BankingIs disintermediation coming? A video case study into the emerging utility model

Is disintermediation coming? A video case study into the emerging utility model

The average operational cost for a bank to execute a cross-border payment, via legacy correspondent banking agreements, is currently more than ten times the cost of the average domestic Automated Clearing House (ACH) payment.

Regulation, compliance and legacy systems have, for so long, been the stumbling blocks for financial institutions to capitalise on the new digital age where there are fewer barriers to international trade.

Cross-border payments, clearly essential when trading internationally, go to the heart of the conundrum currently facing tier two and three banks and fintech businesses. Bringing higher costs than local transactions, they inevitably mean additional costs being passed onto customers – and that can mean lost opportunities.

The average operational cost for a bank to execute a cross-border payment, via legacy correspondent banking agreements, is currently between $25 and $35 – more than ten times the cost of the average domestic Automated Clearing House (ACH) payment. Plus, the FX rate varies based on size of the transaction, time of day, current volatility level, future implied volatility, quality of the customer, current market price action, and even competitor quote levels. As a consequence, banks’ B2B cross-border payment revenue and profits are under pressure.

But times are changing. And the new white paper from Banking Circle is throwing the spotlight on how emerging financial utilities can make the difference.

In this video interview, Devie Mohan, CEO of Burnmark outlines the findings of the report into the utility model and how times are changing to provide a 21st century banking solution.

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