Citi Perspectives Fall 2023: Transforming Treasury

| 17 The global payments transformation: Where next? Where instant payments are concerned, McNulty believes, “some treasurers continue to deliberate whether instant payments offers a value added solution for their business model if they do not have a direct consumer nexus.” But while the consumer nexus point is obviously a powerful use case, McNulty argues that B2B use cases are more and more prevalent. At the same time, he notes that instant payments come with the ability to drive more efficient reconciliation, as companies can access instant data in a way that was not previously possible. Adapting to e-commerce: Bring treasury in early Where the rise of e-commerce and direct-to-consumer models is concerned, treasurers have a role to play in adapting their processes to accommodate high velocity, high volume instant payments. In practice, this means that treasurers may need to set up appropriate cash management structures and achieve greater control and reconciliation over the resulting flows. “For example, our Spring by Citi business is designed to capture the opportunity for our clients and offer a digital collection proposition,” says McNulty. “This proposition will differentiate through its geographical scope, feature functionality and range of payment types, including leveraging instant payments, alternative payment methods and open banking to enable account-to-account collections.” But as Sinha notes, in many cases treasury may not be included early enough in the process, resulting in a suboptimal infrastructure. As e-commerce scales up, treasury teams are then brought in and may need to enhance existing processes to ensure they meet the risk management framework and other treasury standards required by large organizations. “So, one of the things we advise our clients is to get treasury involved in the process early on — have a treasury champion who understands the e-commerce evolution and can add value to the commercial team,” Sinha explains. “Treasury should show value to their business counterparts early on in the process and be a critical part of the overall business growth as their organization embraces e-commerce.” Where next? While the payments transformation is progressing at different rates around the world, there are many common themes across the different regions. One key topic is the question of how best to facilitate cross-border instant payments, notes Jain. “When a payment moves from cross-border to domestic rails, it’s important to consider how the information flows, and what the regulators expect from screening and from the information you pass on,” he says. “In some markets, for example, regulators want to make sure the bank that’s receiving the money can figure out that it started as a cross-border payment. So, it’s a conversation at a country-by-country level.” As progress continues, interoperability will be important as a means of avoiding fragmentation, in McNulty’s opinion. “In Africa, for example, there is a big focus on interoperable switches, where you connect to ACH systems, instant payment systems and digital wallets, all through the same clearing switch. This simplifies the overall proposition and provides a better underlying client experience.” Moving forward, Sinha says technology will continue to be a major enabler of change. “Technology will remain significant in driving the evolution of the payments landscape,” he says. At the same time, “the shift from payments being an ‘experience’ to payments being embedded in our clients’ ecosystems will go a long way toward ensuring the world of tomorrow looks very different from what we’ve seen in the past.”