Global Banking Industry Challenges And How To Overcome Them

12.10.23 08:27 AM - By Naushad Contractor

The banking industry is constantly evolving. Payment processing and information transfer in banking has improved significantly. Data analytics have always been a part of the financial industry’s tool-kit and now they have advanced even further. With the acceptance of artificial intelligence, the banking industry could evolve again completely. Still at the present, banks are facing a number of challenges in the current economic climate. These challenges range from increased competition and regulatory pressure to changing consumer preferences and the emergence of new technologies. In this blog post, we will explore some of the most significant challenges faced by the banking industry and discuss how banks can overcome these challenges.


 Table of contents

  • Increasing competition

  • More regulatory pressure

  • Changing consumer preferences

  • Cybersecurity risks

  • Data privacy

  • Fraud detection

  • Risk management

  • Liquidity management

  • Investment management

  • Cost management & operational efficiency

  • Talent management

  • Customer service / CX

  • Compliance

  • Digital Transformation & the Rise of APIs and Open Banking

  • Financial inclusion

  • Improving foreign-exchange controls

  • Cross-border payments

​​Increasing competition

With the rise of digital and mobile banking, traditional banks are facing increased competition from fintech companies and other non-traditional players. A Goldman Sachs report stated that, these start-ups will reroute up to $4.7 trillion in annual revenue from conventional financial services organizations.  There are some fintech and neobanks which offer banking services at zero fees and mobile-only services.


To counter these non-traditional financial players, as a stopgap measure, many financial institutions are looking for partnerships and/or acquisition opportunities in the fintech space. Banks can also overcome this challenge by investing in digital technologies, such as mobile banking apps and online banking platforms, and using data analytics to better understand and meet the needs of customers. Banks along with offering their core products, can also expand into other services using fintech APIs.

Innovation: Banks can offer new and innovative products and services to attract and retain customers. For example, they can invest in new technologies like mobile banking, blockchain, and artificial intelligence to improve the customer experience.

Cost Efficiency: Banks can reduce costs by streamlining operations, automating processes, and outsourcing non-core functions.

Diversification: Banks can diversify their revenue streams by expanding into new markets or products, such as wealth management or insurance.

Building Stronger Relationships: Banks can build stronger relationships with customers by providing exceptional service, and understanding their needs and preferences.

Mergers and Acquisitions: Banks can merge with or acquire other banks to increase market share and achieve economies of scale.

Focusing on Niche Markets: Banks can focus on serving niche markets, such as small businesses or specific communities, that are underserved by larger banks.

Digital transformation: Banks can digitize their operations, processes, and customer interactions to increase efficiency, accessibility and to offer more personalized services.

Improving Risk Management: Banks can improve risk management practices to better identify and mitigate potential losses, which can help them maintain stability and attract investors.

​​More regulatory pressure

Banks are facing increased regulatory pressure from government and financial institutions. Regulatory pressures on banks can include compliance with laws and regulations related to issues such as anti-money laundering, consumer protection, and financial reporting. Banks may also be subject to additional scrutiny from regulatory bodies. There are new rules with regard to incidence response and cybersecurity incidents.


Banks can overcome this challenge by implementing robust compliance management systems and ensuring they have a deep understanding of regulatory requirements. They can also invest in regulatory technology (RegTech) solutions to automate compliance processes and reduce costs.

Anti-Money Laundering (AML): Banks must have systems in place to detect and report suspicious activity related to money laundering.

Know Your Customer (KYC): Banks must verify the identity of their customers and maintain records of their information.

Consumer Protection: Banks must comply with laws and regulations that protect consumers, such as the Truth in Lending Act and the Fair Credit Reporting Act.

Financial Reporting: Banks must file regular reports with regulatory agencies such as the Federal Reserve and the Office of the Comptroller of the Currency.

Cybersecurity: Banks must have robust cybersecurity measures in place to protect against data breaches and cyber-attacks.

Sanctions: Banks must comply with laws and regulations that prohibit transactions with certain individuals and countries under sanctions.

Capital Adequacy: Banks must maintain sufficient capital to meet regulatory requirements and protect against losses.

Stress Testing: Banks must conduct regular stress testing to evaluate their ability to withstand economic downturns and other adverse scenarios.

