International transfers, what lies beneath the tip of the iceberg?

BBVA processes on average 95 billion euros in international transfers per day. For the customer, it is a simple process that, in just a minute and a couple of clicks, makes it possible to pay rent, send money to a relative or pay for goods. However, for these transactions to be carried out at such speed and in a safe manner, banks need to establish a solid system of relationships among themselves to be able to channel customer demand and process their requests. This requires more effort if the family member to whom the money is being sent is living abroad, if the rent is to be paid in another country or if the goods are being imported.

The reason is that other factors come into play and complicate the equation: different legal systems, foreign banks with which your bank has no previous relationship or the possibility of fraud. The number of clicks for the user remains the same, but the bank faces a much more complex task.

To make these payments possible, BBVA focuses on four fundamental pillars: the relationship between banks, regulation,cybersecurity  and digitalization. There are an increasing number of players in the international payments industry and all of them should invest heavily in these four aspects.

1. Correspondent relationships

Any international payment on its way to the recipient passes through a bank in one form or another and requires establishing a network of payment providers. BBVA has a correspondent banking team, also known as International Financial Institutions (IFI), that establishes strategic alliances with the world's leading financial institutions to create such a network.

When a BBVA client wants to make an international transfer to a foreign country, IFI bankers turn to a partner entity in the region, which in turn maintains relationships with the other players in its territory. Through this entity known as ‘clearer’, BBVA ensures that its customers' transfers reach their final destination.

To facilitate the exchange of the high volume of payments, BBVA opens credit lines with its 'clearers', allowing transfers to be made even faster.

2. Regulation

The process requires first a robust analysis of the partner entity, a 'Know Your Customer' (KYC), which aims to prevent the financing of illicit activities, ensure regulatory compliance and protect customers. Working with solid and solvent entities helps significantly in the success of international transfers.

The regulation of international payments varies from country to country and IFI bankers are familiar with the different markets and can provide advisory on local regulations, technical capabilities or banking practices.

3. Cybersecurity

Cybersecurity is a priority for BBVA, in all its operations and in all countries. The evolution towards faster, and even instant, payment systems increases the risk of fraud. To detect and prevent fraudulent transactions, BBVA makes considerable investments in technology and has teams of expert professionals.

4. Digitization

Continued investment in technology is also a key aspect. In recent years BBVA has invested significantly in systems, digitizing operational processes with the latest technologies on the market. We are living in a time of great technological changes in payments: open banking and APIs, real-time payments, the evolution of SWIFT (SWIFT GPI, SWIFT GO...), blockchain, the growth of cryptoassets, the Internet of Things, etc. The IFI team participates in all these initiatives at BBVA because ultimately there is a payment provider, an IFI client, who makes it possible for payments to reach their destination.

In addition to participating in real-time payment systems in the countries where it is present - such as Bizum in Spain - BBVA is actively engaged in initiatives such as SWIFT GPI for international payments, achieving great results: nearly 50% of GPI transactions are credited to the beneficiary's account in less than half an hour and 38% arrive in less than five minutes at the other end of the world.