What are cross-border market trends? TFT Associate Editor Kate Goldfinch, sat down with Clear Junction CEO Dima Kats, to discuss all things payments
Kate: Cross-border market trade finance and revenues remain concentrated in business-to-business according to SWIFT & McKinsey last research. However B2C & C2B markets are also fast growing. What are the key trends on cross-border market up to your mind?
Dima: Clear Junction focuses on offering correspondent account services to various FIs. There are banks and payment service providers specialising in either B2B or B2C/C2B in our client portfolio. Our internal statistics confirm that the B2C/C2B niche has grown rapidly in the recent years. With that, I don’t believe that increase in retail traffic is still the key trend. The most important trend to our organization is the ever increasing regulatory scrutiny of the cross-border transactions regardless of their nature: retail or B2B. Clearly only the most professional and diligent players will survive it.
Kate: Do you share the view that competition is basically unfolding around “transaction fee”, “transaction speed” and fx indicators?
Dima: This might be correct for retail cross-border payment services. This is totally incorrect for vendors like Clear Junction which offer cross-border transfer services to other FIs. In our segment the competition is driven by two major factors: stability of service and regulatory compliance. The fee structure definitely goes after these two. With all the hype of low-cost cross-border transfer services in the recent years, it is our feeling that due to the heavy regulatory burden, the market of corresponding banking services is far from being saturated or commoditized.
Kate: How BREXIT can affect cross-border payments market?
Dima: I don’t foresee a direct negative impact on the market. Indirectly the markets in both UK and EU will be temporarily affected by reduced level of competition in both regions. The markets will correct themselves with the time though.