​​Changing consumer preferences

Consumers are increasingly turning to digital and mobile banking options. Banks can overcome this challenge by investing in digital technologies and offering a seamless user experience across all digital channels. Modern consumers are smarter and more informed than ever before in history, and they expect a high level of personalization and convenience from their banking experience.


Changing customer demographics play a significant role in these heightened expectations: with each new generation of banking customers comes a deeper understanding of technology and, as a result, a higher expectation of digitised experiences. Millennials were discovered to have the highest percentage of mobile banking users. Based on this trend, banks can anticipate that future generations, beginning with Generation Z, will be even more invested in omnichannel banking and technologically savvy. The older members of Generation X and Baby Boomers, on the other hand, prefer to visit physical branch locations and see who they are talking to.

Offering digital and mobile banking options: Consumers increasingly expect to be able to bank online and through mobile apps. Banks can meet this demand by investing in digital and mobile banking platforms that allow customers to manage their accounts, pay bills, and make transactions from anywhere.

Providing personalized experiences: Consumers expect banks to offer personalized experiences that cater to their specific needs and preferences. Banks can use data and analytics to gain insights into consumer behaviour and preferences, and then use this information to create customized products and services.

Enhancing security: Consumers are increasingly concerned about the security of their financial information. Banks can address these concerns by investing in advanced security technologies and implementing strict security protocols.

Offering innovative financial products and services: Banks can meet the changing needs of consumers by constantly innovating and developing new financial products and services. For example, offering digital wallets, online lending and other digital services

Providing financial education and advice: Many consumers are looking for financial education and advice, so banks can provide resources such as online tutorials, seminars, and financial planning services to help customers make informed decisions about their money.

Enhancing customer service: Banks can improve customer service by adopting new technologies such as chatbots, AI and other digital channels to provide 24/7 customer support and respond quickly to customer inquiries.

​​Cybersecurity risks

Banks are facing increased cybersecurity risks as cybercriminals become more sophisticated in their methods. Banks can overcome this challenge by investing in advanced cybersecurity solutions, such as encryption and biometric authentication, and providing regular security training for employees.


There are several ways that banks can counter cybersecurity breaches.

Implementing robust security measures: Banks should implement robust security measures such as firewalls, intrusion detection and prevention systems, and encryption to protect against unauthorized access to their networks and data. End-to-End Encryption (E2EE), biometric authentication, out-of-band authentication (OOBA), risk-based authentication (RBA), location-based authentication, Address Verification Service (AVS) are some of the technology-based techniques to protect data. The adoption of biometric technologies is thought to address security and privacy concerns more effectively. 

Conducting regular security assessments: Banks should conduct regular security assessments to identify vulnerabilities and weaknesses in their systems and address them promptly.

Providing employee training: Banks should provide employees with regular training on cyber security best practices and awareness of the latest threats and risks.

Enhancing incident response plans: Banks should have robust incident response plans in place to quickly detect and respond to security breaches.

Collaborating with external partners: Banks can work with external partners such as security vendors and other financial institutions to share threat intelligence and best practices for protecting against security breaches.

Regularly monitoring and analysing data: Banks can use advanced technologies like Machine Learning, and Big Data analytics to regularly monitor and analyse data, detect anomalies and potential breaches early and respond accordingly.

Having a incident management plan: Banks can have a incident management plan to ensure that the incident is quickly contained, and the impact on the customer and the bank is minimized.

Communicating with customers: Banks should communicate with customers promptly and transparently about security breaches to assure them that their personal and financial information is safe, and provide them with the necessary information and guidance.

​​Data privacy

Banks are facing increasing challenges related to data privacy as consumers become more concerned about how their personal information is being used. Legacy systems to third-party vendors, banks face a variety of challenges when it comes to data privacy.


Banks can overcome this challenge by;

Investing in advanced security technologies: Banks can invest in advanced security technologies such as encryption, tokenization, and biometrics to protect customer data from unauthorized access and breaches.

Implementing a robust data governance framework: Banks can implement a robust data governance framework to ensure that customer data is collected, stored, and used in compliance with data privacy regulations.

Developing transparent and clear data privacy policies: Banks can develop transparent and clear data privacy policies that inform customers about how their data is collected, stored, and used.

