International payments will continue to get faster and smaller.
Payment providers and banks will continue to offer ever faster cross-border payment services to their customers, enabling them to send and receive low-value payments in real-time. The cost overhead of these payments will also continue to shrink. This trend will accelerate in 2020 as customer demand for frictionless on-demand payments grows – enabling solutions like Interledger and distributed ledger technologies to gain traction and scale up.
More banks will use banking-as-a-service tech platforms to revolutionise their cost-to-serve and cost-to-change. As technology costs associated with running and development continue to climb, we can expect banks will turn to cloud providers of banking technology to help radically reduce these costs.
Pioneers of such cloud services – like 10X and Thought Machine – will be the ones to watch in 2020. Because cloud-hosted banking technology providers have developed new platforms with modern methods, they are ideally placed to easily and cheaply plug into emerging blockchain networks, AI engines and other categories of fintech. This means the competitive advantage of innovative banks over slower-moving rivals will be intensified. The long-awaited tipping point from on-premise “museum” banking technology to agile, cheap cloud-hosted bank technology is getting closer. 2020 perhaps is the year?
2020 will see new consumer purchase solutions emerge for tourists/travellers that don’t require cards or card rails. Technology like Ripple’s will be key in achieving this. For example, imagine if a Japanese tourist visiting Thailand could buy goods using a mobile app or QR code, triggering an immediate cross-border payment from their Japanese yen account to a Thai baht merchant’s account. If more consumer purchase solutions start leveraging blockchain technology in the same way, the payoff will – quite literally – be huge!
The global economy will see continued growth of micro and wallet payments to support immediate, low-value payment flows. The use case for micropayments has traditionally been confined to messaging apps like Telegram and Line. But with big tech companies introducing payment services of their own, we can expect a surge of developers flocking to digital assets as the solution to keep up with in-app, real-time payment processing demand.
The shift from traditional, large-value batch flows to low-value, high-volume payments will help SMEs break into new markets much faster. SMEs are often young and fast growing which exposes them to cash flow crises through late payments from their larger, foreign buyers.
Cross-border payment services today are not set up to help them: they are slow, uncertain, prone to errors and accrue extremely high costs. In some parts of the world, cross-border services aren’t even readily available – all of which puts enormous pressures on small organisations’ small balance sheets and lifeline cash flows.
New blockchain payment technologies like Ripple’s enable SMEs to invoice and receive international payments immediately, in small amounts, and with certainty.
This will be a game-changer, decreasing costs-of-business and enabling SMEs to free up precious capital for reinvestment. This will, in turn, increase the access to new markets for SMEs. 2020 will see a rise in international payment services like Ripple for SMEs across emerging markets, helping them to expand and process immediate payments around the world.
Outpacing of OECD economies by Asian economies in payments innovation will continue through 2020. With 80 percent of the volume in digital asset trading coming from Asia, the region has an appetite for innovation – and perhaps the greatest need for a better payments infrastructure. Blockchain has played a key role in this innovation, with its ability to make micro-transactions such as loans, payments, remittances – much more efficient and transparent. In a region primed for advances in both consumer and enterprise remittances, there is enormous opportunity for the use of blockchain technology like Ripple’s to address issues of liquidity, speed of implementation, and the cost of capital.
About the Author
Marcus Treacher, SVP of Customer Success at Ripple. Marcus has over 30 years of experience in transaction banking and payment technology, including 12 years in global leadership roles at HSBC. He served as a member of the Global Board of SWIFT from 2010 to 2016. Prior to joining Ripple Marcus was HSBC’s Global Head of Payments Innovation, applying emerging fintech to solve customer challenges in digital payments, trade and supply chain. Prior to HSBC, he held leadership positions at Citigroup and Accenture. Marcus also works with industry communities, organizations and governments to help shape new payment practices. He chaired SWIFT’s global advisory body for corporates from 2010 to 2016 and is an independent non-executive director of CHAPS Co, the UK’s RTGS clearing company, where he chairs the CHAPS Security committee & User Group.
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