Change is still a slow march when it comes to gender equality in the financial services industry. While incremental progress has been made, the lingering pay gap remains glaringly apparent. 

It’s easy to point to the gender pay gap as a clear-cut metric of inequality, but the reality is far more complex, hidden beneath structural barriers and cultural norms that still need to be dismantled. Addressing these challenges requires a shift in mindset, a concerted movement to lift each other up, and a willingness to initiate bold, practical actions.

Trade Finance Global (TFG) spoke with Deepa Sinha, Vice President of Payments and Financial Crimes at the Banker’s Association for Financing and Trade (BAFT), to learn more about how these deeply rooted issues took centre stage and discuss strategies for turning awareness to action. 

The ongoing fight against the gender pay gap in finance

The gender pay gap is a longstanding issue that has haunted the finance industry for decades. Today, many financial institutions are still paying women significantly less than their male counterparts. 

It’s not just about pay. Financial services have been slow to recognise the full value of women’s contributions, often relegating them to roles where opportunities for advancement are limited. The pay gap is just a glaring symptom of an underlying condition that involves issues around opportunity, inclusion, and cultural change.

However, awareness of the gap is growing, and that is the first step toward change. 

It’s not enough to simply notice the disparity; action is needed. There are now efforts within the financial services industry to develop focused and structured initiatives that provide women with the tools they need to succeed. 

Whether through mentorship programmes, leadership development opportunities, or actively engaging women in thought leadership, these steps, while not revolutionary, are certainly evolutionary—nudging the industry closer to fairness. 

Women’s unique strengths in transaction banking

But what exactly do women bring to transaction banking that might have been overlooked? There’s something to be said about the unique strengths that women often bring to this field, particularly in areas like payments and financial crime compliance. Women approach challenges differently, and this difference is precisely what the banking sector needs.

Sinha said, “Research suggests that women often approach risk more cautiously, which can be a critical advantage in transaction banking. This perspective helps create robust risk assessments, reducing potential exposure to fraud and other financial crimes.”

Beyond risk management, empathy plays a key role in enhancing customer interactions. Women’s emphasis on empathetic communication builds trust—a quality that cannot be overstated in the world of payments and finance. 

Sinha said, “This empathy allows them to address customer pain points with more nuanced solutions. That’s crucial in transaction banking where trust and relationships are essential.”

This empathy, combined with a detail-oriented approach, becomes especially powerful in fields like compliance. When it comes to anti-money laundering efforts and screening for suspicious activity, an eye for detail can mean the difference between catching a subtle sign of wrongdoing and letting it slip through the cracks.

Tearing down barriers to gender equality

Promoting gender equality in an industry like finance requires confronting structural, cultural, and individual barriers head-on. This means building programmes that mentor and sponsor women while simultaneously addressing the systems that have kept women from advancing for far too long.

Sinha said, “Sponsorship or championship, in particular, where senior leaders actively advocate for women’s advancement, is essential for promoting women in decision-making roles. These programs provide women with the guidance, visibility, and advocacy necessary to advance into senior leadership, where gender representation is still severely limited.”

Mentorship is a key piece of this puzzle—not just traditional mentorship—but reverse mentorship, where younger professionals offer insights to senior leaders, allowing for a two-way exchange of knowledge. By creating spaces where women can be visible, their voices heard, and their work recognised, these types of initiatives can help bring true representation into leadership roles.

But perhaps just as important as these programmes is the need for flexible and inclusive work policies. Many in the workplace balance professional aspirations with caregiving responsibilities, whether for young children or elderly family members. 

Sinha said, “If I have young children that I need to leave the office for at five o’clock every day to go take care of, but I’m able to hop back online later after the kids are down for the evening, that flexibility is invaluable. It’s priceless. When you have a network that is similar to you but is diverse enough to understand what you’re going through, you’re all going to make it work and make it happen together. But that only comes with the relationships that we build with our peers.”

Tearing down barriers also means setting measurable goals. Accountability is crucial; organisations must set clear targets for diversity and track progress. Transparent metrics around hiring, promotions, pay equity, and leadership representation are what will ultimately keep companies honest about their efforts. 

The spark that became Women in Transaction Banking (WTB)

Sometimes, profound change starts with a simple idea.

Sinha said, “Just after our BAFT global annual meeting in 2023 in San Francisco, I was in an elevator discussing women in payments with Maram Al-Jazireh from Arab Bank, and I mused, ‘Why don’t we have anything for women in payments and trade?’. She replied, ‘Well, why don’t you start something?’”

