Treasurers Look to Their Bankers to Co-Create Embedded Payments Solutions

Debopama Sen, head of payments, Citi Services, and Biswarup Chatterjee, head of partnerships and innovation, Citi Services, told Karen Webster that when it comes to payments, banks must offer choice, speed and transparency to their enterprise clients.

Otherwise, they risk losing business to digital upstarts — and as much as 10% of revenues.

Noted Sen, as more commerce moves online, companies that have historically been linked to what might be thought of as “traditional” supply chains “are now, increasingly dealing directly, and digitally, with consumers, with smaller merchants, with gig economy players, with influencers, with a whole different set of counterparties.” B2B eCommerce is emerging as an integrated experience, demanding that trade financing is firmly woven into the technological infrastructure linking buyers and suppliers.

“The payment solutions that [banks] are offering to their customers need to be completely and seamlessly embedded within the commercial transactions they’re doing for their clients,” Sen said.

All facets of commerce, Chatterjee said, are migrating away from cash and paper checks to faster payments, and he said technology is opening consumer and smaller-scale merchant businesses to instant payment opportunities. 2023, he said, “has been the time where you’ve seen a ‘stitching together’ of many things to create mass adoption and scale.”

The post-pandemic digital age offers both challenge and opportunity for Citi’s TTS business, Chatterjee said, adding that the past year has been dominated by discussions with treasurers seeking to use data to improve their analytical decision making and build better forecasting and hedging models, as well as improve processes.

Citi’s own opportunities lie in crafting microservices underpinned by data and artificial intelligence, API-enabled connectivity and tokenization.

“We’re in the middle of a larger transaction chain,” said Chatterjee, and “in some cases, we’re the central place where both counterparties meet for the transaction to clear. In other cases, we’re in the middle where there’s another financial institution required to complete the transaction.”

Those varied counterparties may prefer digital wallets or pay-by-bank — and instant payments are increasingly on the radar, Sen said. The shifting expectations are transforming the ways in which providers like Citi are bundling their own solutions to commercial clients. Sen offered the example where Citi, one of the largest multicurrency issuers of virtual cards and travel solutions, has been embedding those functions into travel management solutions and embedding virtual card solutions for corporate cardholders.

Co-Creation: Adapt or Lose Market Share

Citi’s banking clients are aware of the risks associated with not catering to those demands, Sen said. Citi’s own research shows that dozens of banks surveyed estimated that if they don’t take action quickly to meet cross-border, instant payment demands, they could lose as much as 10% of market share, and an equal percentage of sales.

The banks themselves, particularly those serving clients in Asia and Europe, the Middle East and Africa (EMEA), are taking a “co-creator,” collaborative approach with Citi to address specific business problems, using mobile banking applications to keep client loyalty and even win back customers. Sen estimated that some of Citi’s forward-thinking banking partners have been able to win back 7% to 10% market share by embedding financial activities into their online options with speed and agility, as APIs remove integration burdens and frictions.

What Comes Next

Co-creating, said Chatterjee and Sen, has a positive ripple effect as solutions and new payment options scale quickly across customer bases. The roadmap to 2024, said Sen, must improve risk management in an age where faster payments and new counterparties demand Citi support treasurers as they embed controls into their processes as those processes are built out — pivoting, for example, from a dealer/distributor model to marketplaces and subscription offerings.

As the digital transformation of the treasury function continues, Chatterjee said, AI will increasingly be in the conversation as Citi works with corporate and banking clients.

“There’s a level of readiness and ability to do something” with generative AI, he said, “and we’re just at the tip of the iceberg.”

The natural progression will entail traditional AI being applied for structured transactions — but down the line, generative AI has the potential to significantly impact the customer experience, with faster customer response times.

Modernization will also be tied to tokenization, which creates more efficient alternatives to wholesale bank settlements, Chatterjee said.

Whether the clients are corporates looking to embrace eCommerce or financial institutions eyeing more presence in wholesale banking, there are higher volumes of payments crossing a variety of channels, across a variety of use cases.

Against that backdrop, said Chatterjee, “You’re starting to see the requirement that technology within banks and within networks must address some of these challenges that the new and evolving economy is facing.”