In 2025,  as per the IMF report, banks have ended up as the most expensive gateway to send foreign remittance and considering the fact that cross border spending will jump to $320 T by 2032, banks are in tremendous pressure to either innovate their existing payment rails or risk losing their market share to advanced technologies. 

In this article, we shall see how bank’s market share in global payments is threatened by emerging technologies like stablecoins, the challenges they face to compete with them  and the solution that blockchain can provide to banks  in this regard to resolve their existing issues; 

According to the IMF’s January 2025 report, banks have become the most expensive gateway for cross-border payments. With cross-border spending projected to reach $320 trillion by 2032, banks face existential pressure to innovate or lose market share.

The threat is real. Approximately $27 trillion remains trapped in correspondent banking accounts, creating a $1.22 trillion annual “liquidity tax.” Meanwhile, stablecoins moved $27 trillion in 2025 with 733% B2B payment growth, and Ripple secured 75+ global licenses in February 2026.

This article examines how stablecoins threaten banks’ market share, the structural challenges banks face, and how blockchain provides solutions.

Stablecoins: The Bullet Hard To Dodge For Banks To Dominate the Cross-Border Payments 

At the moment, more than 40% of the banks  are in the position to lose 5% of the market share to next gen payment advancements like stablecoins.  And this trend has already started in the US and the UK, where stablecoins  have already occupied  1% of the total remittance and moved  $27 T in value because they not only streamline faster cross border transfer but also help in  bearing yields while holding such tokens .  In the near future, it is expected that if banks fail to generate real-time impact like; 

• Near Instant Settlements 
• Less than $0.1  charges  for every cross border transaction undertaken
• Borderless, Minimal and non existent FX fees 
• Fully digital, smart-contract enabled programmability 
• Cryptographic security
• Fully transparent transaction reporting. 
• Full operationality  24*7 and 365 days in a year. 

They could risk losing the market in cross border remittance until and unless  they innovate to cover the  $250 Trillion remittance target set for  the next 5 years. But for banks to achieve that, they need to overcome the barriers that they face in the present while providing the remittance services for cross border payments; 

What are the Challenges Banks Face To Deliver Next Gen Innovation in cross-border payments? 

1. Transparency

The Remittance Transfer Rule which is predominantly known as US CFPB and India’s LRS  (RTR)  compels banks to provide the following details to the customers like: (i) clear and accurate fee disclosure (ii) data of delivery of funds (iii)  rights to error resolution and disputes (iv) cancellation and refund rights and (v) compliance monitoring for absolute transparency. 

But due to banks using SWIFT systems for transfers, it is very hard to easily track conversion fees or any other hidden charges that an intermediary banking network can impose while the funds are moving from one location to another. This transparency issue has caused a major trouble for banks because out of $17.9 billion in fees paid for remittance, $5.8 B goes into hidden charges. 

And in case, the banks are not able to provide justification for such charges due their transparency hurdles, they can be fined under the Consumer Financial Protection Bureau (CFPB) law under Regulation E in the US. An example for the same is  Bank of America facing a   $21 M in settlements due to their inability to provide complete transparency of charges to customers. 

2. Regulatory Pressure 

Regulatory frictions while sending money through banks becomes another major hurdle while undertaking cross border transfers because of: (i)   different levels of development of the financial market, (ii) lack of a global regulatory perspective, (iii) non collaboration with regulatory bodies  operating from different  jurisdictions and (iv) lack of public-private partnership among the financial players, pushing them into the dark world of fines and penalties. 

As a result, to prevent penalties and other subsequent charges for non-compliance, every year banks are spending  $206 B  annually setting up manual systems for checking AML/ CFT transactions. And there’s no end to this resulting in remitters having to bear the burden of compliance by seeing their  remittance value in cross border transfers diminishing under the cost pressure put on them especially for low value transfers undertaken under travel, payroll, remittance. 

3. High fees 

The global remittance in 2023 was hovering at around $656 B  and it is expected to reach $900 B by 2025. Though the market size of global remittance has increased significantly but not adequate work has been done to minimize the cost of sending the money. For example, the SDG target proposed by G-20 and G-8 nations was to limit the cost of sending foreign remittance via banks using the SWIFT system to 3%, but at this moment, they are nowhere close to their targets. 

