There is no “i” in team — every coach’s mantra. Guess what, though? That’s only half the story when it comes to the concept of working together for the greater good. As it turns out, “payments is a team sport,” at least in the view of Manish Kohli, global head of payments and receivables at Citi.
In a recent PYMNTS discussion with Karen Webster, Kohli dug deep into how financial institutions (FIs), FinTech firms and others need to find ways to work together to advance the cause of digital payments. That doesn’t mean everyone is going to hold hands and sing the same song around a campfire (competition fosters innovation, after all), but it does mean finding those opportunities where collaboration can provide a better return on investment (ROI).
There is at least one common goal that pretty much every player in financial services and payments can rally around: “The common thread is faster payments,” Kohli told Webster in the second part of a three-part Citi-PYMNTS podcast interview series. The first part, released in March, focused on global payments and corporate responses to cross-border transactions. The second part takes a deeper look at what drives innovation, and how FIs can find common ground with FinTech firms while providing innovative services to institutional clients.
PYMNTS readers hardly need to be told, but innovation and collaboration are part of the payments game now as they become more global, more digital and much faster. Consumers are increasingly expecting instant or near-instant payments and disbursements made via their methods of choice, and that pressure is having an impact in the much-more-complicated world of B2B transactions and commerce. Those trends are leading financial institutions to seek out partnerships with upstart FinTech firms — even when, sometimes, those two parts of the larger payments ecosystem might end up competing.
“Over the past year or so, we’ve been building partnerships or making investments into companies that can be part” of larger overall payment solutions, Kohli said — solutions that can scale globally, and complement what Citi already offers.
Since the last Citi-PYMNTS podcast, for instance, Citi’s Treasury and Trade Solutions unit has announced it is developing a new business unit that will allow consumers to make digital payments to institutions. It’s part of an effort to enable digital commerce for clients, and to expand beyond the wholesale payments market. The service will be made available to institutional merchants, giving them the ability to collect payments from cards, eWallets and bank transfers, such as Request to Pay and Open Banking. Consumers will have access to a variety of payment methods as a result.
“The ability to pay consumers [via] their instrument of choice could be the difference between having a sale or not having a sale,” Kohli said. “Institutional clients now want to give that choice to consumers.”
In a larger sense, that statement describes what Citi seeks in a FinTech partner — a solution to a precise problem in payments. Indeed, keys to such partnerships are precision and clarity, he told Webster. Such a solution should work to craft a customer experience that stands out from the offerings of other players in the payments space.
That’s not the only potential benefit of working with FinTech firms. They tend to have, in Kohli’s words, a “maniacal” focus on a single problem — something FIs might not have. “What they don’t have is access to banking systems around the world,” he said.
However, when it comes to FinTech firms, the calculus of collaboration versus competition depends more on those factors, or even the specific technology involved. The process of choosing a FinTech partner also starts with the identification of a specific problem. “If you don’t know what you are looking for, you probably will not find it,” Kohli said. Beyond that comes the question of whether FinTech firms and financial institutions are really a good match.
“The cultural fit is probably more important than the technical solution on day one,” he said. By culture, he meant an “obsessive focus on innovation,” as well as a client-first attitude when it comes to new and better ways of doing payments. As he shared with Webster, recent success stories that underscore those points include working with outside FinTech firms to better understand the flow of payments in general, and receivables specifically (both of which can reduce operational overhead, and increase customer satisfaction), as well as finding ways to boost the security of transactions.
Additionally important is having a collective mindset when appropriate, to find ways to come together as a team when needed. No single bank or FinTech, of course, can do all the heavy lifting in building the global real-time payments infrastructure, for instance, or improving SWIFT. Being smart about where to align those interests — and where to work together — represents, in Kohli’s view, “a victory” for payments.