Providing customers with more control over their data: Banks can provide customers with more control over their data, such as the ability to access, update, or delete their data, or to opt-out of data collection and sharing.

Leveraging Artificial Intelligence and Machine Learning: Banks can use AI and ML to analyse customer data in a privacy-preserving way, such as differential privacy, Homomorphic Encryption and secure multi-party computation to identify patterns and trends without compromising individual privacy.

Creating secure data sharing platforms: Banks can create secure data sharing platforms that allow them to share customer data with third-party vendors and other financial institutions while maintaining compliance with data privacy regulations.

Partnering with fintechs: Banks can partner with fintech companies that specialize in data privacy and security, such as identity verification and data management companies, to access their expertise and technology.

Investing in employee training: Banks can provide regular training to employees on data privacy best practices and the latest threats and risks. This helps to ensure that all employees are aware of the data privacy policies and procedures, and can help identify potential breaches.

​​Fraud detection

Banks are facing challenges in detecting and preventing fraud. Banks can overcome this challenge by investing in advanced fraud detection and prevention solutions, such as machine learning and artificial intelligence.


Using ML &AI: Implementing machine learning and artificial intelligence techniques to analyse customer behaviour and transactions for anomalies.

Biometrics: Utilizing biometric authentication methods, such as fingerprint or facial recognition, to confirm a customer's identity.

Real-time transaction monitoring: Applying real-time monitoring of transactions and account activity to quickly identify and respond to suspicious activity.

Collaboration with fraud-detection agencies: Collaborating with other financial institutions and law enforcement agencies to share information and improve fraud detection efforts.

Education & training: Educating customers about common fraud schemes and providing resources to help them protect themselves from fraud.

Multilayer protection: Developing and implementing a comprehensive fraud management program that includes multiple layers of protection.

​​Risk management

Banks are facing increased risk management challenges as they navigate the volatile economic climate. Banks can overcome this challenge by implementing robust risk management systems and regularly reviewing and updating their risk management policies.


Banks can manage risk through a variety of methods, including:

Diversification: spreading investments across different types of assets, industries, and geographic regions to reduce the impact of any single event on the bank's overall portfolio.

Hedging: using financial instruments such as derivatives to offset potential losses from changes in interest rates, currency exchange rates, or commodity prices.

Risk-adjusted performance measures: evaluating the bank's performance based on the level of risk taken, rather than just absolute return.

Capital management: maintaining a strong capital base to absorb potential losses and meet regulatory requirements.

Risk governance and control: establishing a framework for identifying, assessing, and managing risk throughout the organization, including regular risk assessments, stress testing, and independent risk management functions.

Insurance: purchasing insurance to transfer the risk to a third party.

Risk mitigation: implementing processes and controls to reduce the likelihood or impact of a potential loss.

​​Liquidity management

Banks are facing challenges in managing their liquidity as they balance the need to meet regulatory requirements with the need to fund growth. This could be market liquidity, central bank liquidity or funding liquidity.


Banks can overcome this challenge by investing in advanced liquidity management solutions and regularly reviewing and updating their liquidity management policies. They can manage liquidity using a variety of techniques, including:

Liquidity risk management frameworks: Establishing a framework to identify, measure, monitor and control liquidity risks. This includes setting internal limits, stress testing, and developing contingency funding plans.

Net Stable Funding Ratio (NSFR): It is a forward-looking liquidity coverage ratio that aims to ensure that a bank has enough stable funding to cover its liquidity needs over a one-year time horizon.

Liquidity Coverage Ratio (LCR): It measures a bank's ability to meet short-term liquidity needs in case of a severe stress scenario.

Intraday liquidity management: Managing the flow of funds in and out of the bank on a day-to-day basis to ensure that the bank has enough liquidity to meet its obligations as they come due.

Securitization: Banks can create liquidity by securitizing their assets, which involves the sale of a pool of assets to a special-purpose vehicle (SPV) that issues securities backed by the assets to investors.

Repo market: Banks can borrow funds in the repo market, which is a market for the sale and repurchase of securities.

Central bank lending: Banks can borrow funds from the central bank as a lender of last resort.

