The global financial services market’s modernization efforts are in full swing, and at the heart of this effort is to improve the visibility of cross-border B2B payments. And for the obvious reason: knowing that “payment is on the way” isn’t good enough anymore. Where it is and when it will arrive is the information that corporates need to manage and optimize their cash position.
It’s a pain point that Citi Treasury and Trade Solutions‘ Manish Kohli, global head of payments and receivables, knows well. Operating within a large network of corporate clients in more than 90 markets, Citi is deep in the belly of the global corporate payments beast. As Kohli told Karen Webster in a recent interview, it’s one of the reasons that Citi was an early adopter — actually, the earliest adopter — of SWIFT gpi, and why Kohli is bullish on its prospects.
Citi was eager to explore the ways in which a tracking system that provided transparency at every point in a payments journey, particularly across borders, could address that corporate pain point at scale, Kohli said.
Citi Payment Insights, which launched earlier this week, has payments transparency, using SWIFT gpi as a central component of its B2B payments proposition — but it’s not the only thing. Kohli told Webster that Payment Insights goes beyond simply offering clients a window in the status of a transaction — it gives them control, since they know where their money is and, more importantly, when it will hit their account. That, he said, meant thinking outside the box.
“It is important to understand that [SWIFT] gpi isn’t just about knowing where a payment is,” he said. “At the superficial level, this is the first tangible benefit. But when I look at problems that need to be solved in the world of payments, I see the need for speed, transparency, convenience — and gpi tackles each one of them.”
Take, for example, the scenario of a cyberattack. A re-routing of a payment by a cyberattacker would normally cause funds to “disappear,” but gpi functionality means corporates and their bank partners can quickly see where funds have gone if they aren’t where they’re supposed to be.
Kohli said that he believes Payment Insights has the potential to shift the balance of power in the B2B payments game toward the corporate customer — exactly how he and Citi believe it should be. He noted that Citi designed the Insights solution as a self-service portal, empowering corporates to obtain information, such as a copy of a SWIFT message or proof of payment, without having to call the bank to find out. Instead of waiting days, corporates get information in real time.
In addition, Kohli said he’s noticed corporates beginning to take this a step further, and asking how they can have the tool delivered to them through APIs to create their own set of user experiences. For example, he said that clients have begun discussing how to provide their beneficiaries with access to this information, implement analytics capabilities and customize their own experiences.
Kohli readily admits that many of these benefits, however, are only possible with widespread adoption of SWIFT gpi. After all, in the event of a cyberattack, a payment ending up at an institution that is not a member of gpi won’t provide the quick insight necessary to mitigate the issue. With only 180 of SWIFT’s 11,000 bank members a part of gpi, ubiquity is a challenge, but one that Kohli said isn’t impossible, and is even achievable in a relatively short timeframe, since the technological challenges of integration and connectivity that have impeded progress no longer exist.
“Everybody in the ecosystem plays a very important role in the world moving toward gpi,” Kohli continued. Regulators, he noted, have encouraged banks to take part, while corporate customers are doing the same as they seek these functionalities from their financial service providers.
Beyond boosting visibility, gpi is a bigger effort to move the needle in payments innovation in support of faster, more efficient transacting. The global financial services industry is largely in agreement about the need to modernize, yet the way to do so has sparked a heated debate, and introduced more radical options for banks (i.e., blockchain).
But Kohli said he is confident that FIs understand the potential in taking the existing infrastructure at play, identifying areas in need of improvement and building on top of what already exists, rather than starting entirely from scratch.
“It is a more valuable alternative to build something and improve messaging and payments capabilities on existing imbedded rails,” he said, adding that this strategy is why Citi became an early backer of gpi. Citi, like other FIs, is experimenting with technologies like blockchain, but its efforts, said Kohli, continue to focus on what already exists in the ecosystem.
“That is where we are putting our energy: to deliver here-and-now, tangible improvements, not experiments,” he said.
Kohli also believes that gpi has the potential to change the competitive environment for cross-border payments, since corporate clients will have visibility into the costs associated with completing a cross-border transaction and how long it takes. Banks that are too slow or too pricey will be forced to step up their game.
“It puts pressure on the whole infrastructure, asking the community to become cheaper and faster in processing payments, now that they know the whole world is watching,” Kohli said.