As the year 2020 opens, the world is increasingly connected – you might even call it hyperconnected. Digital interactions are the reason for this hyperconnected state, and on a personal level, many of us have been experiencing hyperconnectivity for some years through social media, texting and even video chat apps.
Now, those myriad and instantaneous interactions are becoming common in the business world. At work, you might find yourself working in real-time with a freelance software developer halfway around the globe or spending part of your day interacting on video calls with colleagues in other cities.
When it comes to payments, the last decade saw the emergence of fintech companies. Fintech's purpose was to disrupt the industry by digitizing the payments process. Early on, the focus was on digitizing consumer-to-consumer payments, but more recently, attention is shifting to the digitization of business payments.
Still today, the majority of cross-border business payments travel via the global banking system. As those payments travel via the correspondent banking network, there are multiple intermediaries that add costs and delays. For many years now, it’s been apparent that the banking system’s process of sending funds around the world is outdated and doesn’t accommodate the demands for speed and efficiency expected in a hyperconnected world. Understanding that, banks have undertaken projects to retrofit carbon paper-era systems to be faster and more cost effective. These efforts are still very much a work in process, and their success is far from certain. Adding to the problems in retrofitting the banking network is the fact that each year, due to risk, an increasing number of correspondent banks pull out of correspondent banking networks. In fact, from 2012 to 2019, the number of correspondent banking relationships shrunk by 20 percent. Although process inefficiencies are being addressed, the network is shrinking – certainly not a situation that’s conducive to a hyperconnected business environment.
As we move into 2020, providing business payment solutions that enable people and businesses to connect with each other in new and meaningful ways is the future. That’s where Local Bank Transfers come in. Transpay has taken a leading role in enhancing hyperconnectivity in the payments ecosystem by creating our own payments network. Our proprietary network was expressly designed to meet the demands of a hyperconnected world and enables funds to move around the globe with fewer “hops” (a colloquialism for the correspondent banking handoffs) thanks to direct bank partnerships that reach 90% of bank accounts worldwide. Local Bank Transfers travel with ease via our network, which is designed for handling global mass payouts from businesses to businesses and individuals. Local Bank Transfers speeding along new rails that offer direct connection to bank partners is what hyperconnectivity looks like in the cross-border payments industry.
To learn more, visit our article on New York City's Subway and the Global Banking System.