Cross Border Confidence Payments, Permissions and Global Compliance

Hi, good afternoon ladies and gentlemen. Welcome to crossborder confidence payments permissions and global compliance. I am Reni Olivia and with me I have Nashma Salman Chen Yu and Humphrey Valenbrreder. Welcome. Payments in 2025 stand at a critical juncture.

What was once a unified drive toward global efficiency has evolved into a competitive landscape of diverse market systems, each guided by its own principles, capabilities, and constraints. In today's environment, the way in which money moves are as significant as the amount that moves. The global financial system is increasingly shaped by non-financial factors including data governance, energy limitations, and technology. This growing divergence in payment systems reflects a broader transformation of the financial sector into a tapestry of regions each operating under its distinct standards, timelines, currencies, and trust mechanisms. Nashma, let's start with you.

What factors are contributing to this accelerated growth within the payment space?

Thank you, Renji. Um I would say um I don't know if payments are accelerating or the world is shrinking in some ways. Um technically there have been a lot of factors that have contributed to making um the world a smaller place let's say. Uh obviously digitalization digitization of payments that has been a major factor in later times but also just the globalization the fact that um very many different new corridors for trade and for payments are being explored. um and and lots of um innovation in that space is coming as well.

Um on top of that is consumer expectation where uh literally every phone is now a banking branch right where people expect that they can make crossber payments in real time um with least amount of fees involved with high amount of transparency. Um and these factors have all come together to make sure that uh international payments have grown but to a large extent that the global economy is looking smaller and smaller in the sense of um uh even corridors when you think about bilateral corridors lots of multilateral agreements between governments on how to settle payments within specific corridors these are being made easier by many means as well. So all of these factors have really come together to contribute to making um it seem like payments are going higher but it's more like the world is coming together. I like the way that you summarize that. Um and as Crossber payments um industry continues to expand rapidly.

Humphrey um what strategic and innovative actions should payment service providers to consider to remain competitive? Well, I think based on what I just heard from the prior speakers, it would be quantum technology, but I have no clue how to do that. Um, I think in the short term, it's um convergence and I I can only talk about the institutional side. I I think there's a difference between institutional payments and trade and the retail world. I think what you do see is that the regulators that you talked about at your introductions are still trying to catch up to get grips around the speed by which the world is now moving with new kind of use cases and technology [snorts] and what you see is not not all regulators move with the same speed and have the same understanding of that technology wi-i which creates a non-level playing field and I think what need to try to do is educate the participants throughout the whole value chain and make sure that the benefits of what the technology can offer can be applied in a safe and secure way like we did with the traditional rails.

Okay. And um chain as crossber payments providers continue to grow in scale and influence what role are they playing in shaping the economy? Um and specifically if we consider um enabling international trade um like Nashma mentioned or supporting financial inclusion and fostering greater connectivity um between markets and driving innovation um in how we move value across borders.

Yeah, I think crossber payments is really the mission critical infrastructure for the global economy. Uh it's kind of the bloodline for the uh international trade, right? uh and comparing to the u uh the more traditional financial institutions, payment service providers are relatively more flexible. You can see them as the innovation sandboxes. Uh they're actually at more at the cutting edge of adopting uh emerging technologies uh like AI, you know, blockchain and stable coins, right?

uh and after covid basically you see this uh acceleration of uh digital adoption digital transformation especially in a lot of the traditional sectors. Uh so a lot of the uh the enterprise uh clients are actually moving away from the traditional payment rails uh into adopting uh uh new emerging technologies provided by payment service providers uh to make their crossber transactions more efficiently. uh and what I'm trying to say is that the uh the digital adoption not only happens in the uh on the consumer side but also on the enterprise and also on the in a crossber side right so this is the actually the macro trend uh we see in the uh the payment landscape uh so as a payment service provider definitely uh you know it can be the uh the most important enabler in this dig digital transformation for the traditional sectors

um and so the UAE is like regard started as a pioneer in crossber payments and setting regional and global benchmarks through its focus on innovation, regulation, clarity and infrastructure modern modernization. Um Humphrey, what valuable lessons are there that we can learn from other economies?

