By: Joshua Finley
Sending money abroad has long involved high fees, long transfer times, and unfavorable exchange rates. But the rise of financial technology (fintech) companies is rapidly changing cross-border payments, according to Christophe Derdeyn, an expert in global payment optimization.
Christophe has spent years helping manufacturing companies streamline their global payments and reduce banking fees. Recently, he provided insights into the outdated status quo of international wire transfers as well as the innovative solutions emerging to fix a broken system.
The History of Cross-Border Payments
For decades, global payments have run through SWIFT, a messaging network created in the 1960s that facilitates inter-bank communication. As Christophe explained, when you instruct your bank to wire money abroad, it goes through a chain of correspondent banks that are part of the SWIFT network.
“Depending on where the money needs to go, the bank in the UK will send it to a related bank that has a relationship with the destination bank,” he said. “If you have more steps in between or a bigger distance, let’s say from the UK to Singapore, you would have six, seven, maybe 10 banks that actually receive the message, transfer the money to the next bank and the next bank.”
This convoluted web of intermediaries leads to high fees, long transfer times, and opacity.
“Money can travel three, four, five, sometimes 10 days and it’s somewhere in the void and you don’t know where it is,” said Christophe. “It costs money. You transfer $10,000, you will get $9,500 at the end because every bank that transfers it needs a little bit to operate to pay for its costs.”
The more banks involved, the higher the fees. And the more obscure the currency pair, the bigger the foreign exchange spread. A British pound to Singapore dollar transfer sees low fees, but unusual pairs like GBP to Philippine pesos incur massive costs.
“The longer the chain, the bigger the cost and the more extreme the currency pair,” Christophe explained. “So if you send from GBP to Singapore dollars, it’s kind of mainline currencies. It’s going to be easy. But if you send it from GBP to Philippine pesos, the Philippine pesos is what they consider an exotic currency.”
Fintech’s Role in Payment Innovation
According to Christophe, banks have not meaningfully updated cross-border payments in decades, even as technology has radically advanced. But in the late 2000s, fintech startups recognized an opportunity to leverage modern capabilities and fix an antiquated system.
“If you look at what is possible today with today’s communication methods, we’re talking in real-time,” he said. “If I write something down now and show it to you, you’ll be able to see it immediately. This highlights how communication methods have shifted, while the SWIFT network has remained largely unchanged.”
Companies like Wise, Revolut, GoPay, and others built technology to circumvent traditional correspondent banking and enable faster, cheaper cross-border transfers. They connect directly to one another, avoiding the cascading sequence of intermediary banks.
“Instead of telling their bank, you need to pay this to recipient’s bank, they basically put it into this global payment system, which brings it to where it typically needs to be on the same day,” Christophe said.
By tapping into existing financial infrastructure but using software to streamline transfers, these fintechs provide instant settlement, eliminate fees, and offer favorable foreign exchange rates. For example, a company transferring $60 million annually may potentially reduce costs by a significant amount, such as $600,000 per year, by considering this approach.
Overcoming Reluctance Among Financial Leaders
Given the clear benefits, one might expect global payment fintechs to rapidly displace traditional wire transfers. But Christophe noted that many Chief Financial Officers (CFOs) still hesitate to adopt these solutions due to ingrained reluctance toward financial innovation.
“I see a lot of reluctance surprisingly in CFOs to adopt solutions like this,” he said. “CFOs are typically very careful people because they need to manage the treasury chest of a company, and as a consequence by nature, they’re risk averse.” When faced with an unproven fintech offering ostensible savings, CFOs gravitate toward the familiarity of incumbent banks.
“It’s not really proven. Hasn’t been around for 100 years. Is it safe?” Christophe remarked, characterizing typical CFO skepticism. “Can you bring me to another customer that uses it?”
He emphasized fintechs must follow strict compliance regulations and maintain proper insurance safeguards, making concerns around security largely unfounded. But CFOs with an institutional aversion to risk often block adoption nonetheless.
Future Trends in Global Payments
While reluctance persists in some corners, Christophe believes fintech payment solutions will continue permeating global transactions. Large multinationals have historically built expansive in-house banks, while small companies often have less exposure and are more open to leveraging fintech offerings.
Mid-sized organizations present the main challenge, as they lack the scale for in-house banks but retain some institutional hesitation. However, Christophe expects this cohort to integrate fintech as well increasingly.
He also noted an emerging trend where banks acquire or partner with fintechs to stealthily tap into their transfer optimization while retaining control of the customer relationship.
To learn more about Christophe Derdeyn and his approach, check out his LinkedIn profile.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. The information provided reflects general trends in global payments and fintech, and individual results may vary. Readers are encouraged to consult with a qualified financial professional before making any decisions regarding international payments or fintech solutions.
Published by: Annie P.
