Financial Institutions' Integration of Blockchain Technology for Cross-Border Payment Optimization: A Systematic Analysis

Abstract

This systematic article examines the transformative impact of blockchain technology integration within financial institutions' cross-border payment systems. Through detailed assessment of implementation approaches across major banking entities, significant reductions in transaction costs, processing times, and security vulnerabilities emerge as primary benefits. The technological architecture primarily employs consortium blockchains with specialized consensus mechanisms optimized for institutional participants, supported by platforms like Hyperledger Fabric and R3 Corda. Performance metrics demonstrate dramatic improvements in settlement speed, cost efficiency, and fraud prevention compared to traditional correspondent banking models. Regulatory responses have evolved to accommodate distributed payment networks through specialized frameworks addressing compliance requirements while preserving operational advantages. Despite compelling benefits, adoption faces challenges including scalability limitations, organizational readiness, and network effect dependencies. The trajectory points toward increased standardization and interoperability protocols enabling communication between disparate blockchain networks, supporting a multi-chain ecosystem rather than consolidation around a single solution.