Last year, the Financial Stability Board released a progress report on the G20 roadmap aimed at enhancing cross-border payments. At EBAday, a panel of payment experts discussed the associated challenges and optimistic outlooks regarding interoperability and cohesion.
Moderated by Sulabh Agarwal, managing director of global payments at Accenture, the panel included Ainsley Ward from CGI, Karyna Hutarovich of Deutsche Bank, Katja Lehr from JPMorgan Chase, Marianne Demarchi from SWIFT, and Sara Amara from HSBC.
Agarwal initiated the discussion by asking the audience about the challenges in cross-border payments that the industry needs to address. The majority identified interoperability as a key issue, followed by cost transparency and speed. This insight resonated with the G20’s objectives as the panel shared their thoughts on these concerns.
Cohesion Over Innovation
Sara Amara highlighted a misunderstanding regarding the solutions to these challenges, stating that the issue is not a lack of innovation, but rather a lack of cohesion. She described the current payment process as "too slow, too expensive, and too exclusionary." Drawing from her experience, she noted that it was easier for her to fly home, deposit cash, and return than to utilize current systems. She labeled the G20 goals as a guiding light for transparent payments, emphasizing that the solution is structural and requires a reevaluation of the fragmented infrastructure.
Karyna Hutarovich reiterated this perspective, recognizing the progress made but stressing the need for consistent implementation across countries. She mentioned that while standards like ISO 20022 are recognized in name, they often differ in practice, necessitating uniformity throughout the payment chain.
The Last Mile
Marianne Demarchi focused on the significance of "The Last Mile" problem in cross-border payments, explaining that it’s not just about adopting new technologies; rather, it involves addressing issues at the country level, including regulatory hurdles and currency controls, which can delay payments.
Ainsley Ward pointed out that real-time payment systems help resolve many of these issues because they facilitate local settlement, contrasting with traditional channels which often involve costly and risky methods.
When asked about areas of focus for solutions, the audience overwhelmingly favored interconnected real-time payments, followed by current methodologies, stablecoins, and bilateral connectivity.
Common Compliance Framework
Hutarovich stressed that the core issue lies in regulations rather than technology. She noted that faster cross-border transactions must also consider fraud prevention, as a solution for one aspect does not necessarily address another.
Regarding stablecoins, the panelists largely agreed that regardless of the technology employed, the underlying rules and regulations remain paramount. Hutarovich emphasized the need for a unified compliance framework to facilitate smoother transactions.
Finally, when discussing the feasibility of achieving the G20 roadmap objectives by 2027, the panel expressed skepticism about reaching this goal in its present form. Ward highlighted that while understanding the issues might be possible by then, actual implementation would be more challenging. Hutarovich viewed the 2027 deadline as a pivotal starting point rather than an endpoint, while Demarchi noted the need for better coordination between public and private sectors. Amara concluded with optimism, stating that while the timeline might not be achievable, the ongoing developments are promising.