Providing payments services is a privilege that banks have held for a long time, but one they have to earn every day. In many ways, it’s an ungrateful privilege – it requires huge proprietary investments, but it relies on and reaps collective rewards. Failing to keep up with changing demands can very quickly erode market share.

Payments mechanisms and conventions can change rapidly. In just eight years between 2010 and 2018, the usage of cash in low value retail transactions in Sweden, for instance, dropped from 59% to 20% (Risbank, 2018). For customers that was just a change in preference and custom. For merchants and retailers that necessitated change and investment. But for banks it required the most change and investment of all – the eradication (or, worse, maintenance) of redundant ATMs; investment in card issuance; new connectivity partners; new security technologies and anti-fraud mechanisms, and more besides.

Adapting to changing customer needs and payment conventions is key to survival in the payments business. A bank that refuses to issue cards or offer online banking in the UK, or ceases to issue cash in Germany, will soon be out of the payments business. That is today. Tomorrow the habits and preferences of British and German consumers and retailers may be vastly different.

As domestic habits and demands change, as real-time domestic payments systems are rolled out, and as local Real-Time Gross Settlement (RTGS) systems move to 24/7 settlement, banks know they cannot stand still. They need to adapt their own systems to support them – it’s do or die in payments.

The cross-border payments landscape is no different.

Cross-border payments are inherently more challenging than domestic ones, precisely because they involve bridging the “closed loops” of multiple currency systems. Adding to the complexities presented by the world’s 180 currencies and many more regulatory jurisdictions by introducing new “value loops” will slow down the movement of value, not speed it up – at precisely the time when technology affords progress, and economics demands it. With goods and services moving more quickly and across greater distances than ever before, value needs to shift further, faster. From account to account, in an instant.

Only a seamless and open global value transfer system can enable that.

You can read the full Future of Payments paper on the SWIFT website here.