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European payment leaders bullish despite lost business from international challenges - Industry roundup: 5 June

European payment leaders bullish despite lost business from international challenges

While 97% of European payment leaders believe their systems are ‘completely’ or mostly ‘compatible’ with how international recipients receive funds, nearly 40% reported losing business due to cross-border payment issues. This was a key finding from a survey of financial institutions, banks, fintechs, SaaS, money transfer operators and payment service providers in the UK, France, Germany, Netherlands, and Spain by Thunes and Visa.

The survey findings reveal that despite a majority reporting confidence in their firm’s cross-border payment capabilities, decision-makers face difficulties including lost business from failing to integrate with popular and emergent payment methods.

Respondents cited significant differences in the ease of issuing payments to different endpoints. Bank accounts were ranked as the easiest method to facilitate payments, followed by global cards (Visa), e-wallets (like PayPal), cash and local card schemes.

Despite their growing popularity, digital wallets are ranked as the most problematic endpoint for cross-border payments, with only 8% of respondents describing them as the easiest to integrate. By 2026, 60% of the world’s population is expected to use digital wallets for daily payment needs.

Security concerns, payment tracking, and processing speed were identified as the top challenges to integrating different payment systems. Respondents expect AI to play a critical role in improving payment processes, fraud detection, risk management, and customer support. Blockchain technology and digital currencies are also seen as promising ways to facilitate secure, rapid, and low-cost transactions.


Risk managers ask for more firepower

Less than half of global risk professionals are confident in their risk management processes during normal market conditions, according to a study from Coalition Greenwich. Meanwhile, fewer than 40% believe their practices are adequate to handle the next unexpected market shock.

The study concludes that uncertainty about risk management capabilities is rooted in two main issues: 

  1. Risk management has become more challenging as markets move faster and the list of risks facing financial service firms broadens. 
  2. Many financial service firms still struggle to aggregate the data needed to assess and manage risk from multiple internal and third-party systems.

“Financial service firms are in a race to keep up with the increasing complexity, speed and scope of today’s global marketplace,” said Audrey Costabile, Senior Analyst for Coalition Greenwich Market Structure & Technology and author of ‘Preparing for Financial Markets Shocks with Smarter Risk Management’. “Risk managers understand the stakes at play and are pushing for continued investment in faster and more accurate risk management technology.”

The expansion of investment and trading into global strategies, new products and electronically traded markets has increased the challenge of managing risks for financial service companies. In an era of real-time communications and rising market volatility, overnight risk management might no longer be sufficient. In addition, managers need faster access to larger sets of good quality data to accurately model shocks to underlying risk factors to avoid outsized shocks to underlying risk factors. Meanwhile, political and corporate instability, financial market turmoil, climate events, and others, are forcing financial service firms to move beyond traditional risk management metrics and data and introduce multi-factor stress tests to prepare for future shocks.

“Professionals who feel confident about their risk management practices still struggle to aggregate the necessary data to support a thorough analysis of risk exposure,” added Costabile. “Risk data is siloed and difficult to combine, and many risk managers are relying on multiple, disparate systems to view risk across all their books.”

Although many study participants believe that overnight processes are still sufficient, a growing number of risk managers are concerned about a lack of real-time risk assessment.

“At a time when markets are trading in real time, a reliance on overnight metrics could result in response times that are slower than those of competitors and could leave firms in the lurch when unexpected market or macro events occur,” concluded Costabile.


Australia issues inaugural AU$7bn green bond

The Australian government has issued AU$7bn of its inaugural green bond, in a milestone for the country’s sustainable finance market. A government statement noted that the global energy transformation represents a golden opportunity for Australia and this bond is pulling more global and domestic green capital into financing that opportunity.

Money raised from the bond will back projects that support Australia’s role in the global economy and create new jobs in communities around the country.

The Australian Office of Financial Management’s (AOFM) bond issue was over‑subscribed with more than AU$22bn in bids from 105 investor institutions across Australia, Asia, Europe and North America.

The green bond gives investors from around the world the opportunity to back government-supported projects in Australia that are crucial to climate change mitigation, adaptation, and improved environmental outcomes. Money raised from the green bond will go towards projects like green hydrogen hubs, community batteries, and clean transport, as well as programs to conserve biodiversity, among others.

The projects supported by the bond should deliver significant environmental benefits, including lowering greenhouse gas emissions, increasing Australia’s renewable energy production and bolstering our biodiversity conservation, restoration and adaptation.


Approach to payments driving competitive differentiation among merchants

Merchants see the value in a seamless payment experience, according to the 2024 Payment State of the Union (PSOU) report, commissioned by Discover Global Network with S&P Global Market Intelligence’s 451 Research. Nearly two out of three (61%) merchants say payments are a highly strategic area of focus that drives significant competitive differentiation.

Merchants see an assortment of digital payment options as a key driver, as over half (53%) said offering various digital payment options is the top strategy for driving conversions, highlighting the need for diverse payment integration for a personalised payment experience. Consumers agree with merchants, according to the research, which found that the ability to pay using a preferred payment method is the most significant factor (63% strongly agree) influencing consumers to complete a purchase. But there is still work to be done, as less than one out of four (23%) merchants believe they provide highly engaging digital customer experiences.

The research provides plenty of other insights for corporates in the retail sector, not least that omnichannel options are a crucial pain point for consumers and an opportunity for merchants. While most consumers globally (57%) expect to spend most of their discretionary income online this year, in-store purchases are rebounding, rising to 43% in 2024, up from 39% in 2023. Consumers in both North America and EMEA are driving in-store spend. More than half (55%) of consumers in North America and nearly half (48%) of consumers in EMEA expect to spend the majority of discretionary income in-store.

