Citi at forefront of cross-border payment innovations

From your perspective, what are the most significant changes in the cross-border payments industry?

The cross-border payments industry is undergoing transformation led by a notable shift in market dynamics.

Citi recently launched a report titled “Future of Cross-Border Payments,” built on surveys and qualitative contributions from experts from within and outside of Citi, Fintechs, and a diversified set of banks spanning four continents.

The report also outlines key findings from a survey of more than 100 of Citi’s FI clients.

Their priorities were resoundingly clear: speed, cost-efficiency, and transparency are viewed as critical to delivering best-in-class client experiences.

Competition in the industry is increasingly multifaceted.Traditional players are facing new competition from challengers such as digital banks and fintech companies.

Payments are moving away from traditional methods, which are tied to batch transactions and files, and moving towards API connectivity and real-time or instant capabilities.

Regulations are also increasingly fostering innovation via initiatives, such as open banking.

As the result of all of that, we see a shift in cross-border payments market share from late adopters of innovation to innovativeleaders, who deliver fast, cost-effective, and transparent digital-first client experiences, as a differentiating factor.

Dawid Janas, Global Head of Clearing and FI Payments under Treasury and Trade Solutions. Photo courtesy of Dawid

How can banks ensure success in an environment that is evolving at pace?

As the cross-border payments industry continues to grow rapidly, banks must prioritize customer-centric approaches to ensure success.

Understanding and addressing the key drivers of client satisfaction is critical.

Particularly with the lines between institutional and retail banking experiences becoming blurred, banks must focus on payment simplification and harnessing the power of data to elevate offerings.

According to our proprietary survey, over half of financial institutions see the need to revamp the front-end client experience given industry disruption.

Additionally, innovations in faster processing times, cost-effective payment solutions, and transparency can drive market share gains.

In your opinion, what innovative technologies can help banks stay ahead?

There are a few technologies and trends that have shown early signs of meaningful disruption to the payments ecosystem; blockchain, distributed ledger technology, and artificial intelligence hold potential to reshape the industry in the long run.

The latter could provide revenue streams through behavior prediction to cross-sell or mitigate risk through fraud detection capabilities.

Whilst not new, APIs are becoming important not just for front-end experiences but also bank-to-bank interaction models in real time, traditionally done through SWIFT.

In the short to medium term, the shift towards a 24/7 “always on” model in cross-border payments is the most significant.

Alternative payment methods such as digital wallets provide another fiat solution to deliver faster and cheaper payments.

Citi is certainly taking it seriously. We were the first bank to move USD clearing to 24/7/365 operations, and we did it in a fashion that allowed for seamless client adoption, with now nearly 200 institutions actively using the “always-on” solution with use cases ranging from liquidity management on U.S. holidays to truly end-to-end 24/7 USD wires for our bank clients’ retail and corporate customers.

How can local banks in Vietnam scale their cross-border payment processes to benefit their clients and their end customers?

There is a significant opportunity for local banks to differentiate themselves in the cross-border payments space by adopting innovation, in particular offering APMs for cross-border payments across the key destinations.

There are many ways today to deliver payments from country A to country B.

Those providers who offer the best option for such payments, or even better multiple choices will win wallet share.

Of course, it wouldn’t be reasonable to expect local banks to build such networks.

They should therefore partner with institutions that have already built broad cross-border payment networks offering speed, cost efficiencies, and transparency along with choice.

Citi has made substantial investment in building such a cross-border payments network and has a long-standing record of being a strong partner for local banks in Vietnam, bringing world-class capabilities to the table.

We have the ability to support multiple alternative methods across a number of countries and also deliver exotic currency payments via Worldlink for banks, which banks can further cater to their clients without the need of maintaining multiple accounts to support different currencies.