Foreign exchange swaps: Banks can use foreign exchange swaps to swap the cash flows in one currency for the cash flows in another currency, which can help them manage currency risk and liquidity risk.

Digital transformation: Banks are increasingly using digital channels to improve their liquidity management by automating processes and reducing the need for cash.

​​Investment management

Investment banks act as go-betweens for parties in need of capital and those with money to invest. Economic and financial difficulties have had an impact on investment banking performance. Investment banks, large or small, divisional or full-service, are now subject to stringent regulations and significant operational costs. Traditional investment banking models cannot succeed in today's market. As a result, restructuring future resources, targets and priorities is critical.


Diversification: Expanding into new products and markets, such as emerging markets, private equity, and hedge funds, can help investment banks tap into new sources of revenue.

Mergers and acquisitions: Investment banks can grow through mergers and acquisitions, either by acquiring other banks or by being acquired by larger financial institutions.

Digital transformation: Investment banks can use technology to improve efficiency and reduce costs, while also creating new revenue streams through digital products and services.

Risk management: Investment banks can use sophisticated risk management techniques to identify and manage risk in order to increase returns and reduce losses.

Capital markets: Investment banks can increase revenue by underwriting and issuing securities, such as stocks and bonds, for companies and governments.

Investment banking: Investment banks can increase revenue by providing services to companies, such as advise on mergers and acquisitions, and raising capital through initial public offerings (IPOs) and secondary offerings.

Asset management: Investment banks can increase revenue by managing assets on behalf of clients, such as through mutual funds, pension funds, and hedge funds.

Wealth management: Investment banks can increase revenue by providing wealth management services to high-net-worth individuals and families, such as investment advice and portfolio management.

Trading: Investment banks can increase revenue by trading securities and other financial instruments, such as currencies, commodities, and derivatives, on behalf of clients or for their own account.

​​Cost management & operational efficiency

Banks are facing challenges in managing costs as they seek to improve efficiency and profitability. Banks can overcome this challenge by implementing cost-saving measures, such as automation and outsourcing, and regularly reviewing and updating their cost management policies. Banking firms have had to find a way to deliver the best possible user experience to their customers in order to remain competitive in an increasingly saturated market, especially with the increased adoption of virtual banking. Internally, the challenge is to maximise efficiency and minimise costs while maintaining maximum security.


Banks can manage costs and improve operational efficiency through a variety of modern methods and technology, including:

Automation and digitalization: Banks can use technology, such as robotic process automation (RPA) and artificial intelligence (AI), to automate repetitive tasks, reduce errors, and increase efficiency.

Cloud computing: Banks can use cloud computing to reduce costs and improve scalability by moving their operations to a cloud-based infrastructure.

Blockchain: Banks can use blockchain technology to improve the efficiency of their operations by reducing the need for intermediaries and increasing transparency and security.

Big data analytics: Banks can use big data analytics to gain insights into customer behaviour, identify trends, and make more informed decisions.

Open banking: Banks can use open banking to access external data and services, such as account data from other banks, to improve their own operations and services.

Mobile banking: Banks can use mobile banking to provide customers with easy access to their accounts, reduce costs associated with physical branches, and increase customer engagement.

Contactless payments: Banks can use contactless payments to reduce costs associated with cash handling and increase speed of transactions.

Artificial intelligence and Machine learning: Banks can use AI and ML to improve their operations and services, such as fraud detection, customer service, and risk management.

Process reengineering: Banks can review and redesign their business processes to remove inefficiencies and improve overall performance.

Outsourcing: Banks can outsource some of their non-core functions, such as IT and back-office operations, to reduce costs and improve efficiency.

​​Talent management

Banks are facing challenges in recruiting and retaining top talent as they compete with other industries for the best candidates. Prospective employees are now looking for opportunities everywhere, thanks to the rise of remote work. Larger companies in larger cities can hire from anywhere and pay far more than living costs in smaller communities. As a result, community financial institutions must now compete more directly with all financial institutions and fintech firms. This is a different kind of challenge for financial institutions because turnover leads to a loss of expertise and untrained employees pose a risk. Maintaining expertise in new channels and scaling operations will continue to be difficult for banks.