Over the last six months, consumers have experienced a lack of omnichannel options as the primary pain point after making a payment to businesses. Merchants recognise there’s work to be done, as 86% agree their omnichannel payment experience needs improvement.

The benefits of tap-to-pay on mobile include capturing merchant interest, driven by the ability to accept payments nearly anywhere (61%) and deliver a more personalised sales experience (56%). Consumers also enjoy the ease of tap-to-pay on mobile, with nearly three out of four consumers (73%) comfortable making an in-person payment by tapping their card or phone onto a merchant’s mobile device.

In addition, to convert more shoppers in-store, merchants are prioritising ways to offer an integrated app checkout experience that combines payment, offers and rewards (43%), promote contactless payment options (39%) and offer more instalment/financing options (39%).


Societe Generale launches a sustainable framework for transaction banking

Societe Generale has developed a Sustainable GTB Framework to help its clients assess and monitor the environmental and social impacts of their day-to-day working capital, trade, and liquidity management.

The framework is designed to help corporate treasurers to support their company’s transition by identifying activities considered to have positive environmental or social impact, approaches for reporting the impact of these transactions, and methods through which transaction banking can support these activities.

The framework is based on a transparent ESG qualification process. The bank says that the methodology has been established in the spirit of best market practices, such as the Green or Social Loan Principles, while considering the specificities of global transaction banking. To ensure a robust framework, Societe Generale enlisted ISS-Corporate as an independent reviewer, to evaluate the qualification system’s core elements for identifying sustainable GTB solutions and assessing the eligibility criteria.

The framework focuses on sustainable GTB solutions offered by Societe Generale to large corporates. This includes cash management (such as working capital loans), trade finance (such as trade facilities, guarantees, letters of credit, stand-by letters of credit), and factoring services (such as receivable finance and forfaiting).


Ramirez launches government MMF in partnership with Hispanic Scholarship Fund

Ramirez Asset Management (RAM) has expanded its partnership with the Hispanic Scholarship Fund (HSF), one of the largest US nonprofit organisations supporting Hispanic American higher education. RAM and HSF’s expanded partnership is tied to the December 2023 launch of the Ramirez Government Money Market Fund (RAMXX). RAM will donate 10% of the fund’s net management revenues to HSF to further support Latino/a students with the knowledge, resources, and support needed to access higher education.

The RAMXX instrument is a traditional government MMF invested in securities issued by the US government, its agencies, and instrumentalities, including repurchase agreements collateralised solely by US government securities. The Fund is currently available for direct investment via ICD’s Treasury First, JP Morgan’s Morgan Money, US Bank’s Cash Solutions, and Treasury Curve. RAM says it will work to make the fund available on other cash portals shortly.

“We are excited to partner with Ramirez on this initiative and applaud the organisation for its ongoing support of HSF and commitment to the Hispanic community,” said Fidel Vargas, Chief Executive Officer of HSF. “I am proud to highlight that 90+ cents of every dollar spent by HSF goes directly to scholarships, support services, career services and programmes, and the funding from this initiative will be no different.”


Intellect platforms aim to reimagine corporate procurement and AP processes

Intellect Design Arena has launched two AI-powered platforms - iCPX (Corporate Procurement eXchange) and iAPX (Accounts Payable eXchange) - using the open finance platform. The firm says that these platforms apply ‘first principles’ thinking along with embedded genAI from Intellect’s own Purple Fabric AI platform to extend its presence in the commerce ecosystem by appealing to the procurement and accounts payable operations of large and mid-sized enterprises.

The iCPX is an open API-based source-to-pay platform aimed at reimagining the corporate procurement ecosystem. The firm says that cost overruns, inefficiencies and non-compliance are the main challenges in procurement due to a need for cognitive decision-making, manual content generation requirements, and unavailability of insights at the right time for proactive process interventions. The platform embeds expert AI agents while fostering the API economy, which should let global businesses achieve efficiency, cost-effectiveness, and strategic agility. It supports specifications-driven procurement and catalogue-driven procurement, and has over 100 procurement mode variations built-in. 

On the AP side, Intellect says that the iAPX platform provides accuracy and efficiency to clients. By leveraging CDG (cognitive data graph) technology, 12 global patented algorithms and 7 expert agents, iAPX is designed to eliminate duplication and discrepancies of invoices by up to 98%. Through cognitive decision making, automating time-consuming repetitive tasks and content generation, the platform can reduce time, cost and compliance concerns of enterprises.


Bitpanda expands partnership with Deutsche Bank

Fintech unicorn Bitpanda is expanding its partnership with Deutsche Bank to provide real-time payment solutions for incoming and outgoing transactions for users in Germany. This API-based account solution will provide Bitpanda with access to German IBANs, streamlining and enhancing the user experience in an effort to ensure confidence, speed, and efficiency. 

This is the latest step taken as part of Bitpanda’s efforts to provide a tailored local solution and support the continued strengthening of the position of the digital-asset trading platform in Europe. Deutsche Bank already supports the operational needs of Bitpanda as its European Hausbank for cross-currency solutions in Austria and Spain.

Cooperation with traditional financial services providers is a strategic goal throughout 2024 for the unicorn, which believes that such integration will shape the future of the financial services industry.

“Bringing the best parts of the industry together is where we can create real value for people,” said Lukas Enzersdorfer-Konrad, Deputy CEO of Bitpanda. “Deutsche Bank’s commitment to working with new and innovative players in the financial industry continues to make our partnership possible. From today, we can access a range of Deutsche Bank’s products, unlocking benefits for our team and our users.”

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