Citi Perspectives Fall 2023: Transforming Treasury

| 19 The global payments transformation: Where next? Now that the foundational layer of true real-time banking is in place, value-added features are being added. Payments in APAC Q. What are themost important drivers and enablers of development? A. Regulation is certainly one, and many countries in the region are learning from each other as they decide on next steps and further simplification. Other considerations are geopolitics, as well as concerns around data privacy — there has been a lot of focus on onshoring of data and platforms, which comes at a huge cost and effort from a bank’s perspective. At an industry level, the ISO 20022 migration is going to be very beneficial. The quality, consistency and standardization of information flowing across banks will enable clients to see rich data and reconcile their payments. For regulators, this shift will also help to enforce anti- money laundering laws and sanctions around the world. Q. How is the payments landscape in APAC evolving? A. Asia is front and center of the global transformation taking place within the payments landscape. The region has leapfrogged from cash and paper-based payments to more digital forms of payments in many areas. On the e-commerce front, the banking systemwas previously lagging somewhat in terms of what end consumers were looking for, and this has given rise to a lot of alternative payment schemes to come into play to fill that void. Over the last five years, most countries in the region have gone live with 24/7 low-value instant payments. At the same time, batch payments are starting to shift more and more toward real time. Now that the foundational layer of true real-time banking is in place, value-added features are being added. In many cases, regulators are enabling this — but it’s a two-way street, also driven by expectations from corporate clients and consumers. Banks, likewise, are advocating for this shift. In many markets, QR codes have also become a big enabler, as they allow information to flow alongside payments. QR codes can be used to embed payments within an application — for example, if you make an insurance premium payment by scanning a QR code, the insurance company not only receives the payment, but also the full, rich information on what the payment was for and which policy it relates to. So, reconciliation can be completed right away. Meanwhile, regulators are also looking at what’s next. If you have moved low-value payments to 24/7, you could also do the same for ACH payments, which some markets have already done — India, for example, has already moved all forms of payment to 24/7. Other countries are also asking if they really need so many types of payments, such as Hong Kong, which has decided to decommission ACH and move to instant payments. Sanjeev Jain APAC Head, Payments and Receivables, Citi Treasury and Trade Solutions