Sibos 25: clearing real-time hurdles

Longstanding cross-border conventions can be obstacles for effective payments in a real-time world, according to ANZ’s Carl Garrett — but banks, and payers, have equal roles to play in the solution.

Speaking on podcast to On Air with ANZ Institutional, ANZ’s Head of Global Cross-border Payments said some established methods used to create and send payments work “very differently in a real-time world” – including explicitly specifying future settlement dates.

“Now that we're… able to handle that in real time, we see instances where that's an obstacle for payments actually going into real-time rails,” Garrett said. “Sending a value-date-tomorrow payment that we receive right now, and could deliver into real-time rails, is a limiter to the true scale of adoption we could achieve.”

Real-time, cross-border payment mechanisms are still relatively new in the Australian market. In 2024, ANZ became the first major Australian bank to settle cross-border transactions via the NPP.

Settlement cycles like ‘T+1' — where payments are made with instructions to pay the beneficiary the next business day — were common for payments entering Australia from offshore pre-real time, into “what would otherwise have been a very limited cutoff window,” Garret said.

Clearing those obstacles isn’t just about adjustment from payers, but banks “taking some of those hassles out of the equation for [customers] entirely”, Garrett said — and solving convention challenges for them.

Garrett made the comments in conversation with Jenny Hutchings, Head of Banks and Diversified Financials at ANZ, ahead of the Sibos financial services conference in September. You can listen to the podcast — the first part in a two-part conversation — below.

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Consistency

Hutchings said real-time payments had taught many in the Australian market about the expectations of offshore businesses looking to pay into Australia — particularly around consistency of experience.

“When we talk to network managers, product managers, operations managers, or customer-experience managers at our offshore banks, they are looking for a level of consistency [and] ubiquity in terms of what their clients get delivered,” she said. “Ultimately clients are making payments to a number of destinations - Australia being one of them.”

The question or Australian bank is then how to make that process as seamless as possible.

“It's about taking some of the heat off the sending banks, and us thinking about how we can distribute into market as easily as possible,” Hutchings said.

Australia’s geographic location places it in a unique position in the flow of payments around the world, with timezones meaning businesses there operate ‘ahead’ of many large northern-hemisphere markets.

Hutchings said ANZ has learned a lot from its unique position as a global bank based in the Asia-Pacific, and what that means for doing business in the region.

“[Things like] what does that mean for funding? What does it mean for treasury? What does that mean for workforces?” she said. “And equally, what does it mean from an international payments perspective for how our clients have had to make adjustments?”

Leader

As more markets join the real-time, cross-border payments revolution, Australia remains a leader in the space, Garret said — particularly for those incoming payments.

“I think from an inward perspective, and in terms of our capabilities here in Australia when it comes to connecting offshore institutions into Australia and providing them Australian-dollar services, there's no question we're a global leader,” he said.

A key advantage is the NPP, and rules that mandate participants to be able to receive real-time payment. “That puts us as a market in a really good position,” Garrett said.

In the outward direction, there is more competition, he said.

“It's in that space where you see disruption most meaningfully,” he said.   

 “Disruption is now the new normal in the realm of cross-border payments”.

The experts also addressed the impact of real-time payments on treasury operations, the ongoing importance of trust and security as well as the upcoming Sibos conference. Listen to the podcast above to find out more.

Shane White is Editor at ANZ Institutional Insights