Faster Payments Open Global Markets to Smaller Companies

Just a few years ago, cross-border payments were inefficient at best and filled with friction at worst.

They were opaque and took days to settle. Additionally, managing foreign exchange costs was fraught with peril for executives looking to tap into new markets or expand their supply chains.

However, a broad range of providers have entered the space, with digital solutions on offer from FinTechs and banks, helping client firms manage the challenges and rewards of global trade. One of those is FNBO, a subsidiary of 167-year-old First National of Nebraska.

Mike Salerno, senior vice president of global banking at FNBO, told PYMNTS in an interview that cross-border payments are now becoming faster while maintaining security for senders and receivers.

Traditionally Lacking in Transparency

“Waiting two days and not knowing the exact amount you were going to get, well, that’s not acceptable anymore,” Salerno said.

FNBO operates as a bank on the Swift network and has adopted Swift GPI, which allows payments to move quicker as users track money movement in real time.

“At any time in the process, we know exactly where the payment is [in the payment chain],” he said.

Transparency and predictability are especially important in the current operating environment where the dollar is strong, but currencies are volatile, and where inflation is still top of mind. Geopolitics impacts trade relationships and supply chains. Cross-border trade is no longer just for large multinationals, Salerno said. Now, firms across all manner of verticals and sizes operate outside their home markets and import and export goods.

But overarching principles apply.

“With any of our customers, they’ve got to understand the markets you’re in,” which means establishing the right trading relationships and diversifying into new opportunities, Salerno said. “There are companies all throughout the U.S. and around the globe that need to facilitate trade, and that’s a lot of money movement.”

The cornerstone of helping optimize that money movement lies with active management of foreign exchange volatility, he said.

“Just selling in U.S. dollars is not always going to be an option,” Salerno said, adding that as the dollar’s value rises, trading partners may not be able to afford or demand as many U.S. goods, so they might switch to competitors.

For firms looking to remain competitive in a given market, Salerno said using forward contracts can help price products in the local currency. There’s also the option of sourcing inputs through local (and cheaper) markets.

“It all comes down to how you can make it easier for your customers to import and purchase products from you,” Salerno said.

For exporting firms, inventory management and supply chain management are co-existing considerations, and sourcing from multiple countries and vendors (creating new routes for the flow of goods) can eliminate the dangers of relying on a single “thread” of a supply chain, he said.

With the emergence of digital technologies and faster payments, Salerno said that “what most people are afraid of is if you’re making payments faster … is how to fight fraud.”

Banks are stepping up their use of advanced technologies to make sure money doesn’t leave an account until recipients and other parties are verified. FNBO uses outreach programs to educate consumers and commercial clients about different fraud schemes, he said.

“You’re seeing banks implement more controls and checks to ensure that payment instructions are completely validated” through artificial intelligence and real-time analysis of payment “chains,” he said.

“The transparency is helping the banking community move money faster and smarter … which is a good value proposition for our customers,” Salerno told PYMNTS. “It allows them to actively manage money movement on their end — and manage their profits.”