As a result of this, remitters are looking for better options in the form of MTOs or Money Transfer Operators, who are not just providing faster single day settlements but even charging way less than their counterparts like banks.

 

How Can Blockchains Help In Providing Next-Gen Cross-Border Payment Innovation To Banks?

Fortifying  Provenance for Optimum Transparency 

Provenance or trail identification is not possible in a traditional banking infrastructure but blockchain can help trace movements due to its standardization and use of universal distributed ledger systems.  As a result, now it is possible to quickly flag scrupulous  fund movement or track inefficient transactions  moving across borders. 

Santander, a global retail bank operating in Spain, Brazil, Poland and the UK  has partnered with  the  RippleNet Infrastructure to launch One Pay FX, a platform that aims to streamline a smooth and efficient cross border transfer by providing provenance of the fund movement at every checkpoint.  Due to the One Pay FX platform, it is now possible to experience fast transfers, transparency on cost and rates and zero commissions for selective transactions. 

Sandboxing Compliance 

Banks can overcome the regulatory hurdles if they can make cross border payments easily interoperable, strengthen the regulatory collaboration across various stakeholders and build complementary public private partnerships among the financial services involved in streamlining cross border transactions. Blockchains help here because it can allow role based access and eliminate repetitive tasks which significantly inflate the regulatory compliance cost and automate adoption of new regulatory measures in the banking models to eliminate instances of fines and penalties. 

GoldMan Sachs has introduced the GS Digital Asset Platform (DAP)  to help banks fulfill the regulatory requirements.  Using the GS DAP, banks can not just  sandbox compliance but also let different players in the remittance market collaborate and operate with role based control and automate tracking and implementation of new regulations in their modus operandi. As a result, banks are now not  bound to choose between compliance, privacy, and control of permissioned ledger and automation  while operating on a public blockchain for trust and accountability to  optimize operations. 

Mathew McDermott, Managing Director & Global Head of Digital Assets, Goldman Sachs says, “Our goal from the outset has been to help our clients realize the benefits of end-to-end digital lifecycle processing across tokenized assets, digital currencies, and other financial instruments. We are pleased to bring this Daml-based solution to market and continue to find efficiencies that will improve the velocity of transactions.”

Optimizing Cost 

To optimize the cost of remittance, banks need the infrastructure that can help them overcome intermediary bank fees, settlement times, currency exchange fees.  But doing that would demand an infrastructure readily functional  to solve the interop challenges which the SWIFT system isn’t ready for. 

Blockchains provide a considerable advantage using a decentralized ledger network.  For example, Ripple has partnered with more than   300+ banks  allowing them to use its ODL or On-demand Liquidity Solution. Due to this, banks can  instantly  synchronize communication with all the partner networks using a decentralized ledger technology, or Ripple Net which not only passes messages but even moves value. 

Hence  streamlining   debits, credits and liquidity for banks which they couldn’t do using SWIFT previously in a fast and economical way. So far the Ripple Network has significantly cut down the cost and time-to-settlement using its ODL Network for cross-border payments.

It is expected that the global cross border spending will reach $320 T in the next 7 years. Keeping this trend in mind, now banks have more reasons to adopt innovative solutions and embrace the change  or risk being  left behind sticking to legacy rails. Blockchains end up as an amenable solution because they can easily blend with the  new ISO 20022 standards for banking streamlining interoperability and value transfer. 

Because, at this moment, the  ISO 20022 standards can only pass on the message and not the value; thereby still creating a never ending loop of Time-to -Settlement. So, if you want to build anything around the same or want to introduce new use-cases in banking wherein blockchain will have a role to play, Zeeve can help you. 

Pilot Your Banking Use-Cases Around Blockchain With Zeeve

For any of your banking use-cases that you are planning to launch on top of blockchain, compliance will be the most important aspect to avoid business disruption. Zeeve as an ISO 27001, SOC 2 Type II, and GDPR compliant platform makes sure that whatever product that you intend to launch around banking to streamline smooth cross border transactions, we are here to help you in undertaking everything from pilot to implementation to launch. 

With more than 40+ enterprises scattered across regulated and high scale environments, we can provide everything that you are looking for. Schedule a call with us today if you want to integrate blockchain in your existing banking stack for improvisation and better outcomes.