Subscribing to Seamless Payments

Subscription models are reshaping the payments landscape in much the same way that they are remaking customer relationships

As subscription becomes a global mega-trend, companies must consider whether they have the right infrastructure in place to drive growth. For many subscription-based businesses, the ability to collect or pay in a particular market determines their ability to do business in that market, says Manish Kohli, Global Head of Payments and Receivables at Citi.

Manish Kohli

Manish Kohli,
Global Head of
Payments and
Receivables at Citi

Subscription is an irreversible trend— not just a revenue play for companies.


“It’s not about just trying to convert a lump sum revenue into an annuity revenue, which in itself is a very attractive prospect.

Subscription is a very effective client engagement strategy. It builds customer loyalty, and a different way in which client data can be accessed and harnessed. That’s why it’s a long-term, sustainable growth strategy for a company.”

Manish Kohli,
Global Head of
Payments and
Receivables at Citi

Shifting to subscription models is both a cultural and technical challenge for businesses.

“There are certain questions to be considered—ranging from fundamental business model questions to more tactical considerations around which technology stack to use.

For instance, how much do the financial and digital infrastructure need to change to be able to take advantage of a subscription-based model? Are engagements with clients on a realtime basis, or is engagement still in a conventional, batch-based process? Have you invested in APIs?

I’ve seen customers with the right intentions that have struggled as a result of failing to make the right investments to support this shift. A subscription model requires information and engagement through multiple external systems, so it is important to ensure that they can interact and share information in real-time.

This is where traditional companies struggle a little more, because they have legacy infrastructure that needs to be rewired to be able to change this engagement model with customers.”

As a fundamental business model change, subscription needs endorsement from the board.

“It’s as big as getting into a new line of business—and nothing less—and probably one of the most substantive decisions that most companies could face.

It requires investment in better CRM tools. It requires investment into better payments and collection tools. It requires, in certain cases, the creation of an entirely new engagement model with customers, which is direct to consumer (D2C).”

We’ve seen a resurgence of conventional payment types becoming more relevant for the subscription economy.

“In certain cases, the need for immediate settlement goes away because the ticket size is small, and merchants are able to take larger risk on consumers because they have the loyalty hook factor

For instance, I would never cancel my Netflix subscription. I’m happy to pay the $10 a month and, if I renege on that, I lose access to content that I have a lot of loyalty to. Netflix knows I’m not going to walk away if I like that content.

It may seem counterintuitive—because we live in a world in which we are all collectively investing heavily in real-time payment systems, and next-generation technology and payment stacks—but sometimes even the conventional, historically-used products are getting a new lease on life with the support of new solutions like mandate management, better UI-supporting tools, and connectivity using APIs.”

In the payments world, the biggest challenge for clients has typically been, where is my money?

“It may sound simple, but the answer to this question is very challenging— especially where cross-border payments are concerned.

At Citi, we have invested in a multiprong approach. Working with Swift we’ve produced a solution called Global Payment Innovation (GPI). We’ve also invested in Citi Payment Insights, a technology platform that leverages GPI alongside proprietary data infrastructure and data assets to create an intuitive, UI-driven customer experience that can help customers to solve this age-old problem.

We’re also working with our clients to resolve challenges that they have by making significant investments in infrastructure. Challenges like the ability to access not just bank channels, but wallets and non-bank channels. Or the ability to process real-time, 24/7, at exceedingly high scale.”

Historically, the client’s challenges have been manifold — but the biggest one is often the need to collect faster.

“In a subscription-based model there’s a need for better reconciliation tools, because you’re dealing with smallervalue payments, and a lot more of them at regular frequency.

This is where we use AI and machine learning, for example, to be able to reconcile incoming payments against an open subscription file or a subscription customer database.

We’ve invested in partnerships and proprietary solutions in reconciliation tools for clients, so they can recognize the money as soon as they get it. We help them collect not just through bank channels, but through non-bank channels, and help support their digitization strategies.”

Payments is a team sport.

“It starts with a cultural philosophy and it percolates down to those at a senior level spending time to make sure that we’re improving both settlements and messaging, then working with the banking community on adoption of those solutions.

We believe there is a need for us to engage with the wider ecosystem. We work with market infrastructure like Swift, which is a cooperative of maybe 10,000-odd banks, to solve problems that are beyond the control of one individual bank. And GPI is one example of that on the messaging side.

On the settlement side, we work with market infrastructure, with clearing systems in all markets that we do business in. Those in our transaction organization globally sit on the boards of various market infrastructure.”

We don’t like armchair product management; self-service is a core component of a good digital strategy.

“We fundamentally believe that the best products are the ones that put the client at the centre, where the client is involved in the creation of the product.

If I look back at some of the new products we’ve launched over the last couple of years, I actually see the fingerprints of our clients all over them in terms of contribution to the thought process, construction, the validation phase, as well as being our early adopters in many of those products and giving us feedback to improve along the way.

The future of self-service isn’t just about clients getting access to banking information from us; but clients getting access to that information, passing it on to their customers and delivering a more convenient, seamless experience in the process.”