Banks' Strategies for Financing Cross-Border Transaction Payments
In the realm of cross-border payments, the priorities of banks have been evolving, often intertwined with their broader business objectives. A recent report sheds light on when banks invest in cross-border payments companies, revealing a focus on digital transformation, real-time payment rails, fintech integration, and automation of payment processes from 2019 to 2024.
The report, analysing over 3,600 investments across 19 of the world's biggest banks, offers valuable insights into the key investment areas and the evidence supporting them.
Real-time payment rails and faster settlements have been a significant focus, as demonstrated by Visa Direct's handling of nearly 10 billion payouts in 2024, with cross-border volume growing 16% year-on-year. This infrastructure enables instant or near-instant payout capabilities, reducing settlement windows and facilitating payroll, gig-economy, and diaspora remittances.
Banks also prioritize digital and omnichannel payment solutions. Consumer preferences are shifting towards faster payments from primary banks and a willingness to adopt fintech alternatives, indicating investments in seamless, multi-channel digital payment experiences catering to both consumer and business needs.
Virtual cards and automation in business payments have been another area of focus, with mid-size business executives increasingly adopting digital payments and virtual cards. This trend is expected to reach over USD 452 billion in commercial spend by 2027, pushing banks to invest in card-based automation and software enabling simplified procurement and treasury workflows.
The report also highlights the increasing activity of stablecoins and blockchain-related innovations in global RMB payments and other cross-border settlements. This signals major banks investing in blockchain-based solutions to enhance liquidity and efficiency of international payments.
Banks are also preparing for and investing alongside public-sector digital currency initiatives such as the Inthanon-Lionrock project between Thailand and Hong Kong, evolving cross-border interbank payments without reliance on traditional fiat currencies like the US dollar.
Regulatory compliance and digital asset infrastructure have also been key areas of investment, with increased regulatory focus such as EU’s MiCA and US digital asset policy developments. Banks invest in compliance infrastructure ensuring secure and resilient cross-border payment ecosystems amid crypto and digital asset integration.
The report identifies the banks that have invested the most in cross-border payments, including Citi, Goldman Sachs, JPMorgan Chase, HSBC, and Barclays. It also details the locations of the recipient companies around the world.
Investments in specific companies by banks can provide insights into their thinking about the cross-border space and potential expansion areas. For instance, Visa invested in Currencycloud in 2019 and acquired it in 2021 to help leverage its Cross-Border Solutions division. Similarly, Goldman Sachs invested in consumer finance platform GreenSky before acquiring it in 2021 to help scale its consumer arm Marcus.
The report concludes with a discussion on the future of bank investments in the cross-border payment sector, emphasizing the continued focus on financial services as banks continue to invest in cross-border payment players. The data from the report highlights trends that provide more information about where banks are focusing their investments in the cross-border payment sector, signalling a promising future for faster, more efficient, and inclusive cross-border payments.
Banks have been focusing on digital and omnichannel payment solutions, tailoring to consumer preferences for faster payments and fintech alternatives, as indicated by investments in seamless, multi-channel digital payment experiences.
The data from the report also reveals investments in virtual cards and automation in business payments by banks, a trend expected to reach over USD 452 billion in commercial spend by 2027.
