Temenos Launches Enterprise Cross-Border Payments Solution

Cross-border payment transaction flow is set to reach $250 trillion by 2027, says Mick Fennell, Business Line Director of Payments at Temenos, a world-leading core banking and payments solution provider.

“The revenue from those flows will likely be between $250 and $500 billion. So it’s a lucrative opportunity,” says Fennell.

Unfortunately, cross-border payments are “by their very nature” complicated to achieve. They’re also expensive and can lack transparency. Making matters worse, the banking sector’s reliance on legacy systems means that implementing any functional updates to their cross-border payments solution often requires extensive changes to core payment systems. Temenos’s solution is intended to solve that.

“Implementing cross-border payments isn’t a fixed target. It’s more like catching a moving train. The ecosystem is constantly changing, and banks must remain agile to keep up. The only way to do that is with cloud-enabled technology,”
Mick Fennell, Business Line Director of Payments at Temenos

Fennell says cross-border payments are one of the most complex payment types to achieve. “First, you have two currencies involved. Second, money never actually crosses the border.”

To achieve a cross-border payment, a bank must credit and debit funds in alternate currencies in its local and foreign branches. If no foreign branch exists, the bank must work with partners, or correspondent banks and networks. The added parties result in complexity and additional costs.

Apply for a Seat: Cross-Border Payments: Are You Ready for the New Era of Payments?

In 2020, the G20’s Financial Stability Board (FSB) issued a number of cross-border payments initiatives and goals, setting targets for transparency, cost, access, and speed. “Of the four targets, transparency is the most in-demand, especially among institutions, although consumers are likewise interested in transparency, especially regarding costs,” says Fennell.

The targets currently only exist as recommendations. However, it’s safe to assume they’ll someday become mandated.

The assumption has precedent: The European Payments Council (EPC) initially introduced SEPA Instant Credit Transfer (SEPA Inst) as voluntary but then mandated in 2024 for them to go live in 2025, in response to growing consumer demand and lack of implementation. Banks are currently scrambling to make the target.

The consumer demand for speed is now extending to cross-border payments.

“Implementing cross-border payments isn’t a fixed target. It’s more like catching a moving train. The ecosystem is constantly changing, and banks must remain agile to keep up. The only way to do that is with cloud-enabled technology,” says Fennell.

Cross-border payments fall into four general categories:

• Institutional flows
• Business/corporate flows (B2B)
• Business-to-consumer (B2C)
• Consumer-to-consumer (C2C)

Although institutional and corporate represent the largest flows by far, the C2C segment is hefty on its own.

Increased migration means more C2C remittances, and globalisation drives increased flows in e-commerce. Increased exports drive up the B2B flows.

Apply for a Seat: Cross-Border Payments: Are You Ready for the New Era of Payments?

The growing demand presents an immense opportunity for banks if they can implement a solution fast enough, and without breaking the bank—pun intended. For some banks, implementing their own cross-border payments solution means digging into the core payments solution, a risky proposition, and an expensive one. Any intended gains would likely be wiped out by the costs involved, and the risk of breaking a working system is high.

If banks do manage to implement a solution that allows them to “catch that moving train,” it opens up a revenue stream for them that doesn’t exist with domestic payments because banks can charge very little for domestic payments, if anything at all. However, they can charge for cross-border payments—both in direct fees and in forex spreads.

Temenos has just released a modular, pre-configured cross-border payment solution that banks can start implementing and testing within a single day of signing. The bank can either run the solution on Temenos’s servers, or deploy it in its own cloud solution or on-prem.

Temenos designed the solution so that banks and PSPs can hit the goals envisioned by the FSB in 2020—transparency, speed, low cost, and access.

“Many banks out there are running on systems that were originally programmed some thirty years ago, with multiple components tacked on to support updates and translate messages. Making such a system compete with the new players is hard,” says Fennell. “Temenos’s cross-border solution does more than give banks a fighting chance. It enables them to compete at the front of the race.”

Temenos currently provides payment solutions to over 500 organisations globally, both large and small.

Apply for a Seat: Cross-Border Payments: Are You Ready for the New Era of Payments?

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