Stablecoins vs. SWIFT: The Revolution in Cross-Border Payments with Guest John Min

Wrestling Payments Podcast: Season 3 - Episode 24

Episode Summary

In this episode of Wrestling Payments, host Joe Casali sits down with John Min, Chief Economist at Monex. They explore why cross-border payments remain slow and complex, even as real-time domestic payments set new expectations for speed. John explains how most U.S. banks rely on larger correspondent banks for international transactions, which leads to costly delays and unpredictable fees for businesses.

John describes the scale of cross-border activity in the United States, noting that even smaller markets hold untapped opportunities for financial institutions willing to modernize their payment operations. He highlights the challenges that community banks and credit unions face, from losing deposits to larger banks to struggling with outdated systems. As new technologies and stablecoins gain traction, John sees room for smaller banks to compete, especially by partnering with providers that offer plug-and-play solutions.

Throughout the conversation, John urges financial institutions to focus on efficient partnerships and technology upgrades. By modernizing cross-border payment services, banks can improve customer experience, protect their deposit base, and unlock new revenue streams.

Guest-at-a-glance

💡 Name: John Min, Ph.D
💡 What they do: Chief Economist
💡 Company: Monex
💡 Noteworthy: John specializes in global payments, macroeconomic trends, and helps financial institutions navigate the complexities of cross-border transactions and foreign exchange.
💡 Where to find him: https://www.linkedin.com/in/john-min-4941634/
 

Key Insights

Cross-Border Payments: The Hidden Bottleneck in Modern Banking

Domestic payments move at lightning speed, but cross-border transactions still face slowdowns and hidden costs. Most community banks and credit unions rely on larger correspondent banks for international transfers, creating delays and leaving customers in the dark about final costs. This outdated process often means unpredictable fees and forces businesses to keep extra cash on hand to cover unknowns. The lack of transparency and efficiency puts smaller institutions at risk of losing both clients and deposits to bigger banks with better technology. To stay competitive, financial institutions must modernize their cross-border payment systems and give customers the speed and clarity they expect from today’s banking experience.

Stablecoins and Real-Time Tech Will Reshape International Payments

Stablecoins and real-time payment technology promise big changes for cross-border commerce. Unlike volatile cryptocurrencies, stablecoins are pegged to traditional currencies, allowing for quick, transparent, and low-cost transfers. While practical adoption depends on local regulations and the ability to convert digital assets into local currency, the infrastructure is growing. As more businesses look for faster, cheaper ways to send money across borders, stablecoins could shift the industry away from slow, expensive networks like SWIFT. To prepare, banks and credit unions need to monitor regulatory changes and explore partnerships that enable seamless digital currency transactions.

Partnerships and Plug-and-Play Platforms Level the Playing Field

Community banks and credit unions can now compete with the largest financial institutions by partnering with specialized providers and integrating modern payment platforms. Plug-and-play solutions, supported by updated industry standards like ISO 20022, allow smaller banks to offer fast, transparent, and cost-effective cross-border payments without major overhauls. By white-labeling these services, local institutions can serve more customers, access new revenue streams from currency exchange markups, and keep deposits in-house. The key is to act now—adopting these technologies not only defends the deposit base but also positions banks to meet rising customer expectations in a global economy.

Episode Highlights

Real-Time Payments Raise Customer Expectations

00:00:00
The rise of real-time payments in domestic banking has set a new standard for speed and convenience. Customers now expect their money to move instantly, whether they use wallets, online apps, or their bank’s digital services. This shift puts pressure on financial institutions to keep up with faster technology, but also highlights the stark difference between domestic and cross-border transactions. Instant domestic payments create an expectation that international transfers should be just as seamless, yet current systems often fall short. Banks and credit unions must recognize this growing gap and work to align their cross-border services with modern consumer expectations.

“Nowadays, you can do real-time payments. You use wallets, everything is instantaneous. I just did a transaction on my Truist account, and boom, money went out. I was like, wow, that's really fast. But now if I want to do cross-border payments, some of the FIs require you to come to the local branch.”

Cross-Border Payments Hide Major Revenue Opportunities

00:05:32
Cross-border payments make up a significant portion of the U.S. economy, yet many banks overlook the scale and potential of these transactions. Even in smaller markets, a few businesses are often engaged in international trade, and retail customers send money abroad for education, real estate, or family support. By understanding the true size of this segment, banks and credit unions can identify new revenue streams and better serve customers with global needs. Clusters of cross-border activity exist in unexpected places, offering untapped opportunities for financial institutions willing to invest in better payment infrastructure.

“If you have about a hundred businesses in your market, in your area, two to three, four, five are actively involved in cross-border payments. Now, for those people who are more in tune with how much revenue potential is possible, according to McKinsey in the US, we're looking at about $60 billion. That's the size of the pie.”

Big Banks Dominate Foreign Exchange—And Siphon Deposits

00:13:04
Large banks have a structural advantage in foreign exchange and cross-border payments. They control infrastructure, set higher markups, and offer more advanced products, which lets them attract business accounts from smaller institutions. This dynamic forces community banks and credit unions to raise deposit yields just to compete, putting their deposit base at risk. When businesses move accounts to larger banks for better cross-border services, local banks lose both fee income and valuable relationships. Smaller institutions need to recognize this competitive threat and act to retain their customers by upgrading their international payment offerings.

“These top ten major money center banks have a unique advantage. For the same amount of deposit, larger banks offer significantly less yield or interest on that versus small FIs. The implication is, to hold onto that deposit base, smaller FIs have to provide more yield. What they found is that bigger banks can get away with it. They don’t have to pay a higher yield because they offer more advanced, innovative products.”

Plug-and-Play Solutions Can Transform Community Banking

00:24:27
Modern APIs and payment platforms have made it easier than ever for community banks and credit unions to deliver competitive cross-border services. By partnering with specialists and white-labeling their technology, local institutions can offer fast, transparent, and secure international payments—often outpacing big banks. Plug-and-play integrations remove the need for costly overhauls or complex migrations. With the right partnerships, smaller banks can protect their deposit base, monetize new revenue streams, and meet rising customer expectations. This approach gives local financial institutions the tools to compete in a market once dominated by national players.

“With the API technology and everyone going to ISO 20022, it's almost becoming plug-and-play. And literally as an FI, I can plug into the best-in-kind services and then put it all together and provide that level of super competitive, efficient services to your customers. So when it comes to cross-border payments, there's no reason why you can’t white label—even our platform or a competitor's platform. We can white label a platform within two weeks, and then you can just plug into the API. Then you can offer cross-border payments as a service that's actually better than these money center banks.”

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