What started as an innocent question became a full-fledged movement. The WTB initiative grew out of the recognition that women in the industry, especially in middle management, need more opportunities to connect, grow, and thrive.

This initiative focuses on several key areas: mentorship, education, sponsorship, and building a community where women can share experiences, learn from one another, and navigate the complexities of the banking world together. This program aims to provide women in middle management with the knowledge and skills they need to succeed.

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The journey towards gender equality in finance is ongoing. While progress has been slow, conversations are starting to turn into actions, and ideas are taking root, growing into initiatives like Women in Transaction Banking. The pay gap is still there, but it is no longer being ignored. Women are stepping into roles that are reshaping the culture of banking, bringing empathy, caution, detail, and collaboration to the forefront.

Rethinking how the financial industry operates at every level, through mentorship, flexible policies, or simply recognising the unique value that diverse perspectives bring, are steps towards a more inclusive future. 

There’s still a long way to go, but as these conversations take hold, there’s a sense that meaningful change is the natural next step.

Did you know that we are hosting Women in Trade, Treasury and Payments 2025 Conference? Follow the link below to find out more.

The post VIDEO | How WTB is addressing structural barriers to achieve gender parity in finance appeared first on Trade Finance Global.

The conversation surrounding real-time payment systems is evolving quickly, and nowhere is this more evident than in the dynamic between RTP (Real-Time Payments) and FedNow, two significant players within American payments. 

To learn more about these and about the payments space in general, Trade Finance Global (TFG) spoke with Deepa Sinha, Vice President of Payments and Financial Crimes at the Banker’s Association for Financing and Trade (BAFT). 

Two payment systems, one goal

Why is a discussion around payment systems even relevant? As Sinha summarised, “There is no trade without payments.”

Real-time payment (RTP) systems represent a modern financial infrastructure designed to enable near-instantaneous money transfers between banks and financial institutions. These systems allow funds to be sent, received, and settled within seconds, 24/7, compared to the historical multi-day processing times of legacy banking systems. While primarily developed in the US, RTP technologies are increasingly gaining global traction.

Operated by a private entity, RTP has established itself among larger banks and financial institutions, building a network with extensive coverage. However, it has faced challenges with limited adoption from smaller institutions, mainly due to technical and financial requirements.

And then there is FedNow, which is backed by the Federal Reserve, and specifically designed to bridge this gap. It aims to serve smaller banks, credit unions, and financial entities that previously found RTP challenging to access due to costs or technological barriers. This resource could level the playing field, ensuring that real-time payments are within reach no matter the size of the institution.

Sinha said, “The coexistence of both RTP and FedNow could serve complementary segments, broadening the reach of real-time payments across various financial institutions, from large banks to smaller community banks and credit unions.”

While their methods and audiences may differ, their respective goals are inherently similar: to provide a faster, more accessible way for institutions and consumers to move money. Two payment systems striving for similar outcomes create an environment of competition—hopefully, a case of healthy competition that drives progress.

Sinha said, “Competition and innovation could encourage both networks to offer unique features or partnerships, and that would enhance the US payment systems competitiveness with international real-time payment networks.”

The introduction of FedNow challenges RTP to do more—perhaps lowering costs or expanding services to remain competitive. In sheer numbers, FedNow is leading: as of July 2024, more than 800 financial institutions across the US have adopted FedNow, compared with 570 on RTP.

With this, FedNow must demonstrate that it can effectively provide value to smaller institutions and address unmet needs. While two-thirds of banks aren’t signed up to RTP or FedNow, the demand is there: 63% of US corporate bankers experience significant or overwhelming demand for instant payments from their corporate customers.

The pressure to innovate is pushing both systems to introduce new features, explore unique partnerships, and strive for efficiencies that might only have been possible with the presence of a competitor. The October 2024 G20 roadmap identified the significant potential held by instant payments in making cross-border payments faster, easier, and cheaper; healthy competition between RTP systems could give rise to excellent options for businesses and consumers.

Building bridges, not walls

Yet, the story of RTP and FedNow is not just about competition; it’s also about collaboration, ultimately through interoperability. For RTP and FedNow to succeed, they must eventually learn how to communicate with one another.

