How banks can gain a competitive advantage by modernizing cross-border payments

In response to the global commerce boom, cross-border payments have become a non-negotiable capability for financial institutions (FIs) and banks. With customers also demanding instant, transparent and low-cost payment experiences, payment modernization is higher on the agenda than ever.

Here, we’ll explore how financial institutions and banks can leverage modern payment solutions to gain a competitive edge in the ever-evolving landscape of cross-border payments.

The changing cross-border payment market and dynamics

The cross-border payment market is transforming, driven by growing demands for faster, cheaper and more transparent transactions. At the same time, the volume of transactions is climbing, fuelled by international trade, e-commerce and globalized workforces. This is why financial institutions need to seriously invest in modern payment technologies that support such agile cross-border payment solutions.

In a trend analysis by PYMNTS, they identified one of the greatest developments being the convergence of fintech cross-border payments with the traditional banking sector. Partnerships between financial institutions and fintechs are making waves in the industry: banks offer scale, infrastructure and regulatory compliance, while fintechs add agility, innovation and user-friendly solutions.

Emerging technologies, such as blockchain and digital assets, are also changing the landscape. Stablecoins, in particular, are gaining attention for their ability to enable near-instant settlements and lower transaction costs. Yet, challenges related to regulation, interoperability and scalability persist.

Legacy systems continue to be the major hurdle to cross-border payment modernization, with opacity, slow processing times and a lack of visibility being typical issues. Fortunately, new solutions are being introduced to address these problems, reducing friction and driving more secure and transparent ways to move money.

Why payment modernization is essential for cross-border payment solutions

Driving efficiency and cost reduction with modern payment solutions

Payment modernization empowers banks to streamline operations and reduce costs through automation and straight-through processing (STP). By minimizing manual interventions and errors, financial institutions can reduce operational complexity and improve transaction speed.

Modern payment solutions are agile with respect to onboarding new payment mechanisms and routes. With the current growth in the number of possibilities for delivering cross-border payments, such as digital assets, linked instant payment schemes, fintechs and traditional remittance providers, it’s essential that a payment solution can flex in response to these options.

Enhancing customer experience in cross-border payments

Customer expectations are higher than ever. Modernized cross-border payments offer real-time tracking, improved transparency and faster delivery, transforming user experiences for both retail and corporate clients.

Financial institutions can now leverage intelligent routing to optimize payment flows, so that as new cross-border delivery options become available, payments can be re-routed to take advantage of cheaper, faster options, or ones that go beyond account-to-account delivery to include disbursement to wallets or cards. This agility helps banks retain customers in the face of intense competition from fintech companies.

Enabling financial inclusion and market reach through payment modernization

The modernization of cross-border payments is a necessary component to enhancing financial inclusion, especially in underserved and emerging markets. In particular, by offering affordable B2B cross-border payment solutions, banks can extend services to MSMEs and communities previously excluded from global commerce.

According to the World Bank, faster digital payments can act as catalysts for growth and inclusion, particularly in developing regions. Through payment modernization, financial institutions can drive economic empowerment by simplifying access to reliable financial services across borders.

Technologies powering modern cross-border payment platforms and infrastructure

Several key technologies are powering the transformation of cross-border payment platforms and infrastructure, including the move to specific global messaging standards, cloud-native architectures and the integration of embedded finance and APIs.

• ISO 20022: With the upcoming November 2025 migration to ISO 20022, banks face a pivotal moment in cross-border payments. This universal financial messaging standard promises richer data, improved compliance, and greater interoperability across systems. Backed by G20 mandates, the transition aims to address inefficiencies in speed, cost, transparency and accessibility.
• Cloud-native and SaaS platforms: The future of global payment infrastructure lies in cloud-native and SaaS-based architectures, which offer faster onboarding, scalability and cost-efficiency. Finastra’s Payments To Go and Global PAYplus solutions exemplify this approach, allowing financial institutions to take advantage of emerging real-time cross-border solutions. Our platforms enable transparency, reliability and a frictionless customer experience.
• APIs and embedded finance: Open APIs and microservices-based architectures are key enablers of modern payment solutions, allowing banks and financial institutions to integrate with domestic and cross-border payment rails. APIs facilitate embedded finance and real-time integrations to create the contextual payment journeys customers now expect.

Gaining a competitive advantage in the cross-border payment market

There are three strategic areas that can offer financial institutions a competitive edge in the cross-border payment market: growing market reach through advanced platforms, differentiation through superior solutions and maintaining resilience and compliance across global payment infrastructures.

Expanding market share with advanced cross-border payment platforms

The modernization of cross-border payment platforms offers new opportunities for customer acquisition and geographic expansion. While SWIFT has dominated the industry, complexity and regulatory constraints have historically limited competition. Today, banks can choose from a wide range of solutions - digital assets, instant payment schemes and even strategic fintech partnerships.

This signifies a shift: modernization is no longer about compliance with SWIFT MX standards alone, but about transforming systems for agility and growth. Global players like Visa, Mastercard and Thunes are reshaping the space with fast, affordable and personalized borderless payment solutions.

Differentiation through superior cross-border payment solutions

Finastra’s Smart Routing Package empowers financial institutions to select the most optimized settlement route, whether it’s based on cost, speed of delivery or other factors. This capability enhances transaction reliability, reduces latency and equips financial institutions with an edge in cross-border payment services.

With smarter, automated routing, institutions can elevate customer experiences while minimizing internal complexity, essential in a market where service excellence greatly impacts competitive advantage.

Ensuring compliance and resilience in global payment infrastructure

Compliance is an ever-present challenge in cross-border payments. In 2025, AI-powered compliance tools have emerged as game-changers for real-time fraud detection, AML screening and identity verification. As these technologies evolve, they promise to bring greater efficiency and security to cross-border transactions.

To remain compliant and competitive, financial institutions must align with standards such as ISO 20022, adopt modern payment technologies and build strategic partnerships. The result is not just compliance, but greater resilience, reduced risk and enhanced operational agility.

Using payment modernization as a strategic lever in cross-border payments

To thrive in the evolving cross-border payments landscape, financial institutions and banks must partner with fintechs to combine regulatory reliability with innovation. This collaboration creates tailored, customer-centric solutions that deliver value at scale.

Finastra’s payment hubs, Global PAYplus and Payments To Go are best-in-class, secure and pre-certified payment hubs that consolidate domestic and international payments into a single, configurable system. They reduce complexity, improve efficiency and support intelligent payment routing, a key requirement for modern cross-border payment solutions.

Besides maintaining regulatory compliance and scalability, financial institutions that partner with fintechs can also expand into new markets, facilitate value-added services and ultimately sustain a competitive advantage.

Modern payments are no longer just about improved operational infrastructure - they’re a strategic asset. For more insights, explore our report on embracing the future of cross-border payments.