How banks can innovate without compromise

Technology changes fast in the banking world, and innovation can mean the difference between thriving or struggling as a financial institution. Fundamentally, innovation is the creation of products, services, and processes that can enhance or upgrade existing systems and infrastructure or bring new solutions to market. Banks that invest in new technologies are well-equipped to offer the tools and security measures their customers demand, while those that can’t quickly adapt to those shifts risk losing ground. Innovation is especially critical for banks as they navigate the intermediary steps and regulatory requirements that complicate cross-border transactions. These transactions are expected to account for a significant portion of the nearly $80 trillion annual opportunity in peer-to-peer (P2P) payment flows.¹

As banks refine their digital innovation strategies, many look to fintechs as examples to follow. Fintechs are often smaller and are seen as more agile than banks, which can give them the flexibility to pivot and launch new technologies faster. Some fintechs are built on modern technology stacks, while many banks have to depend on legacy systems or spend time and money to update them. Many fintechs also have tools and tech that banks do not. Banks have historically focused on developing processes around deposits, cash, loans, and other paper-based revenue-generating staples, whereas fintechs have leaned into digital tools from the get-go. Lastly, fintechs often face fewer regulations, which can make it less time-consuming, expensive, and burdensome for them to test and deploy new tech.

While most fintechs can offer a selection of digital tools, banks must balance several factors when determining whether to build out their own solutions or purchase them from payments providers. Banks that opt for the flexibility of relying on payments partners for cross-border capabilities must then determine which cross-border payments provider is the right fit. They need a partner with innovative solutions that offer not only speed and convenience but also transparency, security, and simplicity. This is all the more crucial in the world of cross-border payments, where tracking and securing transactions across several jurisdictions add complexity and risk.

Below, we examine some of the hallmarks of digital innovation for banks and how the right payments provider can help them realize their current digital goals and stay primed to deliver the services, features, and security their customers will come to expect in the future.

Transparency: Building line of sight into money movement

For a payment to successfully flow across borders, several intricate, sensitive steps need to take place. Cross-border transactions travel through intermediary banks and other financial institutions en route to their destinations, facing a host of regulations and compliance requirements at each point. Then there’s the necessity of navigating foreign exchange rates and transaction fees as payments wind their way through different rails and networks. All of these complexities create logistical headaches for banks as they work to track and ultimately reconcile their cross-border payments.

An ideal payments provider will help banks address these challenges and anchor on innovations to build transparency into their cross-border transactions. Banks should look for a partner that offers a clear and predictable fee structure, which can help their customers avoid surprises when they receive payments. Banks should also seek out a payments provider that can deliver real-time tracking. With cross-border payments subjected to several stops on the way to their recipients, immediate insights into where payments are, how long they’ve been held, what fees have been applied, and when payments are credited are invaluable.

Foiling fraud to mitigate risks

Banks live by their reputations, and few issues can threaten credibility like fraud. Digital payment innovations allow banks to offer unparalleled levels of personalization, transparency, and control for their customers — but fraudsters are always evolving, and they’ll adjust their tactics and use new technologies to evade detection. Cybercriminals leverage everything from social engineering schemes and synthetic identity fraud to AI and machine learning tools in their efforts to fool both financial institutions and their customers. People expect their banks to incorporate innovative solutions to safeguard their transactions, all while minimizing friction.

Fighting cross-border payments fraud requires a multifaceted approach, one that leans heavily on context and data analysis. An effective payments provider can harness insights from countless transactions to root out fraud, employing innovative tools like machine learning to recognize patterns and help banks establish a playbook for evaluating risky transactions. Partners with the latest tech for advanced predictive analysis can also flag variable levels of risk for a given transaction, an innovation critical to keeping banks secure as they transact with different parties globally.

Smoother transactions with the latest account validation tools

Account validation is a key step in any financial transaction, and there’s an opportunity for banks to innovate on the process. Failure to flag inaccurate details for a recipient can result in money being sent to the wrong account or even to one that doesn’t exist, frustrating customers whose payments fail unexpectedly and eroding the confidence they have in their banks. Account validation solutions that aren’t attuned to small inconsistencies could also miss flags that indicate compromised accounts. Failing to notice and sort out these issues can add more friction to international transactions, leaving customers in the dark about the status of their payments and when, or even whether, they’ll arrive.