Sinha said, “While RTP and Fed now use similar ISO 20022 standards, full interoperability could be complex and might take time to achieve. The two can definitely coexist, though. If interoperability is prioritised, banks could seamlessly move transactions across both networks, potentially allowing payments initiated in one network to be completed in another.”

ISO 20022 is a global standard that provides a universal language for financial services messaging, creating a common framework for exchanging payment information across different systems. By adopting this standard, RTP and FedNow are using a shared “dictionary” that potentially makes communication between networks easier, though full interoperability remains complex.

This collaboration is easier said than done. While both systems use similar standards, achieving true interoperability is complex and requires considerable coordination and compromise. But it’s worth it. If RTP and FedNow manage to bridge their systems effectively, it would mean a more resilient payment infrastructure for all users. 

Payments in a changing world

But this story doesn’t end with interoperability or competition, and it extends far beyond the US borders. As the payments landscape evolves, stakeholders cannot ignore the global context. 

With the rise of new alliances like BRICS and the exploration of alternative systems to Swift, payments are transforming worldwide. The development of RTP and FedNow is part of this larger narrative. It’s about positioning the US payment systems to be competitive globally while addressing domestic needs.

Just as speed is essential, so too is the financial system’s integrity. In a world where criminals, from money launderers to fraudsters, are constantly looking for weaknesses, providing fast, secure, and transparent payment options has become crucial to financial security. Innovations such as fraud prevention tools, regulatory frameworks, and enhanced financial inclusion lie at the core of these efforts.

Sinha said, “We’re fighting money laundering, fraud, human trafficking, arms smuggling, drug trafficking. All of these are a profound detriment to the peaceful function of our societies and communities.”

Regulatory frameworks have emerged as critical defenders in this evolving digital payments ecosystem. Standards like the Payment Card Industry Data Security Standard (PCI DSS) provide robust requirements for safeguarding financial data, mandating encryption, regular security assessments, and comprehensive compliance reporting. The EMVCo‘s global payment security standards have been particularly effective, reducing worldwide payment fraud by establishing stringent protocols for card and mobile transactions.

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Internationally, Japan pioneered real-time payment processing with its Zengin system in 1973, (though it only became a 24/7 service in 2018). Currently, over 70 countries across six continents support real-time payments. In 2022, the number of transactions reached 195 billion, representing a remarkable 63% year-on-year growth, per ACI Worldwide’s March 2023 report.

India leads the market, processing 89.5 billion transactions through its Unified Payments Interface, launched in 2016. Brazil, China, Thailand, and South Korea follow as significant real-time payment markets.

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By 2028, real-time payments are expected to constitute 27.1% of all payments globally.

With two systems working side by side, each catering to different market segments, the potential to transform how money moves across the country is immense. Their rivalry pushes both to innovate, improve accessibility, and lower costs, while their eventual interoperability could lead to a unified system that benefits everyone

By 2028, RTP is expected to constitute 27.1% of all global payments. With this capability, international trade finance will be unrecognisable, dramatically reducing transaction times and increasing liquidity for businesses.

The journey will continue as these two systems learn to paradoxically coexist, compete, and ultimately work together to improve real-time payments for everyone.

The post VIDEO | Race against real-time: The evolving landscape of US payment systems appeared first on Trade Finance Global.

The payments industry is undergoing a profound transformation, fuelled by technological advancements, shifting consumer expectations, and regulatory developments. 

ISO implementations, instant and real-time Payments, digital currencies, regulatory compliance, and financial crime concerns are all on the top of the agenda this year and for the near future. 

As we navigate this complex ecosystem, it’s essential to reflect on the lessons learned, anticipate future challenges, and embrace opportunities for innovation. In this thought leadership article, we look at key initiatives and insights shaping the payments landscape, drawing from recent publications by BAFT (Bankers Association for Finance and Trade).

ISO 20022 Migrations: Lessons Learned

In January 2024, BAFT released a white paper highlighting lessons learned from ISO 20022 migrations. The adoption of ISO 20022, a global messaging standard for financial transactions, represents a significant milestone in modernising payment systems worldwide. 

However, the migration process comes with its share of challenges, including technical complexities, data mapping issues, and coordination among stakeholders. 

The paper’s target audience are those banks who have not yet started their ISO migration journey, or those who are in the middle of it. The paper is the collaborative work of several banks’ experiences to guide others through these challenges.

A key insight from the white paper highlights the significance of robust project management and the need for effective collaboration among institutions. 