Banks can overcome this challenge by offering competitive compensation and benefits packages, as well as investing in employee training and development. Some methods already in process and some that can be implemented are;

Digital recruitment: Banks can use digital platforms, such as job portals, to reach a wider pool of candidates and streamline the recruitment process.

Virtual onboarding: Banks can use virtual onboarding methods to introduce new employees to the company culture, policies, and procedures while they work remotely.

Remote working policies: Banks can establish clear policies and procedures for remote working, such as guidelines for working hours, communication, and security protocols.

Employee engagement: Banks can use digital tools and platforms to enhance employee engagement and collaboration, such as virtual team-building activities and employee recognition programs.

Training and development: Banks can provide employees with remote training and development opportunities to help them stay up-to-date with industry developments and the latest technologies.

Cybersecurity: Banks can implement robust cybersecurity measures, such as multi-factor authentication, encryption, and remote access controls, to protect sensitive information and systems from cyber threats.

Security awareness training: Banks can provide regular security awareness training to employees to help them identify and prevent security threats, such as phishing and social engineering attacks.

Regular security assessments: Banks can conduct regular security assessments to identify vulnerabilities and evaluate the effectiveness of their security controls.

Remote device management: Banks can use remote device management solutions to ensure that employees' devices meet security standards and can be easily located, locked or erased if lost or stolen.

Employee retention: Banks can implement strategies to retain their employees, such as providing opportunities for growth and development, flexible working arrangements, and a positive work-life balance.

​​Customer service / CX

To overcome banking industry challenges and meet today's consumer expectations and demands, a firm focus on the customer experience is required. According to a retail banking study, financial institutions that are CX leaders have higher recommendation rates and deposit shares, as well as a higher likelihood that customers will buy additional products and services. Those who allow CX to decline, on the other hand, risk losing a large percentage of their deposit share.


Banks can improve customer experience by implementing the following modern and cutting-edge methods:

Personalization: Banks can use data and analytics to personalize interactions and services for each customer, such as offering personalized financial advice or product recommendations.

Digital channels: Banks can use digital channels, such as mobile apps and online portals, to provide customers with easy access to their accounts and services, such as account management, money transfers, and bill payments.

Chatbots and virtual assistants: Banks can use chatbots and virtual assistants to provide 24/7 customer service and support, reducing wait times and improving response times.

Biometric authentication: Banks can use biometric authentication, such as facial recognition or fingerprint scanning, to provide customers with a more secure and convenient login experience.

Artificial intelligence: Banks can use AI to improve customer service, such as by providing personalized recommendations or detecting and resolving issues in real-time.

Open banking: Banks can use open banking to provide customers with access to third-party financial services, such as budgeting tools, investment platforms, and comparison sites.

User experience design: Banks can use user-centred design to create a seamless and intuitive customer experience across all channels.

Voice assistants and smart speakers: Banks can use voice assistants and smart speakers to provide customers with hands-free access to their accounts and services, such as account balance, transaction history and bill payments.

Social media: Banks can use social media to engage with customers, provide customer support, and offer personalized promotions and offers.

Gamification: Banks can use gamification techniques to make banking more engaging and interactive, such as by turning financial education into a game or rewarding customers for achieving financial goals.

​​Compliance

Banks are facing challenges in complying with a growing number of regulations. Banks can overcome this challenge by investing in compliance management systems and staying up-to-date on regulatory changes. Anti-money laundering (AML) regulations- Banks are required to implement systems and procedures to detect and prevent money laundering and other financial crimes. Know-your-customer (KYC) regulations- Banks are required to verify the identity of their customers and monitor their transactions for suspicious activity. The Bank Secrecy Act (BSA)- Banks are required to report suspicious activity, maintain certain records, and file various reports with regulatory agencies. The Patriot Act- In the USA, banks are required to take steps to prevent terrorist financing, such as implementing customer identification programs. The General Data Protection Regulation (GDPR)- Banks are required to protect the personal data of their customers and comply with data privacy regulations. Basel III- Banks are required to maintain a certain level of capital and liquidity in order to reduce the risk of financial instability. Other regulations include the Foreign Account Tax Compliance Act (FATCA), The Dodd-Frank Wall Street Reform and Consumer Protection Act and soe of these may wary from country to country.


