Every few years, the payments industry introduces another way to move money across borders. Instant payment systems, distributed ledgers, tokenised deposits and regulated stablecoins have each promised to make international payments faster, cheaper or more transparent. Collectively, however, they present banks with a different challenge. Every new network adds another layer of infrastructure that must interact with the ones already in place.

For Naveen Mallela, Global Head of Payments Products at Standard Chartered, that is now the defining question for transaction banking. The future of cross-border payments will not be shaped by a single technology replacing correspondent banking. In his view, it will depend on whether banks can integrate an increasingly diverse set of payment infrastructures into a coherent operating model that customers never have to think about.

That perspective explains why Standard Chartered continues to participate in multiple industry initiatives, including Partior, Project Agora and Swift's work on digital assets and interoperability. Viewed individually, these initiatives appear to address different technologies and use cases.

Mallela sees them as solving the same problem: enabling different forms of money, settlement and payment infrastructure to work together rather than compete with one another. Although each initiative addresses a different part of the ecosystem, he argued they are converging on the same commercial objective: enabling different forms of money to interoperate rather than compete. The question, therefore, is no longer which payment rail will dominate the future. It is how banks redesign cross-border payments for a world where many payment rails coexist.

Shortening transaction chains rather than replacing correspondent banking

Mallela believes much of the industry's discussion begins in the wrong place. Too often, the debate focuses on whether tokenised deposits, regulated stablecoins or distributed ledgers will eventually replace correspondent banking. In his view, that is the wrong objective. The more important question is whether new infrastructure reduces unnecessary complexity within existing payment chains. "The question is: how do we shorten transaction chains?" Mallela said.

Many international payments continue to pass through multiple correspondent institutions before reaching their final destination. Every additional intermediary introduces operational hand-offs, additional liquidity requirements, reconciliation processes and settlement risk. The opportunity presented by emerging forms of digital settlement is not necessarily to eliminate those banking relationships, but to simplify how value moves between them.

Mallela illustrated the point using trade between China and Brazil. Today, a cross-border payment between the two countries may pass through several correspondent institutions before settlement is completed. A shared digital settlement environment could reduce the number of intermediary steps while preserving the commercial banking relationships at either end of the transaction.

The result is not simply a faster payment. It is a shorter and more efficient transaction chain requiring fewer transfers of liquidity and fewer operational touchpoints. That distinction is important. The significance is not simply fewer intermediaries, but fewer liquidity transfers, fewer reconciliation points and less operational friction across the payment chain.

Mallela is not arguing for disruption for its own sake. He is arguing for architectural simplification. The objective is not to replace existing infrastructure wherever possible. It is to determine where new infrastructure can remove unnecessary complexity while preserving the trust, governance and regulatory certainty that banks already provide.

Liquidity becomes more important than speed

If simplifying transaction chains addresses one source of friction, Mallela believes the industry's next challenge lies beneath the payment itself. For much of the past decade, innovation focused on making payments faster. Increasingly, the limiting factor is no longer messaging. "It is liquidity," Mallela said, when asked what now limits the next phase of cross-border payments.

As payment systems move towards continuous operation, banks need liquidity to be available continuously as well. That changes how they think about collateral, funding and settlement across multiple currencies and jurisdictions. This is where Mallela believes the distinction between payments, collateral and financial assets is becoming progressively less meaningful as more value becomes digitally represented.

Much attention has focused on tokenised deposits and regulated stablecoins. He sees equally significant opportunities in tokenised collateral and programmable financial assets that can support liquidity management more dynamically than conventional mechanisms allow. The implications extend well beyond payments. If collateral can be mobilised more efficiently and converted into usable liquidity whenever required, banks reduce one of the principal constraints that still limits continuous settlement.

Competitive advantage therefore shifts away from accelerating payment messages towards improving how liquidity moves through increasingly interconnected financial infrastructure. This also explains Standard Chartered's growing interest in tokenised financial markets more broadly. Payments are no longer evolving independently from capital markets, collateral management or treasury operations. Increasingly, they are becoming part of the same operating model.

Removing exceptions before accelerating payments

Another misconception, Mallela argued, is that faster payment infrastructure automatically produces a better payment experience. Many delays occur long before settlement begins. Incorrect beneficiary information, incomplete payment instructions and compliance requirements continue to interrupt straight-through processing despite improvements in payment technology.