It’s imperative for banks to partner with a payments provider offering the latest account validation and verification tools. Partners that leverage APIs or other tools to validate accounts before transfers are initiated can flag small inconsistencies before they become big problems for customers and, consequently, for banks. Allowing bank customers to update or correct inaccurate payment details in real time is a particularly desirable innovation, one that helps customers keep cross-border payments moving without delay.

Tying it all together with user experience

According to a recent survey conducted by Visa, 63% of small and mid-sized businesses in Germany, the U.K., and Italy are using digital wallets or virtual accounts for international payments.² That’s a clear sign of the growing familiarity that consumers have with digital financial transactions. Banks are understandably eager to engage these customers and stand out from competitors by embracing innovation. But even the most cutting-edge technologies can fall flat if banks and their payments providers neglect user experience.

Simplicity in cross-border payments is paramount for customers, and banks must keep this in mind when evaluating their payments partners. Working with a single provider that can prioritize seamless integrations via APIs can give banks the UX to support their digital innovation strategies without adding friction. Incorporating additional payment methods and tools such as digital wallets and real-time payments is another win, offering customers more choice, opening up new markets and opportunities, and encouraging them to continue doing business with their banks instead of shopping for competitors with a more robust selection of services.

So where do innovation-focused banks go from here? Finding one payments provider equipped to solve every innovation challenge may feel impossible, and indeed, some banks incorporate technologies from multiple fintechs and financial services providers to achieve their goals. But banks don’t have to make do with an inelegant patchwork of cross-border payment solutions. There’s one trusted provider with the experience and infrastructure to empower banks to innovate and respond to new global payment needs as they arise.

The direct approach to innovation with Visa Direct

Visa has been an innovator in the financial space for over 60 years. The company’s size, reach, and strategic approach to acquisitions ensure that banks and their customers can use Visa Direct to supercharge cross-border transactions without relying on multiple providers.

Keep tabs on transactions — wherever they are

With Visa Direct, banks can offer customers insights into their cross-border transactions. Customers can track their payments via the Swift international payment network, which provides real-time insights into exactly where payments are and any fees that have been incurred and notifies customers the moment funds hit their accounts. There’s no guesswork, which makes it easier for customers to forecast their cash flows and plot out money movement without worrying about unforeseen changes.

Face down fraud with the latest tools

Nearly two-thirds of consumers globally say security is their top factor for cross-border payments,³ which means banks that innovate in this area are well-placed to build long-term trust and strengthen their customer relationships. Visa Direct puts anti-fraud tools at the forefront of its approach to innovation, leveraging AI and machine learning to analyze innumerable transactions for patterns that could indicate fraud. Visa Protect, for example, pairs real-time AI decisioning with human experts to manage risk across all payments, increasing security and boosting revenue by combating false declines. Other tools such as Account Name Inquiry (ANI) and enhanced fraud reporting keep transactions secure from end to end. Visa also continues to acquire anti-fraud solutions, which add flexibility and features to keep banks’ customers secure and at ease.

Take the devil out of the details with advanced account validation

Account validation is critical to ensuring that money reaches its intended destination, and Visa Direct provides multiple tools to confirm the accuracy and legitimacy of payment details. Our Payment Account Validation API gives banks several features to determine whether account information is accurate, and it’s capable of flagging details entered in error or accounts that are frozen or appear compromised.

Create a smooth user experience with cutting-edge payment tools

Visa Direct’s unrivaled infrastructure and reach expand access to more than 195 countries and more than 150 currencies through a single provider, ensuring a consistent user experience that takes the friction out of innovation. Banks can also tap into features and tools that they may lack, including real-time payments, multi-currency wallets, and infrastructure that can boost their reach into new markets—all capabilities typically associated with fintechs.

All the innovation you need in one provider

Visa Direct. Move money your way.

To learn more about money movement, visit: visa.com/visadirect

Sources

1. Visa Investor Day 25, Visa, 2025
2. McKinsey survey for Visa of 340 SMEs in the UK, Italy, and Germany
3. Unlocking the future: Banking on cross-border payment habits, Visa/IPSOS whitepaper, 2024