#4: How Challenger FMIs are Revolutionising Cross-border Payments

14 Aug

30th August 2022

With:

| Claudi Ceresani (DGT Solutions)

| Phil Mochan (Nomos)

In Session #4, our guests explore how Challenger FMIs are moving beyond the legacy constraints of the SWIFT-led correspondent model. While wholesale high-value payments are increasingly optimized, "lower-value" cross-border flows—essential for SMEs and international remittances—remain disproportionately expensive due to the multiple layers of intermediary banks.

The discussion focuses on the emergence of Next-Generation payment rails that utilize flexible, cloud-native computing and decentralized ledger concepts to provide "direct-to-account" connectivity. By bypassing redundant intermediaries, Challenger FMIs like Nomos aim to democratize access to global liquidity. Phil and Claudio analyze the risks and policy shifts required to scale these solutions, arguing that the public sector stands to gain significantly from the increased financial inclusion and economic activity that "low-cost, high-speed" remittance can unlock.

The session covered:

The "Lower-Value" Bottleneck: Why transactions under $10,000 are often the least efficient in the correspondent banking system and the impact this has on global SMEs.
The Economic Upside: How reducing the cost of cross-border remittances can act as a massive stimulus for emerging markets and cross-border trade.
FMI Innovation: Exploring how Phil Mochan’s Nomos provides a new global infrastructure that supports, rather than replaces, correspondent banking by providing more efficient settlement layers.
Cloud-Native Resilience: Using affordable, scalable computing to build payment infrastructures that are more flexible and less capital-intensive than legacy on-premise systems.
Policy & De-Risking: Addressing the regulatory challenges where "know your customer" (KYC) and anti-money laundering (AML) requirements often lead to the "de-risking" of certain corridors, and how technology can solve the compliance gap.
The Future of Remittance: Moving toward a world of "atomic" cross-border retail payments where the finality is instant and the fees are transparent.
Public-Private Gains: The role of Challenger FMIs in helping central banks achieve the G20 targets for enhancing cross-border payments.