Banks vs Fintechs vs Stablecoins: What the BIS Says About Cross-Border Payment Costs

Sending money across borders is still slower and more expensive than sending it across town. That is not for lack of attempts to fix it. In the week of 19 to 23 October 2026, three separate developments landed within days of each other: a BIS working paper comparing banks, fintechs and stablecoins head to head; a stablecoin launch from one of the world’s largest banks; and a regional central-bank initiative for cross-border settlement in digital money. Read together, they show where the contest stands.

The BIS paper: “Competing Rails”

The paper, BIS Working Paper 1385, is titled “Competing Rails for Cross-Border Payments: Banks, Fintechs, and Stablecoins” and was published on 19 October 2026. Its authors are Du, Huang and Scharfstein. It compares the cost of three channels for moving money internationally: traditional bank wires, fintech money-transfer operators, and stablecoin-based routes.

The headline findings, as reported by the BIS page and commentary on it, are these:

• Banks are expensive. In the authors’ small sample of bank transactions, foreign-exchange markups ran from about 2% to 4.7%, even for highly liquid currencies and before explicit wire fees.
• Fintechs are much cheaper. Commentary on the paper reports all-in fintech costs of roughly 40 to 150 basis points, with savings that grow as transfer size rises. Wise, Remitly and Western Union are among the examples named in a related BIS conference discussion, which summarised the finding as “Fintech is cheaper”.
• Stablecoins are not a panacea. Stablecoin exchange rates for major currencies can approach wholesale FX rates, and on-chain fees are low. But the full journey from fiat to stablecoin and back to fiat still incurs transaction, withdrawal and exchange fees.
• Liquidity is thin. Trading between US dollar stablecoins and the euro averaged about $200 million a day across centralised and decentralised venues, compared with roughly $2.7 trillion of daily FX turnover involving the euro.
• Some advantages may be distortions. The researchers cautioned that certain stablecoin price advantages may reflect market distortions rather than better technology.

A caution from another study

The BIS paper is not the only recent work. A separate Banca d’Italia study reportedly reached a more sceptical view of stablecoin remittances, finding no systematic cost advantage, with total costs ranging from about 0.3% to nearly 9%. Critics noted the test transaction size was small, around $200, so results may not generalise to larger transfers. The two studies measure different things in different samples, but they point the same way: the cost of a stablecoin route depends heavily on the on-ramps and off-ramps at each end, not just on the blockchain in the middle.

Why fintechs have the edge today

The reason is less glamorous than technology. Firms like Wise and Remitly hold balances in many currencies and match flows internally, so many transfers never cross a border in the traditional sense; a payment in one country is funded by a payout from a local balance elsewhere. They also compete on transparent pricing, while bank wires often hide cost in the exchange-rate spread rather than the visible fee. The BIS numbers capture exactly that effect: the 2 to 4.7% bank markup sits in the rate, not on the fee line.

Scale matters too. The savings reported for fintechs grow with transfer size, which suggests that small business payments and larger family remittances benefit most, while very small transfers are less differentiated.

Banks answer: HSBC RedCoin and bank-issued tokens

The banks are not standing still. On 23 October, Finextra reported that HSBC had launched RedCoin, its first stablecoin, for public use. The move continues a trend of regulated institutions issuing their own digital money rather than leaving the field to crypto-native issuers. Our earlier piece on HSBC RedCoin and the rise of bank stablecoins covers what finance teams need to know about that launch.

In the United States, SoFi Technologies announced SoFi Earn (SOFIE), described by the company as the first and only national bank-issued tokenised deposit for consumers. A tokenised deposit is different from a stablecoin in an important way: it is a claim on the bank itself, recorded on a ledger, rather than a token backed by a reserve held by a separate issuer. That keeps it within the banking system’s regulatory perimeter, which is its main selling point.

The distinction matters for cross-border use. A stablecoin must be converted to local money at the destination, which brings the liquidity problem the BIS paper highlights. A tokenised deposit could, in principle, settle between participating banks without the intermediate conversion, but only if enough banks are connected on compatible platforms.

Central banks: BLOOM

The third contender is the public sector. Finextra reported on 23 October that the central banks of Thailand and Malaysia are backing BLOOM, a cross-border digital money initiative led by the Monetary Authority of Singapore with public and private participants. The aim is to advance cross-border settlement in digital money. Public details are limited in the reporting we reviewed, so it is too early to judge its design or timetable. What it signals is that regional authorities want a say in how cross-border rails are built, rather than leaving them wholly to private networks or global stablecoin issuers.

A comparison at a glance

What this means for businesses

If your company pays suppliers, contractors or subsidiaries abroad, the evidence points to a practical conclusion: compare the all-in cost, not the advertised fee. Ask for the exchange rate used and compare it with the mid-market rate on the day. A 2% spread on a $100,000 payment is $2,000, which dwarfs any wire fee.

1. Benchmark your last ten payments. Calculate the effective cost as a percentage of the amount sent, including the FX spread.
2. Segment by corridor and size. Large, regular corridors may justify negotiating bank rates or using a fintech business account; sporadic small ones may suit a transfer app.
3. Treat stablecoins as an option, not a default. Model the on-ramp and off-ramp costs, custody, accounting treatment and compliance obligations before routing payments through them.
4. Watch counterparty and regulatory risk. Stablecoin and tokenised-deposit rules differ by jurisdiction and are evolving.
5. Ask your bank about its roadmap. With HSBC and others launching digital-money products, treasury teams may soon have new options within existing relationships.

The bigger picture

The BIS paper’s framing, “competing rails”, is apt. For consumers and small businesses, fintechs have already delivered the largest cost reduction. For institutions, the longer-term prize is a settlement layer where money and messages move together. Stablecoins, tokenised deposits and central-bank platforms are all bids for that layer, and they are not mutually exclusive. The likeliest near-term outcome is coexistence: fintech apps for retail and small-business flows, bank-issued digital money for institutional ones, stablecoins serving corridors where traditional banking is weakest, and public-sector platforms shaping standards in regions like South-East Asia.

The caution in the data is worth keeping: technology alone does not remove cost. Costs sit in liquidity, compliance, distribution and the last mile into local bank accounts. Whichever rail wins share will be the one that cuts those, not merely the one with the cheapest ledger.

What to watch

• Uptake of RedCoin and whether HSBC extends it to cross-border corporate payments.
• Whether other US banks follow SoFi with consumer tokenised deposits.
• More detail on BLOOM’s participants, design and timeline.
• Follow-up research testing larger transfer sizes and more corridors.

Sources and further reading: BIS Working Paper 1385, “Competing Rails for Cross-Border Payments: Banks, Fintechs, and Stablecoins” (19 October 2026) and press commentary on it; Finextra reports on HSBC RedCoin, SoFi tokenised deposits and BLOOM (22 to 23 October 2026). Figures reflect public reports as of 25 October 2026. General information, not financial advice.