Metrics for the next generation of correspondent service providers

Wise Platform Commercial Director Abid Mumtaz explains how collaboration with the next generation of correspondents will enable banks to optimise their cross-border payments services and the four key metrics you should consider when evaluating new partnerships.

In an increasingly globalised world, the needs of consumers and SMBs to send money internationally are evolving rapidly. As a result, the market for low value retail payments ($<100k) is growing exponentially, with use cases now accounting for $12 trillion in global cross-border payment outflows. In response to this demand, traditional players and fintechs are offering a wealth of options for cross-border use cases, including payroll, trade and consumer remittances.

Abid Mumtaz, Commercial Director at Wise Platform

To keep pace, banks are under pressure to deliver fast, low cost and more convenient cross-border payments experiences for their customers, or risk losing them to alternative providers. And while traditional correspondents are the life-blood of higher-value corporate payments, banks are increasingly complementing their existing relationships by collaborating with the next generation of correspondent service providers to better compete in the low-value cross-border payments space.

When evaluating this new breed of agile correspondents, banks should focus on four key areas to assess their suitability: customer experience, speed, cost and transparency, ease of integration and network quality and reach.

While traditional correspondents are the life-blood of higher-value corporate payments, banks are increasingly complementing their existing relationships by collaborating with the next generation of correspondent service providers.

Customer experience

As customer needs evolve, banks are building on their correspondent relationships to offer a range of new currency routes, payment methods or to simply accelerate the speed and efficiency of their network in order to compete. When selecting a correspondent, banks need to ensure their partner understands their customers' pain points and can deliver a payment experience that addresses these evolving demands.

Speed, cost and transparency

Some of the most important metrics when evaluating the suitability of a correspondent partner are speed, cost and transparency. These are essential for capturing market share for low value international payments. Customers expect to know the cost of the payment up front and when it will arrive. Instant payments provide a first class experience for any customer, and it is worth understanding if real-time payment schemes can be leveraged by the correspondent.

Ease of integration

Selecting a correspondent services provider that can be easily integrated and aligns with the bank’s existing tech stack, compliance and security requirements is essential.

An example of this is Wise Platform's Correspondent Services solution, which allows banks to simply route Swift messages directly to Wise without requiring a systems upgrade. This next-generation solution can complement existing correspondent relationships by providing access to real-time payment rails leveraging the same tech stack banks already use.

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Network quality and reach

When evaluating the reach of a potential partner’s network, it’s important to understand the countries that they cover and the number of payout methods they support.

And it’s not just reach — it’s about the quality of that reach. Is the correspondent a direct member of Real-Time Gross Settlement (RTGS) or have they been granted access to the network through an aggregator? This distinction will have a material impact on the bank-correspondent collaboration as well as customer experience.

The future of correspondents

Driven by the need to capture market share in low-value transactions, banks must cater to consumer and SMB demand for fast, cost-effective and transparent international payments services. To do this, they are broadening their correspondent networks to include a new breed of tech-driven providers.

In doing so, the way banks assess correspondents has evolved to reflect the need for network and service modernisation. Keeping these key considerations in mind will help banks establish robust, innovative partnerships that open new corridors and offer their end customers world-class cross-border payments services.

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