Citi Sees Upside in Deeper Payments Messaging and Cross-Border Innovation

Amit Agarwal and Debopama Sen, global co-heads of payments and receivables, Treasury and Trade Solutions (TTS) at Citi, offer some tips for the payments industry in the new PYMNTS eBook, “2023 Payments New Year’s Resolutions.”

The payments industry has upped its game in recent years, but it can do much more. A new year is a perfect time to make resolutions. But while many of us slip when it comes to keeping them, the industry needs to deliver the following resolutions if it is to help clients effectively.

Get into shape: The world is changing because of geopolitical and macroeconomic shifts, accelerating digitization, supply chain disruption, new business models and the growing importance of sustainability. This backdrop presents challenges for clients but also offers enormous opportunities to become more competitive and grow. A fit and flexible payments industry that leverages cloud and other modern technologies is an enabler of economic growth and innovation as clients limber up to compete in new digital markets like the Internet of Things, Web 3.0 and the metaverse.

Learn a new language: Market infrastructures around the world are moving to the new language of ISO20022, which means payments messaging is no longer limited by fixed field lengths. It sounds like a technical issue, but it has very significant real-world consequences. If a client is settling 1,000 invoices with one payment, then the payment needs to carry much more information to ensure efficient reconciliation and cash application.

Live in the moment: The digital economy is real-time and always on, while corporations and banks still measure time in business days. The transition from batch processing to real time means providing 24/7 access to payments and new payment infrastructures such as digital wallets and instant payments. And it means enabling clients to embed payments into their systems — via APIs and Banking as a Service (BaaS) — so they can respond to new challenges and opportunities.

Simplify and declutter: Technology and commerce are undergoing a generational shift. Mobile technology is now ubiquitous and, combined with the experience of the pandemic, the adoption of eCommerce has rocketed and become a permanent feature of the landscape. As clients embrace business-to-consumer and business-to-business opportunities, the industry needs a different mindset that prioritizes a frictionless and straightforward payment experience and offers consumers or businesses the ability to use their payment method of choice. Rather than a trade-off between security and customer experience, the industry needs to deliver solutions where these reinforce one another.

Travel the world: In the 20th century corporations became multi-national over decades, now they are born global. The gig-, sharing- and creator-economies are examples of new business models that rely on digital payments at global scale. To facilitate this kind of innovation, the payments industry needs to deliver digital cross-border solutions that leverage domestic clearing systems around the world and are scalable so that they can easily accommodate clients’ needs as they respond to evolving operational dynamics. Multi-domestic payment solutions through providers with direct access to the last mile provide digital multi-nationals with efficiency, scale, reach and innovation.

Invest in relationships: Just like in our personal lives, the quality of our economic lives is determined by the quality of our relationships. There is always scope to increase the quality of our interactions with the whole ecosystem of stakeholders: regulators, market infrastructures, clients, vendors, partners, employees and wider society. In particular, the opportunity for partnership between banks and FinTechs has never been more relevant. It is time to move past the language of disruption and look at the ways we can power the growth of a digital economy which is only in its infancy.

Give something back: The payment industry is highly competitive, but industry cooperation is also essential. Industry innovations like Swift gpi mean that around half of cross-border payments now reach the beneficiary within an hour. There is scope for further improvements such as pre-validation and orchestrated settlement.  We need to realize that community action is an essential element of being the best for our clients.