There are several modern methods that banks can implement to deal with compliance challenges, including:

Artificial intelligence (AI) and machine learning (ML): Banks can use these technologies to automate and improve their compliance processes, such as by identifying suspicious transactions or detecting money laundering.

Robotic Process Automation (RPA): Banks can use RPA to automate repetitive and time-consuming compliance tasks, such as data entry and report generation.

Blockchain technology: Banks can use blockchain to create tamper-proof and transparent records of transactions, which can help with compliance and regulatory reporting.

Cloud Computing: Banks can leverage the scalability, flexibility, and cost-effectiveness of cloud computing to manage their compliance requirements and to build more robust risk management systems.

Data Analytics: Banks can use data analytics to gain insights from large data sets, such as customer data, and thus identify suspicious activities, frauds and other compliance related issues.

Cybersecurity: Banks can implement robust cybersecurity measures, including encryption and multi-factor authentication, to protect customer data and prevent cyberattacks.

Regulatory technology (RegTech): Banks can use RegTech solutions to help them comply with regulations, such as by automating compliance processes and providing real-time monitoring and reporting.

Compliance Management System (CMS): Banks can implement a CMS that integrates all the compliance activities, policies, and procedures, which is an effective and efficient way to manage the compliance challenges.

The above methods can be and are being combined to provide a holistic compliance solution.

​​​Digital Transformation & the Rise of APIs and Open Banking

Banks are facing challenges in keeping up with the fast pace of digital transformation. Financial institutions around the world are thinking about open banking APIs because they enable game-changing technology such as banking as a service (BaaS), platform banking, and embedded banking. Opening a bank and exposing data and capabilities to third parties remains unsettling for some, particularly those used to have sole custody of customer data.


Banks can overcome this challenge by implementing a digital transformation strategy and investing in emerging technologies such as blockchain, AI, and IoT. Banks can use Application Programming Interfaces (APIs) and open banking to drive business growth in several ways, including:

Third-party integration: Banks can use APIs to securely share data and functionality with third-party providers, such as fintech companies and other financial institutions. This allows banks to expand their product and service offerings, increase customer engagement, and create new revenue streams. Fable Fintech's API Hub allows the bank's corporate customers to access their financial data on their own ERP systems.

Personalized banking experience: Banks can use APIs to enable customers to access their financial data from different sources and devices, such as mobile apps and websites. This allows banks to provide a more personalized and convenient banking experience for customers.

Improved customer service: Banks can use APIs to connect with other systems, such as CRM systems, to access customer data and provide better customer service.

Data analytics: Banks can use APIs to collect and analyse data from different sources, such as social media and IoT devices, to gain insights into customer behaviour and preferences.

Increased competition: Open banking allows third-party providers to access banking data and services, which increases competition among financial institutions, and drives innovation in the industry.

Innovation and new business models: Banks can use APIs to create new business models, such as subscription-based services, and to develop new financial products and services.

Cost reduction: Banks can use APIs to automate back-end processes, such as account opening and loan origination, which can reduce costs and improve efficiency.

Cybersecurity: Banks can use APIs to secure their systems and data from cyber threats, by implementing security protocols like OAuth2, OpenID connect, and JWT.

Compliance: Banks can use APIs to comply with regulations, such as GDPR, by providing customers with secure access to their data and enabling them to control how their data is used.

​​Financial inclusion

Banks are facing challenges in providing financial services to underbanked and unbanked population.


Banks can overcome this challenge by implementing digital banking services and creating partnerships. There are several steps that banks can take to increase financial inclusion for the underbanked and unbanked population, including:

Reducing barriers to access: Banks can reduce barriers to access by providing services that are affordable and accessible to low-income individuals, such as low-balance account options and alternative forms of identification.

Leveraging technology: Banks can use technology to reach and serve underbanked and unbanked individuals, such as through mobile banking, digital wallets, and other digital financial services.

Building trust: Banks can build trust by working with community-based organizations and other stakeholders to educate and inform underbanked and unbanked individuals about financial services and to address their specific needs.

Reaching rural and remote areas: Banks can reach rural and remote areas by providing banking services through mobile banking, agents, or other innovative channels

Providing financial education: Banks can provide financial education to underbanked and unbanked individuals to help them better understand financial products and services and how to use them effectively.