Effective communication and coordination help mitigate risks and ensure a smooth transition to ISO 20022 standards. Additionally, investing in training and education for staff members is vital to enhance awareness and proficiency in handling the new messaging format.

Uneven regulations in the payments industry

Despite the progress made in standardisation, regulatory frameworks governing the payments industry remain fragmented and uneven. BAFT is actively engaged in addressing these regulatory disparities to foster a more cohesive and transparent environment for payments players, including banks and non-bank financial institutions. 

By advocating for harmonised and even regulations across jurisdictions, and among banks and non-bank financial institutions, BAFT aims to facilitate collaboration and promote financial inclusion on an even playing field for all.

The payments roadmap and G20 initiatives

BAFT’s Payments Roadmap aligns with the priorities outlined by the G20 to enhance the efficiency, resilience, and security of payment systems globally. This strategic initiative encompasses a range of objectives, including promoting interoperability, leveraging emerging technologies, and enhancing cybersecurity measures. 

By aligning with G20 initiatives, BAFT seeks to drive consensus and collaboration among policymakers, regulators, and industry stakeholders. It is also the first of its kind as a collaborative effort among banks to outline their payments initiatives in place now, and what they have planned in the near future.

Digital currencies and financial crime concerns

The proliferation of digital currencies presents both opportunities and challenges for the payments industry. BAFT is actively researching the implications of digital currencies on financial crime prevention and compliance measures. As digital payment methods gain traction, concerns about money laundering, terrorist financing, and fraud have become more pronounced.

BAFT’s white paper on Digital Currencies and Financial Crimes, which will be published by summer 2024,  will aim to provide insights into mitigating risks associated with the adoption of digital currencies. 

By leveraging advanced analytics, artificial intelligence, and blockchain technology, financial institutions can enhance their ability to detect and prevent illicit activities. Moreover, collaboration between the public and private sectors is essential to develop robust regulatory frameworks that balance innovation with security.

ISO 20022 Migrations: Guidance and best practices

As a sequel to the lessons learned paper, BAFT is developing a guidance and best practices white paper, which will include use cases, for ISO 20022 migrations to support financial institutions throughout the transition process. 

This comprehensive resource will offer practical insights into data mapping, testing procedures, and change management strategies. By leveraging the collective expertise of industry stakeholders, BAFT aims to provide a guide to facilitate a seamless migration to ISO 20022 standards.

Sanctions: Lessons learned

In its ongoing commitment to fostering best practices and enhancing compliance standards within the financial industry, BAFT will release a groundbreaking white paper focusing on “Sanctions: Lessons Learned.” 

This publication will serve as a guide, drawing from real-world experiences and case studies, to illuminate the complexities and nuances surrounding sanctions compliance. 

The new guide will take insights and best practices and focus on providing financial institutions with knowledge and practical strategies to manoeuvre through the constantly changing sanctions regulations landscape.

From mitigating risks associated with sanctions violations to implementing robust compliance frameworks, this white paper will offer guidance for industry professionals striving to uphold the highest integrity and regulatory compliance standards.

Key drivers for shaping the future of payments

The payments industry is undergoing a period of unprecedented change, driven by technological innovation, regulatory reform, and evolving customer preferences. As we navigate this dynamic landscape, collaboration, innovation, and adaptability are essential to driving progress and ensuring the resilience of payment systems. 

By harnessing insights from these various white papers, and fostering collaboration and cooperation, financial institutions can navigate challenges, capitalise on opportunities, and shape the future of payments. Together, we can build a more inclusive, efficient, and secure payments ecosystem that meets the needs of a rapidly evolving digital economy.

The post Keeping pace with payments: Lessons learned from a dynamic landscape appeared first on Trade Finance Global.

Automated Clearing House (ACH), wire transfers, and credit cards have become the cornerstones of modern commerce, enabling seamless transactions across borders and time zones. However, as these digital payment methods flourish, industry stakeholders are increasingly cognisant of the inherent risks that come hand-in-hand with this progress.

The digital advantage: Efficiency and accessibility

Digital payments have revolutionised the way businesses and consumers conduct transactions, offering unparalleled convenience and speed. ACH transfers allow for the automatic movement of funds between accounts, streamlining processes like payroll and bill payments. 

Wire transfers expedite international transactions, eliminating the time-consuming intermediaries of traditional cross-border commerce. Credit cards, with their widespread acceptance and instant payment capabilities, have become the go-to choice for in-store and online purchases.

