Experience is a key differentiating factor for organizations that want to rise above the commoditization of products and deliver differentiation. Fast, frictionless payments improve customer experience and build loyalty into the relationship.

Yet customers are likely to abandon a transaction encounter if there is too much friction in the purchasing process. According to our recent True Impact of Failed Payments study, 72 percent of respondents manually check bank beneficiary name and address details, adding friction in payment processes. This results in lost revenue, damaged customer loyalty, and increased staff workload.

Our research forecast revenue from payments in Asia-Pacific will reach $932 billion in 2025, far higher than any other region. Organizations worldwide are adopting ISO 20022, a new global and open standard for payment messaging that establishes a common language and data model for payments.

Perfecting cross-border payments infrastructure

When the financial industry adopts ISO 20022 as the common language for payment systems, migrations should significantly improve data quality, reduce manual intervention and help build a more efficient payment system.

Governments stress the importance of modern instant-payment systems that embrace effectiveness and efficiency. An international forum of 19 major countries and the European Union, known as the G20, has made it a priority to improve the cost, speed, access, and transparency of cross-border payments since 2020.

In the same year, the G20 also developed a Roadmap for Enhancing Cross-border Payments with the Financial Stability Board (FSB) in coordination with Committee on Payments and Market Infrastructures (CPMI) and other relevant organizations.

However, the existing payment systems across countries are different and there is no one-size-fits-all approach. Connecting payment systems across boundaries is a long game and our research found 14 percent of cross-border payments incur charges from a banking partner.

Evolving geopolitical conditions fuelling the problem

Amid heightened geopolitical tensions, sanctions lists are constantly changing. Core regulatory authorities issued 329 updates to their sanctions lists with 5,674 added designations in 2022, compared to 211 updates with 517 added designations in 2021.

Regulatory authorities mandate the checking of cross-border payments against sanctions lists to prevent payments to terrorists and drug traffickers and other illicit activities.

The role of automation

Businesses must keep up with the competition at a time when technology and real-time payment initiatives are rapidly changing the marketplace. Today’s technology enables corporations to enhance payment efficiency without human intervention.

Straight-through processing (STP), an automated electronic payment process, allows businesses to process payments faster and at a lower cost. Businesses and financial institutions can rely on STP to protect the integrity of critical supply chains and deliver a smoother customer experience. The level of STP determines the efficiency of an organization’s payments system. Higher STP rates mean lower processing costs.

Increasing STP rates requires a wider application of automation in payments. Companies leveraging API technology and real-time global payments data achieve the highest STP rate (31.8%), mitigating wasteful expenses and productivity losses associated with failed payments because they rein in the wasted expense and productivity losses tied to failed payments. There is still room for improvement in Asia-Pacific, where companies only reach a rate of 24 percent.

Integrating advanced API payments technologies with more accurate global payments data is the first step towards raising STP rates and realizing measurable gains across global payments workflows.

As the paradigm for customer engagement evolves, flexibility becomes crucial in addressing regulatory requirements that change daily and sometimes hourly. Achieving the next phase of customer engagement in the digital world requires organizations to elevate the customer experience without creating unnecessary friction in the customer journey. Companies that fail to react or respond will eventually risk damage to their revenue.

Ramanathan (“Ram”) Sivabalan is the Director of Market Planning for Financial Crime Compliance for the APAC region at LexisNexis® Risk Solutions. Based in Singapore, Sivabalan leads the development and fulfilment of the overall revenue and customer value proposition throughout Asia Pacific.

With over 22 years of experience in Banking, Financial Services and Insurance industries, Sivabalan has a strong track record in leading the legal and compliance functions and effective business operations in various markets within Asia. Sivabalan previously held legal and compliance leadership roles at MUFG, Societe Generale and Future Generali.

Sivabalan is a member of the Institute of Company Secretaries of India and is a two-time graduate of the University of Mumbai.

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