Citi has released its latest Global Perspectives & Solutions (Citi GPS) report on Monday, focusing on the future of cross-border payments. The report titled "FUTURE OF CROSS-BORDER PAYMENTS -- Who Will Be Moving $250 Trillion in the Next Five Years?" anticipates a significant increase in cross-border payment activity, presenting a major opportunity for players in this space.
The Bank of England estimates the value of cross-border payments to rise from nearly $150 trillion in 2017 to over $250 trillion by 2027, a surge of over $100 trillion within a decade. This growth is expected to favor innovative players who invest in this business. According to Citi's proprietary survey, almost 90% of financial institution clients expect at least 5% of market share will be lost, primarily to FinTechs, over the next 5-10 years.
Jane Fraser, Chief Executive Officer at Citi, underscored the importance of adapting to the evolving industry. "Our vision to be the preeminent banking partner for institutions with cross-border needs grows ever more relevant every day," Fraser said on Monday. She emphasized the need for solutions that meet global needs and highlighted the role of technologies such as artificial intelligence and digital assets in shaping the future of cross-border payments.
However, challenges persist in responding to industry evolution due to legacy technologies and competing regulatory obligations. Despite these hurdles, financial institutions are focused on innovation across traditional fiat currency and digital asset spaces.
Shahmir Khaliq, Global Head of Services at Citi, noted that competition within the industry is increasingly multi-faceted. He pointed out that payments are shifting away from traditional instruction methods towards API connectivity, which presents opportunities for FinTechs and other participants enabled through traditional financial infrastructures.
The report also emphasized the importance of client experience in delivering best-in-class cross-border payments. Over 50% of financial institutions, according to the survey, see the need to revamp front ends to improve client experience and compete against disruption.
The report was based on qualitative contributions from key market infrastructure experts within and outside of Citi, FinTechs, and a diversified set of banks across four continents. It also included the findings from a survey of more than 100 of Citi’s financial institution clients.
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