What makes the traditional system ineffective? The above diagram shows the issue in the current Banking system.
Correspondent banking forms the core of international payments via wire transfer.
All the correspondent banking relationships are impacted by changing regulations. Such relationships are being withdrawn across many geographies, causing a restricted access to financial services for a section of customers and business lines.
I believe that bank-FinTech partnerships are the defining trend for the future of international payments. With their advanced technological leverage and innovative solutions, FinTech can fill the gaps and enable banks to provide efficient, high-speed and low-cost international payment services to their customers, while improving banks’ profit margins and running a sustainable business.
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Fascinating read on the evolving landscape of international payments, especially the insights on the role of FinTech partnerships in shaping the future of banking. As regulations continue to impact correspondent banking relationships globally, I'm particularly interested in how the adoption of LEI (Legal Entity Identifier) codes can enhance these international payment processes.
LEI code registration ensures transparency by providing a unique identity to each legal entity involved in financial transactions. This not only helps in mitigating risk but also promotes a more structured and secure framework for cross-border payments. Given the advanced technological infrastructure of FinTech companies, integrating LEI codes could further streamline the compliance processes and enhance the efficiency of international transactions between the US and India. It would be interesting to see how banks and FinTech companies collaborate to leverage this in the near future.
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