Future efficiency therefore depends as much on preventing operational exceptions as on accelerating settlement. This is where richer payment data, pre-validation and artificial intelligence become increasingly important. Rather than accelerating flawed payments, Mallela argued the industry should first reduce the need for payments to be repaired after initiation. The objective is not simply faster payments. It is more predictable payments.

Building interoperability rather than choosing a winning rail

If liquidity represents one pillar of the next operating model, interoperability represents another. Mallela does not believe the future belongs to a single global payment network. He expects a world of specialised networks, making integration, not standardisation, the defining capability of transaction banking. He expects the number of payment infrastructures to continue increasing. Domestic instant payment systems, correspondent banking, tokenised deposits, regulated stablecoins and distributed ledger platforms will each continue evolving because they solve different problems for different participants.

"There is not going to be one singular rail," he said. The industry's challenge is therefore changing. It is no longer deciding which payment rail will prevail. It is ensuring that multiple payment rails can operate together as though they were part of a single financial system. This philosophy explains Standard Chartered's participation in initiatives such as Partior, Project Agora and Swift's work on digital assets and interoperability.

Although these initiatives are often discussed individually, Mallela sees them as exploring different aspects of the same problem. Partior explores how shared ledger infrastructure can improve cross-border settlement using commercial bank money. Project Agora examines how tokenised commercial bank money and central bank money could interoperate within a common settlement environment. Swift is developing interoperability frameworks that allow traditional payment infrastructure to interact with emerging digital asset networks rather than being displaced by them.

Banks are no longer designing another payment network. They are designing the operating model that allows many payment networks to coexist. Payments become part of a broader financial architecture This evolution also changes how payments themselves should be understood. Historically, payments, liquidity management, collateral, securities and custody have operated as largely independent banking functions, each supported by its own infrastructure.

Mallela believes those boundaries are becoming progressively less distinct. As financial assets become increasingly tokenised, payments no longer move independently from the assets supporting them. Collateral can potentially be mobilised in real time. Securities increasingly contribute to liquidity management. Treasury, settlement and payments begin operating as interconnected components of the same financial architecture rather than as separate disciplines.

Payments increasingly become the mechanism through which liquidity, collateral, tokenised assets and settlement are coordinated, rather than a standalone banking function. They become the connective layer through which liquidity, collateral and tokenised assets interact across the financial system. That shift explains why the future of cross-border payments cannot be considered in isolation from wider developments in digital assets and capital markets. The operating model increasingly matters more than any individual product.

Artificial intelligence improves certainty rather than simply efficiency

Artificial intelligence also supports this evolving operating model. Rather than viewing AI primarily as a customer-facing capability, Mallela sees its greatest value in improving operational certainty. As payment ecosystems become increasingly diverse, banks require intelligent systems capable of validating beneficiary information before payments begin, identifying incomplete instructions, improving sanctions screening and other compliance processes, and reducing avoidable exceptions before transactions enter processing.

The objective is not simply to automate manual work. It is to improve the quality of payment execution. Customers benefit because fewer transactions require investigation, repair or manual intervention after they have been initiated. In an increasingly complex payments ecosystem, predictability becomes just as valuable as speed.

From payment infrastructure to operating model

Taken together, Mallela's observations suggest that transaction banking is entering a different phase of development. For decades, competitive advantage centred on expanding correspondent banking networks and improving individual payment rails. Increasingly, banks must solve a more complex problem.

Customers will continue sending payments through an expanding mix of correspondent banking, domestic instant payment systems, tokenised money, regulated stablecoins, distributed ledger platforms and whatever new forms of infrastructure emerge over the coming decade. That diversity is unlikely to diminish. If anything, it will continue increasing.

Success therefore depends less on introducing another payment rail than on integrating an expanding ecosystem into a coherent operating model. Banks increasingly become architects rather than simply operators. They coordinate infrastructure that customers neither see nor need to understand. Cross-border payments will almost certainly become more technologically sophisticated as new settlement models, new forms of money and new financial infrastructure continue to emerge.

Mallela does not see that as fragmentation. He sees it as maturity. In his view, the industry is moving beyond building individual payment networks towards connecting them. For banks, the competitive question is therefore changing. It is no longer, "Which payment rail should we build?" It is, "How do we make every payment rail work together?"

For Mallela, the institutions that lead the next phase of transaction banking will not necessarily be those with the newest technologies or the largest payment networks. They will be those that design operating models capable of integrating an increasingly diverse financial ecosystem into a coherent customer experience.