BofA: Firms want cross-border payments without tech headaches

Bilateral corridors create as many problems as they solve.

Companies across the Asia-Pacific region are demanding real-time cross-border payments that are seamless and easy to use, but banks face challenges in delivering these solutions when markets operate under different rules and infrastructures.

Phil Carmalt, head of Asia Pacific global payments solutions (GPS) product at Bank of America (BofA), said clients increasingly want payments to be triggered directly from their existing systems, such as invoice portals or procurement platforms, without logging into separate banking applications.

“The challenge is that treasury teams don’t have large information technology budgets, so they’re looking for simple and cost-effective ways to connect up with the banks,” he told Asian Banking & Finance in a Microsoft Teams call.

To address this, BofA is working with fintechs and technology vendors to simplify integration for clients. This reduces the need for extensive in-house development and helps businesses connect treasury management systems directly with bank payment gateways.

Cross-border payments in Asia have improved in recent years, particularly with the rise of e-commerce, digital wallets, and merchant payments. On the retail side, QR codes have been central to progress, with countries such as Singapore and Thailand linking their NETS and PromptPay systems.

But bilateral corridors create as many problems as they solve, Carmalt said. “Instead of having multilateral clearing and settlement systems, bilateral arrangements have been springing up,” he said.

This patchwork of corridors complicates scaling for banks. “It’s hard to justify connecting to so many when they’re always solving for a very small part of our client flows,” he added.

He noted that the adoption of ISO 20022 standards across Asia’s clearing systems is laying the groundwork for multilateral corridors by improving technical interoperability. There are also attempts to harmonize anti-money laundering (AML) and counter-terrorist financing (CFT) requirements across markets, though these remain uneven.

“Some of the practical challenges are around data privacy, liability for frauds and scams, and what the different regulator expectations are on banks to protect consumers and compliance with AML, CFT, and payment transparency requirements when you’re routing overseas payments through domestic real-time rails,” Carmalt said.

Whilst faster payments are attractive, they bring new vulnerabilities. “If we look at the statistics on authorized payment scams in Asia and other markets leveraging real-time payments, unfortunately, it’s an increasing trend. It’s become top of mind for corporate treasurers,” he said.

To mitigate these risks, BofA has invested in enhanced fraud alerts and detection systems to protect clients.

Emerging technologies such as blockchain settlement and tokenised deposits are also being explored. Carmalt said these innovations enable use cases such as programmable money, where payments are executed only when conditions are met, and atomic settlement, which ensures simultaneous exchange of assets.

However, adoption remains limited. “There’s a challenge in the lack of interoperability with existing rails and existing payments done by our customers. The challenge is that while these new technologies are interesting, they solve for a very, very small percentage of our clients’ flows,” he said.

For now, BofA is prioritizing more practical applications. The bank has embedded artificial intelligence and machine learning into its CashPro platform, offering fraud detection, AI chat assistance, and payment insights.

“Information about the payment can sometimes be as important as the payment itself,” he said. “We also invest in providing insights to our customers on their payment trends, their outliers, and cash flow forecasting based on historical payment collection flows to help our corporate treasuries manage their business better.”

Ultimately, clients are more concerned with outcomes than the underlying technology. “We find that our clients tend to be ambivalent to the underlying technology so long as we’re actually delivering practical solutions to their most pressing business needs,” he added.