By DERCO ROSAL
Citi stated that bank management sees full-time operations as the top priority for banks over the next five years to address cross-border payment challenges.
“Our clients and their end-users increasingly expect payment services that are instant and available 24x7,” Citi said in an Oct. 20 Global Perspectives & Solutions (GPS) report.
In the same report, Citi said banks “need to focus on providing alternative payment methods” as nearly two-thirds of survey respondents report client demand for these options.
“Clients are primarily demanding faster, more cost-effective, and transparent cross-border payments,” Bhavna Saraf, Head of Payment Products & Propositions in Santander UK, said.
Once the 24/7 model is implemented, 38 percent of FinTech companies anticipate capturing an additional five to 10 percent market share in cross-border payments within the next two to five years.
With ISO 20022 in place, a global and open financial messaging standard for financial institutions, Citi expects reduced fragmented standards for cross-border payments.
It will deliver rich, structured data with each transaction, allowing for improved analytics that should benefit all market participants, the bank stated.
The survey further reveals that nearly half of banks believe there is potential to enhance foreign exchange (FX) revenue from cross-border payment products through innovative pricing, smarter routing, and better data utilization.
Rajesh Mehta, senior advisor in various companies, expects the development of tokenized payment infrastructure in cross-border transactions to allow instant fund transfers and settlements between different payment networks, changing the payment landscape.
Thus, experts suggest banks and financial institutions invest in infrastructure that supports 24/7 payment settlements as real-time, always-on payments depend more on access to funds than availability.
At the onset of the pandemic, the Group of Twenty (G20) focused on improving cross-border payments to make them faster, cheaper, and more transparent, aiming to support economic growth, international trade, and financial inclusion worldwide.
For this Citi Treasury and Trade Solutions (TTS) survey, around 100 financial institutions globally participated, including banks, FinTechs, and insurance companies.
TTS division is part of Citi’s services organization which processes nearly $5 trillion daily for approximately 19,000 clients across 180 markets.