Sibos 2024: The evolution of payments collaboration in financial services
This year’s Sibos conference is currently taking place in Beijing, China, where financial services leaders from all over the world are gathering at the China National Convention Centre.
Day two of the conference offered thought-provoking panels and networking opportunities, with topics ranging from trade data to G20 targets and the securities market.
The A2A payments collaboration panel at Sibos 2024 in Beijing, China
Customer-driven payment disruption
In a panel led by Alex Alder, Swift’s head of go-to-market, payments industry experts discussed how innovation through new business models and collaboration is reshaping the sector, with a focus on how interoperability can elevate the global payments experience for end-users.
The panel featured Christian Kramer, head of group payments strategy and partnerships at Lloyds Banking Group; Rasika Raina, EVP of Mastercard Move; and Till Wirth, head of product at Wise.
Moderator Alder opened the discussion by asking how evolving customer needs are driving disruption in the payments sector.
Kramer responded by suggesting that “disruption is a good thing”, benefiting everyone from consumers to incumbent banks. He emphasised that disruption is not solely driven by fintechs but also by regulators and central institutions involved in cross-border payments initiatives like Project Agora and Project mBridge.
On the subject of cross-border payments, Wirth remarked that fintechs specialising in this area have “raised the bar of what customers think is normal”. He explained, “Customers now expect to download an app, easily complete KYC, sign up, and send money to Australia instantly.”
Wirth also highlighted transparency as a key demand from today’s customers. Alder built on this by noting that Swift’s research has shown hidden fees are a major reason businesses lose clients.
Kramer agreed, stressing that trust is paramount in today’s payments landscape. He referenced a colleague’s saying that “changing payments is like changing two engines on a jumbo jet in mid-air”, underscoring the significant trust required for successful payment innovation.
Turning to corporate practices, Raina emphasised the need for 24/7 payment services and more tailored, “segment-specific or industry-vertical-specific payment solutions”, rather than one-size-fits-all approaches.
“Competitors have become partners”
The conversation shifted to the evolving nature of collaboration within the payments industry. Raina pointed out that in past decades, payments were largely “dominated by the banks”, but today, there are far more players involved.
She noted a growing trend in retail banking, where many institutions have partnered with fintechs and payment processors to handle low-value payments, as these companies have “figured out how to do it at scale”.
On the commercial side, however, Raina acknowledged that it remains “more complex”, as most banks are hesitant to outsource their entire suite of end-to-end payment processes to fintechs. Still, she says she has observed significant collaboration in “discrete functions”, such as liquidity optimisation and cash management.
Meanwhile, Kramer asserts that there has been a radical change in the relationship between incumbent banks and fintechs, describing it as having evolved from a “supplier relationship” to one of active collaboration.
He emphasised that Lloyds now actively partners with start-ups and even invests in them, citing the bank’s dedicated fintech funding division, which has supported several paytechs, including Form3.
However, Kramer also hinted at a subtle shift toward prioritising “in-house” engineering, citing Lloyds Group’s COO, who remarked that the bank is “building the UK’s largest fintech”.
Wirth responded by saying that for specialised services like cross-border payments, banks understand the necessity of partnering with other financial institutions or fintechs to “level up user experience”. He pointed to Nubank in Brazil, which he says “embraces” its relationship with Wise.
Software vendors were also deemed a critical component of the payments ecosystem, with Raina referring to them as “ecosystem enablers” for all participants.
Raina stressed that by providing “value-added services to customers”, software vendors help streamline operations, removing the need for payment networks like Mastercard to “reinvent the wheel”.
Future predictions
The panel wrapped up with Alder asking the speakers about their predictions for the future of the payments landscape.
Raina predicted that “many of the new entrants will fold up” due to shrinking margins, leading to “massive consolidation in that space, as VC funding dries up”.
Kramer followed by highlighting current technologies like tokenisation, blockchain, and DLT as the key future disrupters in the payments ecosystem.
Wirth concluded by noting that unexpected partnerships will continue to surface, referencing the Swift-Wise collaboration announced at last year’s Sibos, stating that prioritising customers is essential, as “in the long term, you will win”.
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