets and innovation policy.
To join or get more information, email [email protected].
The digital balance in cross‑border payments
As the FSB considers ways to remove friction from cross-border payments, distributed ledger technology (DLT) has emerged as one potential solution. In fact, FSB’s October 2024 report, The Financial Stability Implications of Tokenization, indicated that many financial services organizations are exploring DLT-based tokenization for global payments.
A June 2024 report from the U.S. Faster Payments Council reiterated that sentiment, noting “DLT could be a game changer, transforming the way currency conversion is supported today and thereby significantly improving the timing in which transactions are completed.”
“Think about having a FedNow payment settle on the distributed ledger or transferring that fiat to a stablecoin and then having that stablecoin settle in real time,” says Angela Murphy, vice president of marketing and solutions for technology solution provider Pidgin. “That’s the big ‘north star’ idea of where I think this could go, but it’s going to take a while for people to get there.”
It will take time, in part because DLT doesn’t come without risks. As the basis for cryptocurrency, it brings with it security concerns, particularly as cryptocurrency fraud rises exponentially. The FBI’s latest Internet Crime Complaint Center report reveals cryptocurrency fraud losses of $9.3 billion in 2024, accounting for more than half of all reported fraud losses and making global collaboration all the more vital.
“It’s not enough for any one country to act alone,” says Laverdure. “As long as you have some jurisdictions with weak regulatory frameworks or corruption or other issues, that’s where the bad actors are going to go. It really does speak to a need for jurisdictions to work together to address common concerns.”
Banking locally, transacting globally
Quick Stat
$321B
The expected value of the cross-border payments market by 2030
Source: Grand View Research
Today, most of the cross-border payments that community banks make take the form of wire transfers, but consumers are increasingly looking for faster transactions, lower fees and an easier experience.
So, against this backdrop of the G20 roadmap and cross-border payments evolution, what can community banks do now to improve international payments?
“I’ve been encouraging community institutions to run an analysis of their payments behavior,” says Murphy. “How many international wires are you processing? What are the personas or verticals that could most directly benefit from reducing the cost and increasing the timeliness of international payments? Once you have that information, you can look at what a strategy could be to engage in cross-border.”
Experts also point to the importance of sharing experiences to influence global actions. “I think the best way for community banks to try to shape that undetermined future is to speak up and have a voice,” says Laverdure. “They need to be aware of all the different possibilities and try to figure out how they could impact their businesses and what they can do to shape the most positive outcome.”
