Global targets for cross-border payment reforms at risk of delay

The Financial Stability Board has stated that global financial authorities are expected to miss their 2027 target to significantly enhance international cross-border payments.

The latest progress report from the FSB on the G20 roadmap for cross-border payments finds that, although some policy milestones have been met, tangible improvements for end users remain limited. Persistent challenges in cost, transparency and efficiency continue to hamper broad progress, with payments still often slow and expensive for businesses and consumers alike.

Cost and competition barriers

Laurent Descout, Chief Executive Officer and co-founder at Neo, attributes the limited advancement in part to the concentration of power among a handful of major banking institutions. He contends that this group holds an "oligopoly that limits competition and causes bottlenecks" within the correspondent banking model, which remains the backbone of global payment rails.

"For their part, fintechs have driven a significant reduction in cross-border fees and FX spreads since 2011. However, the reality is that a small number of major banks continue to dominate the correspondent banking business, creating an oligopoly that limits competition and causes bottlenecks. At the same time, regulatory inflation and non-harmonised rules or practices have led to a global waste of the resources used to clear payments, creating inefficiencies and high costs. This has left fintech players on their own, with each player left to build their own screening tools that end up creating additional layers of cost."

Descout explains that, although financial technology platforms have brought about reductions in transaction costs and foreign exchange spreads over recent years, the entrenched position of large banks slows further progress. The need to embark on building proprietary compliance and security controls, driven by divergent rules and standards globally, adds further overheads rather than eliminating inefficiency.

Regulatory divergence

The FSB's report highlights that speed and access have improved in certain payment corridors, but many obstacles remain. Costs for cross-border payments, especially to and from emerging markets, continue to exceed both user expectations and the G20's benchmarks.

David Patrick, Head of Payments Strategy at RedCompass Labs, points to the complexity of managing multiple, conflicting regulations across jurisdictions as a central cause of high costs and lack of transparency.

"Despite advances in digital technology and the rise of neo-banks, cross-border payment costs remain stubbornly high, mainly due to the hidden costs of information security, compliance, and the complexity of operating across multiple regulatory regimes. Each jurisdiction imposes its own rules on data protection, anti-money laundering, and capital movement, often with limited interoperability, which adds friction instead of efficiency. National regulators play an essential role in maintaining trust and stability, but their mandates are domestic, making global coordination difficult. Greater regulatory alignment, not simply more regulation, is required if we are to reduce costs and improve efficiency."

Patrick adds that even as digital-first platforms and newer banks have improved the customer experience in terms of speed and convenience, these firms still rely on legacy networks tied to the correspondent banking system. These networks are characterised by slow settlement cycles and embedded costs linked to compliance, anti-money laundering controls, and inconsistent data requirements.

Outlook for improvement

The report and industry commentary indicate the need for stronger international cooperation to harmonise standards and improve interoperability. Both Descout and Patrick argue that aligning regulatory practices globally, rather than simply increasing oversight, will be essential for real progress.

Descout highlights the opportunity presented by emerging technological standards, noting, "Hope comes from new message formats such as ISO20022 and the on-chain networks that will allow information to circulate faster and be treated faster, reducing costs on an industrial scale. What is needed now is adoption across supply chains."

Patrick also urges governments to "focus on harmonised standards and open access, letting technology and competition drive innovation, rather than constraining them through conflicting national rules."

Policymakers remain under pressure to accelerate improvements for end users. Stakeholders across the sector will continue to watch whether international efforts can translate new technologies and standards into lower costs, increased transparency and faster settlement across borders.