Hold on to your hats
It is the end of 2021, which has many of us thinking about what 2022 might look like. We are all in the midst of dealing with COVID-19, and surely our challenges next year adjusting to and with the pandemic will continue. International standard setters and national-level regulators likewise are grappling with the necessary regulatory adjustments. One point of data recently released by the Committee on Payments and Market Infrastructures shows that the number of correspondent banking relationships continue to decrease by 4% from the previous year, representing a 25% total decrease between 2011 and 2020. Meanwhile cross-border payment volume and value increased by 2% and 7%, respectively. This shows an increase in volume but a decrease in the number of banks offering the services.
This trend is significant for credit unions because the loss of correspondent relationships and consolidation of providers can significantly impact credit unions’ ability to offer payments services. In turn, this directly hurts financial inclusion, raises the cost of payments and likely pushes payments activity into less regulated areas. We know that next year, at the direction of the G20, the international standard setting bodies will be focused on providing faster, cheaper, more transparent and more inclusive cross-border payments. That means we are likely to see numerous transformations in the payments area over the next several years.
We will also see changes related to sustainable finance, AML/CFT, open banking/privacy, cybersecurity, crypto/digital currencies and many other areas. Looking to 2022, it would be easy to say, “hang on to your hats and get ready for the ride,” but that indicates that credit unions will be a passive participant in these changes. The truth is more optimistic. Credit unions have a long history of being resilient and exist to serve their members. Because of this member-centric value, not only will they adjust, but they will be at the forefront of leading changes in many of these areas. People helping people always leads the way. So yes, “hold on to your hats.”
continue reading »