According to Anders la Cour, chief executive of Saxo Payments, the global transaction banking industry is experiencing one of the biggest shake-ups it has seen in decades. Non-bank tech disruptors such as bitcoin and the blockchain, the eastward shift in global economic power, low-interest earnings in developed markets, the emergence of challenger banks, and regulatory pressure to reduce risk and inefficiency in payment-clearing infrastructure are all contributing to what is a seismic shift in how the sector operates and what customers expect.

Shortcomings in banking services, along with the wish of some corporations to be ‘bank agnostic’, have therefore opened the revenue doors to FinTechs and digital giants. But how easy is it for businesses to switch and what can they expect from both incumbents and new service providers?

Saxo Payments commissioned exclusive research to identify how the diminishing availability of services is impacting, not only on FinTechs but on the business of their clients’ operating in international markets.

Ranking their top three biggest concerns when it comes to cross border transfers, respondents placed cost as their biggest concern, unsurprisingly, with 50% ranking it top. Speed of transaction ranked highest as the second biggest concern, taking 32% of the votes. International regulatory requirements ranked third recording 30% of the votes followed closely by limited payment channels.

Clearly the flow of cash, to and from different businesses, is vital to keep a business alive. Yet in the world of FX payments it appears that there are some severe barriers that are stifling cash flow, with nearly half (44%) saying that payment settlement times cause the longest delays. In second place, reconciliation (17%) also caused delays, followed by screening (12%). It’s not all bad, though, as nearly a quarter (24%) said they aren’t aware of any delays. However, this could simply be that they have come to accept and live with long lead times without being aware of other options.

High overheads are compounded by the fact that nearly a third believe they are not offered competitive rates by their current FX provider (29%). Interestingly, however, nearly one in ten simply hasn’t compared rates. And, significantly, going to the heart of the challenges faced by fast-moving businesses, it seems that current providers are not responsive to the FX and payments businesses needs with one in five (21%) saying it took between two and three months to set up currency account, payment and FX facilities for their business.

Cross-border payments key for growth

Given the concerns already identified by respondents, it’s probably not surprising that the top three payments related factors hindering the growth of FX and Payments businesses are the cost of FX, access to bank accounts and the speed of settlement.

With many of the big banks pulling out of overseas markets and preferring to operate in their domestic market, access to these services looks set to get worse, not better for businesses still relying on the traditional providers. 40% said their current provider cannot help them reach new international markets, and 45% say their provider does not offer access to FX tools or analytics to help manage FX risk, despite the cost of FX being identified as a barrier to growth.

What our white paper identifies is that in what has become a global digital world with very few barriers, the banking process still appears to be fenced in. Rising compliance, risk and operational costs are driving the banking sector to focus on digitising their business and operate domestically. Businesses that want to trade internationally, therefore, have to open separate accounts with multiple banks in multiple countries. With lengthy application processes taking as much as six to 12 months, the administrative burden can be huge.

Whether it is the lack of competitive rates or long delays in payment settlement, it seems that accessing global transaction banking is at the heart of the challenges facing businesses trading internationally.

Access to fast, low-cost FX rates is no longer the preserve of big, multi-nationals, as online trading opens the door to smaller businesses that need to be able to make and receive international payments. However, the research shows that too many businesses are unable to grow into new markets and reach their potential due to slow, expensive services that put too high a burden on smaller firms and start-ups.