Citi Perspectives Fall 2019

Citi Perspectives  | 37 36 | Treasury and Trade Solutions Regulators: Driving transformation to real time Regulators are also stepping in to foster and encourage innovation and remove friction from payment processes. Governments realize that payments are increasingly becoming digital and need to be settled in nearly real time and around-the-clock. With their support, new payment systems are flourishing in markets around the world. In many countries real-time payments are aligned with goals to modernize clearing and settlement systems and create more transparency. India, for example, has been on the forefront of instant payments. Its instant payments scheme is central to the government’s goal of reducing the use of cash to mitigate corruption and also to promote financial inclusion. Elsewhere, such as Kenya, Zambia and Tanzania, instant mobile money transfers have both reduced the use of cash and revolutionized how payments are made. Other examples include The Clearing House’s Real-Time Payments System in the U.S. and Australia’s New Payments Platform. As the number of countries grows, other countries face mounting pressures to meet the new standard. Banks: Making real time a reality As instant payment schemes spread across the globe, Citi is working with central banks and other stakeholders to help ensure that efficient settlement processes and secure processing infrastructures are being deployed. While instant payments schemes are domestic by nature, the future actually lies in the ability to complete payment transactions globally in minutes, even seconds. Thus, Citi’s response is to offer its clients one global platform, a single point of entry, and consistent connectivity to all key local instant payment systems and a host of value-added services. Using a single application programming interface (API) or file channel, it is expected that companies will be able to access, via Citi’s platform, instant payment schemes in close to 30 countries by the end of the year. Citi also is developing cross-border capabilities that pair instant foreign exchange (FX) with instant payments, where possible. Our global network, with direct presence in 98 countries, leaves us uniquely placed to connect instant payment systems globally. This in turn magnifies the benefit of each individual instant pay scheme and helps the world become truly instant. More broadly, the technology and standards being applied to the new payments infrastructure opens up the doors to a host of new capabilities and add-on services that benefit both companies and their customers. Take the ISO 20022 messaging standards that accompany instant payments. The robust data that flows with the payments is as valuable, if not more valuable, than the speed of the payments. This data facilitates easier and faster — even nearly real- time — reconciliations and other collection improvements. As payments move at a greater velocity, Citi is also creating tools to help manage emerging risks. Citi Payment Outlier Detection, for instance, uses artificial intelligence (AI) and machine learning to help identify transactions that do not conform to a client’s past payment behaviors and patterns within an organization, stopping them and alerting account holders before they are processed. Cost, speed, convenience, security and transparency Cost savings are another advantage. Instant payments are less expensive than Real Time Gross Settlement transactions, and in many markets the cost is comparable to that of ACH transactions. Other financial gains can accrue from saving time, increasing productivity and putting funds to work faster. An array of security- and convenience-boosting solutions that sit on top of instant payments offer additional benefits, to payees and payers in both B2B and B2C environments. Request-to-pay collections services and the use of tokenization and QR codes to help protect payers’ account numbers are just a few such solutions. The bottom line is that our focus at Citi, and across the payment industry, is to leverage new technologies and systems to make instant the new norm. The end game is to drive innovations that help companies unlock the power of new technologies to create a competitive edge via improved speed, costs, convenience, security and transparency. Around the globe, instant payment services and alternative payment methods, such as mobile wallets, have gained traction, redefining the standards for how, where and the speed with which payments can be made.