Beyond the convenience, these digital methods have democratised financial access. Small businesses can now compete on a global scale, reaching customers beyond their local markets. Consumers benefit from the flexibility to manage their finances, make purchases, and pay bills with a few clicks. However, these benefits come intertwined with potential risks that necessitate careful consideration.

Navigating the risks: Security and fraud

The rise of digital payments has also given rise to an array of cybersecurity challenges. With transactions occurring in the virtual realm, the potential for cyberattacks, data breaches, and fraud has grown exponentially. 

While security breaches predominately occur with merchants connected to the network rather than the payment systems themselves, malicious actors are constantly seeking vulnerabilities in payment systems to gain unauthorised access to sensitive information,  leading to financial loss and reputational damage for both businesses and consumers.

ACH transactions, while efficient, can be susceptible to account takeovers and unauthorised withdrawals. Wire transfers, particularly in international contexts, may be subject to fraudulent instructions that divert funds to the wrong destinations. 

Credit card fraud remains a persistent concern, with cardholder information being compromised via retailer breaches. As these risks evolve, industry stakeholders must adopt comprehensive security measures to safeguard digital transactions.

The role of regulations and compliance

Recognising the critical need to address these challenges, regulatory bodies have implemented measures to protect digital payment ecosystems. The Payment Card Industry Data Security Standard (PCI DSS) provides robust requirements for safeguarding credit and debit card data, requiring encryption, regular security assessments, and compliance reporting. 

A lack of PCI compliance by non-bank entities (major retailers, most prominently) has been the proximate cause of major data breaches, demonstrating that a secure ecosystem relies on compliance by all data handlers. 

The EMVCo (Europay, Mastercard, and Visa Consortium)’s global card and mobile payment security standards are a major step forward in securing new payment types and have reduced payments fraud worldwide. The new EMV Secure Remote Commerce (SRC) standard is increasingly found online, where it’s called “Click to Pay” and leverages a combination of methods to secure card-not-present transactions. 

The Bank Secrecy Act and Anti-Money Laundering regulations impose robust due diligence practices on financial institutions, mitigating the potential misuse of digital payment platforms for illicit activities.

Yet, achieving compliance is not a one-size-fits-all solution. Industry participants must tailor their security protocols to their specific operational landscapes. Robust authentication mechanisms, multi-factor identification, adoption of the latest standards from bodies like the PCI Council and EMVCo, and real-time transaction monitoring are among the strategies that can fortify digital payment platforms against threats. 

Uneven regulations between banks and non-banking financial institutions across the global payments industry are a problem that needs to be addressed. The BAFT Global Payments Industry Council, comprised of senior bankers in global payments, is publishing a collaborative white paper titled “Uneven Regulations in Payments”, which is a model code for how to remedy the uneven payments landscape. 

It addresses the uneven regulations’ four themes and their implications: 

1. Regulatory Oversight, 
2. Extension to Sponsorship – Indirect Scheme Participation, 
3. Consistency of KYC/CDD Requirements, 
4. Permissibility of Cross-Border Activity. 

The overarching principle should be to avoid ambiguity or “silent” rules, which will then lead to different interpretations and difficult enforcement. The paper will be published later this year.

Collaboration and innovation as defenders

As the digital payment landscape continues to evolve, collaboration and innovation emerge as vital strategies for managing risks. Industry stakeholders must come together to share insights, best practices, and emerging threat intelligence. 

Financial institutions, retailers, fintech startups, cybersecurity experts, and regulatory bodies must forge partnerships to create a united front against cyber threats.

Furthermore, embracing technological advancements such as artificial intelligence (AI) and machine learning can empower payment platforms to detect anomalies and patterns that indicate fraudulent activities. Real-time fraud detection algorithms can provide an additional layer of security, swiftly identifying and blocking suspicious transactions.

No pain no gain

The ongoing digital payment revolution offers a host of benefits, enabling businesses and consumers to transact with unprecedented ease. However, these advantages are accompanied by inherent risks that require strategic vigilance and action. 

Security breaches, fraud, and compliance challenges underscore the need for comprehensive risk management strategies. By implementing robust security measures, adhering to regulations, fostering collaboration, and leveraging innovative technologies, the industry can navigate the intricate landscape of digital payments and usher in an era of secure and seamless transactions.

The post Navigating the future of digital payments: Efficiency, security, and compliance appeared first on Trade Finance Global.