Better isn’t good enough in improving global payments system

It’s often easy for payments professionals to lose touch with the impact of what our institutions do every day to support not only the world economy, but also individuals. Perhaps as a byproduct of losing touch, we have done too little to leverage transformational changes in technology to improve the overall client experience. We simply haven’t done nearly enough.

On a global scale, payments remain too slow and costly, and lack basic transparency, predictability and can’t be tracked, end to end, so that all interested parties have access to the latest status information. Some other industries solved these challenges years ago. Imagine sending an important package to a critical destination and having no idea when it would arrive, how much it would cost to send and what condition it would be in upon receipt. Or, imagine landing in a foreign country and not being able to make a call to your loved ones, or the call taking hours to be connected, or not knowing how much it would cost.

As consumers, we used to accept this level of service, but no more. Yet in many ways, this is akin to the level of service offered by the payments industry, particularly when moving funds across borders. As service providers, we can no longer accept this standard.

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Payments professionals need to raise the bar and create a global, real-time payment experience for our clients — anyone to anyone — with full transparency into the status of payments in process and full disclosure as to end-to-end cost to all parties in a payment transaction. I believe that the primary obstacle to delivering this improved experience is not technology — it’s having the collective vision and will to make it happen. As an industry, we need to demonstrate our desire to deliver the absolute best experience to our clients in keeping with a real-time, always-on, global economy. Without question, creating such a global, timely and transparent experience will require industrywide collaboration and some transformative changes.

The good news is we are already building momentum in this direction through initiatives like the global payments innovation, developed by the Society for Worldwide Interbank Financial Telecommunication, or Swift, which aims to make numerous improvements over time. This includes end-to-end tracking of global payments as an initial enhancement. There is the ongoing effort to establish a real-time payments system in the U.S. as well as in dozens of other countries — all using the same international messaging standard. Financial market infrastructures are already extending their operating hours and moving closer to 24/7.

But we can and need to go further. Industry efforts to improve the client experience with global payments will naturally start with global financial institutions and the providers and technologies that support them. But those efforts will likely not result in any payment-related improvements for billions of the global population who live in poverty and could be, from one perspective, some of the greatest beneficiaries of global payment transformation.

The developing world is severely underserved when it comes to payments and digital banking. A 2013 study by the Bill and Melinda Gates Foundation concluded that available digital banking services, including digital payments, are one of the most effective means of pulling people out of poverty globally. Telecom companies have begun to step in to fill the traditional banking void by providing basic banking services — efforts that have already had a positive impact in developing economies. Now, financial institutions and payments professionals can do our part by linking these telecom banking networks to our global payment systems, enabling people to enjoy the benefits of the digital economy while guarding against money laundering and fraud. Efforts are already underway by some banks to send cross-border, low-value payments directly to telecom banking providers, providing a more timely and cost-effective means to transfer funds to low-income citizens of the developing world than traditional alternatives.

Not only can we create a global real-time payment experience, we need to do this. The impact we have on people’s lives, along with the organizations they work for, is powerful. The time to commit ourselves to developing a new, optimal standard for global banking and payments is now.