While FinTechs have redefined speed and usability, launching new corridors, pricing models and APIs, banks are re-engineering their global plumbing and modernizing the settlement, compliance and liquidity infrastructure that still underpins the bulk of international flows.
The corporate strategies supporting today’s cross-border environment are becoming increasingly complex and sensitive. Companies are expanding internationally not just to grow, but to diversify risk. Treasury teams care less about marginal fee reductions and more about predictability, or knowing when money will arrive, in what currency, and under which regulatory conditions.
Volatility as an operating context has shifted the buyer’s mindset from cheapest and fastest to most reliable under stress.
At the same time, one of the more telling shifts in cross-border payments has been a renewed focus on liquidity and freeing trapped capital. In a low-rate, stable environment, prefunding and trapped capital were accepted costs of doing business. With today’s higher rates and currency volatility, keeping cash idle is no longer a defensible position for chief financial officers and treasurers.
These realities are reshaping the traditional bank versus FinTech competitive dynamic in cross-border payments innovation. Winning in cross-border payments today increasingly no longer means owning the entire value chain. Instead, it means being indispensable at a critical layer and interoperable everywhere else.
Read also: The Cross-Border CFO Playbook: Using Local Collections for Growth
How the Cross-Border Stack Is Fragmenting and Recombining
For much of the past decade, the debate around cross-border payments followed a familiar script. FinTech firms, unburdened by legacy systems, promised faster settlement, lower costs and greater transparency. Banks, weighed down by legacy infrastructure and regulatory caution, appeared destined to cede ground corridor by corridor.
FinTech firms have reshaped cross-border payments by approaching them as a product rather than a process. They simplified onboarding, clarified pricing and reduced settlement times by abstracting away correspondent banking complexity. APIs allowed payments to be embedded directly into software platforms, enabling new use cases and lowering barriers to entry for small firms.
Volatility has not erased these gains. If anything, demand for flexibility has increased. Businesses want to reroute payments quickly, add or suspend corridors and respond to regulatory changes without reengineering their systems. FinTech architectures, designed for modularity and rapid deployment, remain well-suited to this environment.
While FinTechs focused on usability, banks retained control over the less visible but structurally critical layers of cross-border payments. Settlement accounts, regulatory permissions and balance sheet liquidity remain concentrated within the banking system. For years, these assets delivered diminishing returns; modernization was expensive, and customer pressure was limited.
Volatility has altered that equation. Banks are now investing in the modernization of core payment infrastructure, including real-time settlement capabilities, internal liquidity management systems, and compliance platforms designed for continuous monitoring rather than periodic review.
See also: Cross-Border Payments Put CFOs Under Rising AML Pressure
What Advantage Looks Like When Uncertainty Reigns
The question of whether banks or FinTechs are winning obscures the structural transformation underway. Cross-border payments are no longer a single system dominated by one type of institution. They are a layered stack in which leadership can vary by function.
FinTechs continue to define standards at the experience and integration layers. Banks retain dominance in settlement, liquidity and regulatory credibility. Between these poles, collaboration has become more common as a response to complexity. Banks expose APIs. FinTechs pursue licenses. Hybrid models proliferate.
Advantage is less about owning the entire value chain than about being indispensable within it. For FinTechs, this may mean focusing on orchestration, data and customer experience while relying more explicitly on bank partners for capital and compliance. For banks, it may mean accepting that differentiation lies not in customer interfaces, but in making their infrastructure faster, more transparent and easier to integrate.
“One thing that all treasury organizations are looking for is visibility into their global activity,” Sebastian Sintes, director of transactional FX at Bank of America, told PYMNTS in an interview posted Sept. 8.
“For the corporate organizations that have been making some heavy investments into their system infrastructure, that return on that investment is going to start to be felt in the upcoming years…,” he added.
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