Um yeah, I I think a lot I I think like people can learn a lot from what's happening in the UAE. Uh likewise I think what you see for instance in Brazil where the interaction between the central bank and the market participants has started at the level of introducing blockchain technology. Um they had picss they have drax now they have a domestic play and an crossber play. I think it's the the interaction of government regulators and market participants where I think and I and I think it is happening that this region can also benefit at looking at these models and the the big I think party in the room is what's happening in the US. I think what you see is in the US the developments are going so fast in the last 8 to 10 months that I think that the the the close alignment of using what's relevant genius act legislation uh translating that into the use cases and regulations I think that is where the UAE also needs to stay closely attuned to what's happening there.

So Chen, I saw you nodding your heads around um the lessons learned from the US. Is there anything that you would like to add?

Well, I think uh UAE really sits in a strategic crossroads, right? Connecting east and west, the global north and global source. Uh you know, essentially UAE does business with everyone. So it actually has this neutrality uh in terms of the uh the global trade uh international trade, right? uh because you know with the geopolitical shift uh and you know tariff wars and everything there's there's going to be this I I think that the entire global trade network and the supply chain is actually being realigned and restructured right so this presents a lot of challenges but at the same time a lot of the uh new opportunities uh so UAE definitely sits in a very strategic position to uh leverage that

NHSMA what are the key factors that could weaken them confidence in crossber payments and what strategies and measures can be implemented to mitigate these risks. Um I think um to what Humphrey mentioned earlier the regulatory framework is very critical um because there are a lot of players and lot of authentic players but also not so authentic players that are there in the market and it's the regulatory framework that would help with ensuring to a large extent also some of the new age uh technology perhaps not meant to be heavily regulated but more transparent and so on but from a risk perspective there are many factors s that could come in that could make the trust factor go off, it's it's literally trust has to go as digital as payments are trying to go, right? Um so be it cyber security risk or be it um the the fact that FX u whether that goes through well there's operational risks if a payment doesn't go through then you lose the trust and and to the earlier point it's not just fi this has actually exploded the space of retail as well so it's it's the individual at the end who perhaps doesn't always understand all the technology that comes behind it so it's it's so important to get that right when it comes to the effects when it comes to liquidity for the bigger payments, the bigger amounts, whether um the new players can bring in the amount of liquidity that's needed at the back end of such transfers, payments, crossber. Um so all of this plays uh a major factor when it comes to risk and how crossber payments are evolving at the moment. It's definitely something that we need to go into the digital space.

I mean it's it's everything's going digital and payments do have to go digital as well but we need to build it on the framework of all these things taken care of because it's not that one big problem that people are scared of. It's all of these little frictions that come in the payment that make people withdraw from adapting to new technologies. So it's very important that we get that whole framework in place and have the right kind of regulatory setup as well required for these um uh crossber payments and to build the trust that is needed in this because you you're basically as strong as your weakest link in the payment right so even if it's from the originator or the beneficiary who's supposed to receive the funds or the technology that went through it or the financial institution or the regulator that's come in between it if any of this is a weak link it actually breaks the trust and it breaks the whole system. So it's very important that we have that trust in place.

So Najma would you say then that all stakeholders that play a role has a responsibility to ensure that trust is built and maintains.

Definitely I mean I think no doubt uh traditionally it has been that this kind of a responsibility is looked uh from a regulatory space. you look at the central banks to do this. But now with a lot of new players, I think the trust as such should always have been the case. But the banks, the financial institutions that are there in the setup, the fintexs uh that either operate independently or collaborate with the with the financial institutions. Um the corporates that are involved in this if um that responsibility is not taken over by them as well that they do responsible methods of making crossber payments and do not use any kind of loopholes to to fail the system.

Um so I think basically every person is a player in this and should have that responsibility to make sure that crossber payments are safe.

Um so crossber payments continue to grow in scale and complexity. Chen what are the main risks that stakeholders should be aware of. So as Nasha mentioned all stakeholders carrying responsibility and how can these risks be mitigated um through technological solutions? uh there there are a lot of risks associated with the uh the crossber payments uh I mean for example in a lot of the emerging markets uh or maybe we call the frontier markets right there's this problem with the FX shortage uh you know FX uh volatility and also there are a lot of the regulatory uh barriers uh for crossber transactions uh and as a payment service provider a lot of times you you also have to face the different uh kind of the messy and fragmented uh regulatory landscape, right? Uh so these are the issues that we need to address uh by leveraging emerging technologies.