Collaborating with government and non-profit organizations: Banks can collaborate with government and non-profit organizations to create and support programs that target underbanked and unbanked individuals and help them to build credit and savings.

Providing Microfinance services: Banks can provide microfinance services such as small loans, savings accounts, and insurance to help low-income individuals build assets and start businesses.

Offering financial products tailored to the needs of underbanked and unbanked population: Banks can offer specialized financial products such as remittances, mobile money, and savings accounts with no minimum balance requirement.

It's important to note that financial inclusion is a complex issue and addressing it requires a combination of approaches and tailored solutions to specific needs of underbanked and unbanked population.

​​Improving foreign-exchange controls

Banks must comply with a variety of regulations and laws, both at the national and international level, which can be complex and constantly changing. The foreign-exchange market is highly decentralized, making it difficult for banks to track and monitor transactions. Banks may have difficulty accessing accurate and complete data on foreign-exchange transactions, making it harder to detect and prevent suspicious activities. Banks may struggle to implement effective foreign-exchange controls due to operational constraints, such as limited resources or outdated technology. Banks may face reputational risks if they are found to have weak foreign-exchange controls, which could lead to fines, penalties, and damage to the bank's reputation. Banks are also exposed to Cybersecurity risks, due to the increase in online transactions and the use of digital platforms, which makes them vulnerable to hacking and other malicious activities.


Banks can improve foreign-exchange controls by implementing strict internal policies and procedures, regularly reviewing and updating these policies, and providing training to staff on compliance with these policies. Banks can also use advanced technology, such as transaction monitoring systems, to detect and prevent suspicious activities. Additionally, banks can strengthen their risk management systems by performing regular audits and risk assessments, and by maintaining strong relationships with regulatory authorities.

​​Cross-border payments

Banks are facing challenges in providing efficient and cost-effective cross-border payment services. Payments remain one of the most disruptive and dynamic aspects of the banking industry. Innovations are raising customer expectations and increasing global competition. With friction prevalent in nearly every legacy payment system, the pursuit of frictionless digital payment experiences continues.


Banks can overcome this challenge by investing in advanced cross-border payment solutions and partnering with other banks and fintech companies to streamline their cross-border payment processes.

  
 In-house Cross-Border Payments Platform  Third-Party Cross-Border Payments Platform
Pros:
  • Maximum-control of the development process
  • Personal branding
  • Customization as per requirement
 Pros:
  • A tested and ready cross-border payments platform
  • Low expenditure
  • Customized solutions available
  • Fixing, maintenance, upgrading and 24/7 support offered by third-party
 Cons:
  • Needs diverting or hiring more specialized resources
  • High expenditure
  • Long period of development and testing
 Cons:
  • Multiple banks using the same cross-border payments product might offer similar services and increase competition
  • Lesser control over development


Banks can implement several technology and methods to improve their cross-border payments business, such as:


Blockchain technology: Banks can use blockchain technology to facilitate cross-border payments by providing a secure and transparent way to process transactions. This technology can also help to reduce the cost and time it takes to process cross-border payments.

API-based platforms: Banks can use API-based platforms to integrate their systems with other financial institutions, allowing for faster and more efficient cross-border payments.

Real-time tracking and payment tracking: Banks can use real-time tracking and payment tracking technologies to monitor and manage cross-border payments in near real-time, which can help to detect and prevent fraudulent activities.

Artificial intelligence (AI) and machine learning (ML): Banks can use AI and ML to automate and optimize various aspects of their cross-border payments business, such as risk management, compliance and customer service.

Instant Payment: Banks can implement instant payment schemes to provide faster cross-border payments to customers, which can help to improve customer satisfaction and increase revenue.

Virtual account numbers: Banks can use virtual account numbers to provide customers with a unique account number that can be used for a specific transaction, which can help to increase security and reduce fraud.

​​Conclusion

Fable Fintech has been a long time cross-border payments technology partner to some of the biggest global banks in the world To learn more about the right cross border remittance solutions for your business, get in touch with a Fable Fintech cross-border payment solutions team now!


To acquire the platform, book a demo with the Fable Fintech cross-border platform experts;

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