In 1995, Harvard Business School professors Joseph L. Bower and Clayton M. Christensen described how established companies can lose ground to technologies that initially appear less capable or attractive.
Those technologies often begin by serving customers overlooked by traditional market leaders. Over time, they improve, expand and challenge established companies from outside the industry’s conventional structure.
The theory offers one way to examine changes in cross-border finance since Western governments imposed sweeping sanctions on Russia following its invasion of Ukraine. However, the comparison also has important limits.
Russia’s alternative payment networks did not emerge through ordinary competition alone. They developed as banks and businesses searched for ways to continue international trade after losing access to established financial relationships.
How sanctions changed payment routes
For decades, much of international commerce has depended on the SWIFT financial messaging network and relationships among correspondent banks.
SWIFT does not directly transfer or settle money. It provides standardized and secure messages that financial institutions use to communicate transaction instructions. The actual movement and settlement of funds generally occur through banks and other payment infrastructure.
After certain Russian institutions were removed from SWIFT and Western banks reduced their exposure to Russia, businesses faced longer payment times, higher costs and increased compliance scrutiny.
Russian companies responded by using regional banks, local currencies, intermediaries, digital assets and payment agents. These arrangements reduced reliance on institutions based in the United States and Europe, but they also introduced new legal and counterparty risks.
Russia’s economy proved more resilient than many early forecasts predicted. The International Monetary Fund reported that the economy contracted 1.2% in 2022 before growing 3.6% in 2023.
The IMF attributed that performance to several factors, including continued oil exports to China and India, investment in manufacturing and defense, strong private consumption and government spending. Alternative payment routes helped preserve some trade, but the available evidence does not establish that they were the primary cause of Russia’s economic growth.
A7 demonstrates the risks
A7 emerged as one of the companies involved in Russia’s alternative cross-border settlement system. The company has promoted payment services intended to reduce reliance on Western correspondent banks.
Its regulatory status is essential to understanding the company. In August 2025, the U.S. Treasury Department’s Office of Foreign Assets Control sanctioned A7, A7 Agent and related entities. Treasury described A7 as a Russian company providing cross-border settlement platforms used for sanctions evasion.
Treasury said A7 and its subsidiaries were owned by sanctioned Moldovan oligarch Ilan Shor and Promsvyazbank, a sanctioned Russian bank commonly known as PSB. The agency also connected A7 to financial infrastructure involving Garantex, a cryptocurrency exchange accused of facilitating illicit transactions.
The designation means A7 cannot be treated simply as a financial technology company competing with conventional payment providers. Treasury says U.S. persons are generally prohibited from engaging in transactions involving the property or interests of designated entities unless those activities are authorized or exempt. Financial institutions and other parties may also face enforcement or sanctions exposure for certain dealings involving blocked companies.
A7 therefore illustrates both the adaptability and the risks associated with alternative financial channels. A system can process transactions outside traditional Western banking relationships while still creating substantial questions about transparency, oversight and compliance.
A broader transformation in payments
Russia’s search for new settlement routes is occurring alongside a broader international effort to improve cross-border payments.
Central banks have explored systems that could make transfers faster and less expensive without relying on long chains of correspondent banks.
Project mBridge, for example, tested a shared platform for cross-border transactions involving central bank digital currencies. The Bank for International Settlements developed the project with monetary authorities in China, Hong Kong, Thailand and the United Arab Emirates before handing it to participating institutions in 2024.
Project Nexus has pursued a different model by seeking to connect domestic instant-payment systems. India, Indonesia, Malaysia, the Philippines, Singapore and Thailand formed Nexus Global Payments in 2025 to move the project toward implementation. These initiatives should not be treated as extensions of Russia’s sanctions-driven payment networks. They are central-bank projects focused on improving the speed, cost and accessibility of cross-border payments through regulated infrastructure.
Their development does, however, demonstrate that countries are considering alternatives to the traditional correspondent banking model.
Where the disruption comparison ends
Christensen’s theory helps explain why established systems can face pressure from alternatives that initially appear limited or inefficient.
Russia’s experience also shows how quickly new channels can appear when access to established infrastructure is restricted. Businesses will search for intermediaries, currencies and technologies capable of keeping trade moving.
But financial infrastructure depends on more than speed and price. It also requires legal recognition, liquidity, security, transparency and confidence that counterparties will honor their obligations.
That is where the comparison with conventional market disruption becomes less precise. A payment system designed to avoid regulatory restrictions is not equivalent to a lower-cost technology winning customers through ordinary competition. SWIFT and correspondent banking are unlikely to disappear because alternative platforms have emerged. Their reach, established compliance systems and institutional relationships remain difficult to replicate.
The more likely outcome is a fragmented global payment environment in which several networks operate alongside one another. Some will be regulated central-bank initiatives. Others will develop in response to geopolitical restrictions. The risks and legal standing of each system will differ significantly.
Russia’s experience shows that financial pressure can accelerate technological and institutional change. It does not yet prove that the alternatives are safer, more sustainable or capable of replacing the system they were designed to bypass.
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