Uh but also we need to work with the regulators uh in different jurisdictions uh to come up with solutions to uh address the uh the problems uh with these uh crossber you know payments. Um I mean one one of the u one one of the applications of uh emerging AI technology is really uh to address the uh you know the um the netting problems between between different markets. uh for example if you're targeting emerging markets you can actually uh use smart routing uh you know powered by the AI technologies to make your natting solutions more efficiently right so there are a lot of the uh applications like that we can actually improve uh the crossber transactions and settlements

and um chain what role should regulators financial institutions and payment providers play in managing and monitoring these risks to ensure a secure, efficient and trust uh worthy crossborder ecosystem.

Uh well, first of all, all these different players need to work together. Uh from the regulators perspective, uh they need to uh they need to focus more on guaranteeing the the bottom line kind of safeguarding the bottom line instead of capping the top line, right? Uh I I think that's essentially uh very uh critical uh especially when we seeing a lot of emerging new technologies because you don't want to um you you don't want to actually choke the uh innovations that you know uh could which could be brought upon by uh emerging technologies like stable coins and blockchain right uh and from the payment service provider side because they're relatively more flexible compared to the uh convention financial institutions so they they should also uh you know lead the technology uh re uh technology innovations.

Um Humphrey, what role does crypto play in all of this?

Uh a big role. I I think it's the game changer now. uh I don't know if it's as big as quantum computing but I think what what you do see is that the the nature of what we're doing in the blockchain let's first step do one step back I think we're talking about blockchain as technology and crypto as a form of digital money I I I think if the question is on blockchain I think it's the the gamecher in the space of crossber payments and many use cases also in capital markets in B2C. I think crypto is a specific form of digital money that will coexist with tokenized deposits, stable coins, tokenized fiat and real fiat money. So I I think crypto per se is really a driver to look for adoption of the other kind of solutions but that is not for me the big game changer the big game changer is the blockchain technology which is now use widespread and then I think to your prior question but please interrupt me if I'm taking too much time [snorts] I I think the regulators shouldn't do anything different than what they did for the last 600 years they need to do what they always did.

Ensure that the system is protected against those that don't mean well to the system. Yeah. And for that they need to know what they don't know and they need to know what they need to know. So over and above the regulatories role that they're playing, what other elements would have and carry some form of responsibility to ensure the sustainable future of crossber payments.

Well, it it start to again you you really need to understand what it's used for and ultimately payments is a mean to an end. It it's not an objective in itself. uh what we're trying to assure is more reach, more efficiency, new use cases as well. But because we haven't spoken about that yet, there's also the element of new use cases. So this new technology doesn't move old technology to new technology for the same use cases.

What you will see is new use cases. Programmability of money. You didn't have that. uh shared ledgers which allow for intraday transactions. So so there's a whole new playing field where the regulators needs to make sure that they look at the same angle of mitigating the risk without stopping innovation and and I think it's a it's a fine line that you need to thread but ultimately you don't want to get it wrong.

Yeah. So, so from a regulatory perspective, you need to be conservative, but the genius is out of the bottle. So, you need to catch up now. Yeah.

And to add on to that chain, how um and if you've seen it elsewhere in um globally, how would AI play a role in the compliant compliance element of crossber payments? Um I I think in g I mean payment and fintech in general is one of the best testing grounds for AI, right? Because AI thrives on data and payments naturally generates massive amounts of data that can be used to train different models. Uh except in the past most of the applications of AI technology uh in payment space has been uh discriminative AI instead of generative AI. Uh and generally you can see uh two categories of applications of AI in payments.

crossber payments, right? Uh one category is basically what what we call the the bottom line applications. Basically, you use AI to uh safeguard the the integrity of your transactions like for risk management, anti-moneyaundering, uh CTF, right? It's kind of the bottom line, right? And the other category is the topline uh applications of AI.

Basically, you leverage AI to uh enhance user experience uh for your customer support for streamlining your uh onboarding process, right? So AI definitely has a lot of the uh you know revolutionary applications in payment space.

Nashma chain I'm free ladies and gentlemen thank you so much for joining us.

[music]