Published: December 10, 2024
According to the Financial Stability Board’s latest report, significant progress has been made – but a lot more needs to be done to stay on track.
Back in November 2020, the G20 nations turned their focus to cross-border payments. As leaders agreed at the time, payments needed to become cheaper, faster, more transparent and more accessible. The result was a seven-year roadmap, setting quantitative targets around these goals. For instance, it specifies that the cost of sending a $200 digital remittance should fall to 3%, and that three-quarters of cross-border payments should be credited to the beneficiary within an hour.
Four years into their roadmap, the Financial Stability Board (FSB) has published a progress report detailing how the various parties are getting on. With the Sibos conference underway in Beijing, cross-border payments are top of mind for the financial services industry – and the FSB was keen to weigh in on the state of play.
As their report emphasises, efforts have been continuing apace on a global scale. Many banks have already migrated to ISO 20022, a flexible standard for financial messages that is set to be phased in by November 2025. Once it’s in place across the board, ISO 20022 will enable banks to communicate in the same language, wherever they are in the world.
Another success story is fast payment systems (FPS), a service that enables the near-instant transfer of funds. More than 70 jurisdictions have now implemented FPS, and many are working to establish links with other FPS abroad. This would in theory speed up cross-border payments, by enabling individuals and businesses in different jurisdictions to benefit from FPS-style services across borders.
Overall, more than half of the planned actions set out by the G20 have been completed – an appropriate milestone considering the roadmap is more than halfway through.
Inconsistent progress
While developments of this nature are encouraging, the FSB’s key performance indicators (KPIs) suggest that a greater push will be needed to meet the 2027 goals. Performance has been inconsistent across market segments, with some regions much closer to meeting the targets than others.
For instance, within the wholesale segment the Middle East saw significant improvements in speed, but sub-Saharan Africa remains a long way from the goal. By contrast, sub-Saharan Africa came out in front within the remittances segment. It had the highest share of remittances credited within one hour, with the East Asia and Pacific region trailing behind.
In general, progress on the KPIs has been minimal since last year.