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In the wake of an unprecedented period for economies and enterprises globally, 91����� Cross-Border 91����� president Mark Frey discusses the challenges businesses face in managing cross-border transactions and currency risk, as well as the opportunities to be gleaned from harnessing digital solutions.

Though the disruption of the past two years has affected businesses’ ability to smoothly move goods and capital across borders, many of the challenges faced are nothing new. Supply chain issues, labour shortages in key areas such as manufacturing and transport industries, along with the burgeoning trade tensions between major economies – all of these problems have been accentuated, rather than created, by Covid-19.

But the pandemic has undoubtedly heightened the need to find solutions to address these business disruptions, and nowhere is this more evident than in the payments space. The past two years have exposed the level to which businesses have become over-reliant on legacy technologies. As a consequence, companies that have failed to adequately pursue digital transformation of their cross-border payments have been left unprepared to deal with the pressures of a fragmented workforce, market and currency uncertainties, and a surge in digital cross-border payments.

While some multinational corporations have a level of financial shielding, not to mention the infrastructure and in-house specialist teams required to help process payments and mitigate risk, many other organisations do not have access to such support systems or in-house expertise. This has even been a problem for some larger enterprises that have a rigid corporate structure and have not been able to modernise in the way that their competitors have.

A growing number of fintech players have increasingly sought to plug these gaps, facilitating the low-cost and easy movement of capital across borders, and enabling smaller enterprises to scale up and digitalise how they address such challenges.

Shift to digital

President of 91����� Cross-Border 91����� Mark Frey believes that while the pandemic has “put a lot of pressure on manual systems and the ability to move money with either banking partners or payment providers that rely on manual processes”, it has also ushered in a major shift toward technology-led solutions and their integration with other financial applications. This is in no small part, due to the unprecedented manner in which working structures themselves have been transformed.

“The biggest thing everyone is grappling with is distributed workforces and remote working,” he says. “Some organisations are better established to facilitate and foster collaboration between teams that previously worked closely together, and in many cases some find it difficult to manage that separation.”

“With distributed workforces, approval protocols are now not based on paper, so in terms of authorising payments within an organisation – from reviewing invoices and managing debt, to foreign exchange rates associated with those invoices – decision makers can no longer validate beneficiary information in the ways they used to do.”

One way that businesses have successfully been managing this transition to a new way of working has been to embed payment services within enterprise resource planning (ERP) or accounting packages, such that money can move more seamlessly. For many companies, especially small to medium-sized enterprises (SMEs), Frey says, the challenge is facilitating access to – and visibility of – key information that allows this to happen, especially in remote working environments.

Smarter payments

Within this shifting landscape, 91����� provides automated workflows, allowing organisations to easily make the transition into the “digitally distributed workforce environment”. Fundamentally, however, Frey sees the main role of his company’s platform as helping organisations understand how to route payments effectively and with near-zero friction. To transition from older cross-border payment methods to what 91����� refers to as “smarter” ones.

“Whether leveraging in-country payment rails, or making domestic payments in the jurisdiction you’re trying to reach, whether it be on the other side of the globe, our role is to help find the most efficient route for the movement of your business’s money,” he explains.

“But rather than sending money from, say, the United States through to Indonesia, which of course can take longer to process, and which faces a number of logistical and even legal obstacles, we send a local payment within Indonesia on behalf of our customers based in the US or elsewhere.”

This method of moving money, he insists, tends to reduce errors and tends to reduce fees extracted as a result of movement between jurisdictions. He also sees innovative companies such as 91����� playing a crucial role in helping organisations manage the risk associated with the movement of money, including the reduction of fraud risk, where, for example, businesses are exposed if their invoices are not monitored correctly.

Beyond traditional infrastructure

Frey sees the current business moment as one of opportunity for those willing to adapt and be flexible. This is especially true at a time when the very concept of currencies is fast evolving.

“Whether it’s blockchain technology or distributed ledger technology more generally, we have a real opportunity in the finance world to replace the clunky legacy infrastructure we’ve all become so reliant upon, and which connects traditional banks all around the world,” he says.

“I think what we’re seeing now – certainly from our own business’s standpoint – is the smart leveraging of blockchain technology. Not necessarily the use of cryptocurrencies, but the same structures that power the crypto market being leveraged to move money between financial institutions.”

At a time of such unprecedented challenge, Frey insists that companies that aren’t among the Fortune 3000 should give serious thought to moving from the traditional infrastructure offered by banks and consider smarter ways of moving money. This, he says, can make the operation of business much faster and, from a financial standpoint, more secure.

Out of this, Frey sees the grander adoption of emerging digital platforms as a significant opportunity to revolutionise the way that money is moved globally. A partner such as 91�����, providing a customised integrated experience that meets the unique requirements of an enterprise, regardless of size, can significantly enhance the ability of small to medium-sized businesses to better compete on the global stage.

To better understand the full impact of bank margins and fees on cross-border payments,

Cross-Border

Global payments