Citi was one of the first big banks to adopt a private Cloud – or on-premise infrastructure – to help it respond to a changing client profile. Stuart Riley, who leads the Institutional Clients Group Operations and Technology team, discusses how it helps shape the bank’s approach to payments.
A growing number of financial institutions are cautiously unlocking the potential in Cloud technology to boost services and customer experience – not least to deal more efficiently with the increasing volume of low-value transactions over different payment rails and the security around them.
The substantial growth in lower value, contactless payments as consumers move away from using cash for everyday transactions, as well as the move towards P2P (peer to peer) payments, has undoubtedly been boosted by the COVID-19 pandemic, and the uptick in adoption is likely to continue once we come through the other side.
The intensity of demand created by COVID-19 demonstrated the ability of certain systems, such as Cloud technology, to cope better than others when it comes to rapid scalability. Citi, a leading global bank, is one institution that is responding well to the evolving payments landscape, offering clients a broad range of options, all facilitated by an extensive internal Cloud computing network that has been in place since 2017.
Wholesale banking operations, like the Institutional Clients Group (ICG) at Citi, find themselves having to adapt because their client business models are changing, increasingly predicated on real-time, high-volume, low-value transactions in the gig-based, digital-native economy being shaped by the Ubers, Airbnbs and Spotifys of the world. These companies are also famed for their agility, moving into new territories and rapidly generating business there. The challenge for the banks is how to keep up with them.
“Where we were traditionally dealing with payments for corporates, we’re moving to dealing with payments for their end customers,” says Stuart Riley, who heads up the bank’s Institutional Clients Group Operations and Technology team. “The companies you associate with things like taxi rides and renting properties are now our clients, and they’re putting tiny transactions through our pipes. So, be it trading, foreign exchange or our payments businesses, we need to be able to massively scale them up because transactions are tending to become smaller in size and larger in frequency, and therefore the throughput is growing exponentially.
“Without automation, there’s absolutely no way you can scale those businesses, so it’s absolutely critical. You need a technology platform that’s 24/7.”
It’s not just about the choice of underlying system architecture, though.
“Things like machine learning and artificial intelligence are becoming commoditised, in the sense that we can all get hold of good machine learning libraries from the likes of Google and Amazon, which have very good platforms to offer those capabilities. What really matters is what data you have to put into those platforms, and how you use them. What’s important is not necessarily the specific choice of underlying technology a bank or institution chooses, but bringing those things together and how it deploys that to bring services to market.
“At Citi, we’ve been cautious in terms of making sure that we really had a secure environment before we rushed into public, Cloud-type environments, but we’re absolutely pursuing those agendas.”
Getting on board faster
Faster, secure onboarding, in particular, has become a technology objective as the bank sees clients migrate their businesses across the globe.
In April 2020, Australian regtech Kyckr extended its partnership with Citi and now supplies application programming interface (API) and portal solutions to its ICG and Trade and Transaction Services (TTS) unit to underpin faster customer onboarding. Kyckr’s customer verification platform is said to be one of the largest portals for customer verification globally, offering banks access to intelligence on more than 170 million legal entities across 120 countries.
“What’s often misunderstood is that it’s not always onboarding of new clients; it’s often onboarding existing customers that has moved into new territories, new geographies or new client types. That means they need new accounts with us. So it’s often about servicing our existing large customers and making their businesses work more effectively,” says Riley. “We’ve standardised onboarding globally, but we’re still obviously compliant with local laws and regulations.
“Cross-border data is a big issue, and there are countries where we have to ensure that the data stays in the country. That could affect what data we can aggregate, what data we can utilise. But we now have a framework that permits us to do that and still move into those geographies as quickly as is sensible.
“When you think about things like anti-money laundering or sanctions screening, if those processes are not automated now, through the use of machine learning, then, in the future, it’s going to be incredibly hard to scale those businesses, because you can only scale them to the extent you can scale your operational staff, and that’s not going to be feasible.”
As these digital-based businesses expand across the world, the pressure grows for their payment capabilities to localise. They must allow new customers to pay with the method they prefer in order to attract and retain new clients. So, Spring by Citi was launched as a new service in 2019, offering wholesale banking clients digital consumer payments options. It leverages Citi’s considerable experience in open banking – it was the first corporate bank to connect to open banking in the UK – and extensive plug-ins to local payment schemes across the world, giving its clients the ability to collect from a wide range of payment methods, including cards, e-wallets and new bank transfers such as Request to Pay and Instant Payments.
Citi is collaborating with some of the world’s leading fintechs to incorporate up to 140 alternative payment methods into the Spring by Citi service. These include Global Payments’ card processing solutions as well as PPRO’s access to local payment methods.
“Most countries, and many central banks, are looking to adopt some form of instant payment network in their country,” says Riley. “We’re working alongside them so that we can make sure we’re one of the first in the market to operate on their instant payment rails. But, from a Citi perspective, what’s really important is not just delivering the local experience of instant payments, but making sure our customers feel like they get a seamless service that essentially allows them to operate cross-border, almost as if there were no currencies. If you imagine a world where there were no borders, and there were no currencies, and we all operated with one currency, that’s an ideal state for a company that wants to operate everywhere in the world.”
Riley is a big advocate of collaboration and partnerships with fintechs.
“Our London lab is a great example of how we’re doing that,” he says.
“We have a dedicated space for fintechs to speed up their development, which allows them to quicken the delivery of products to us. In some cases, we invest in the company, in other cases it’s just a pure partnership, but in all cases our aim is to essentially to transfer our intellectual property to them. That then creates a product or service that we can integrate back into our environment.”
Riley, who leads a diverse and inclusive team of engineers and other professionals in around 90 countries, is also quick to highlight the importance of talent.
“This year alone, we announced that we’re hiring an additional 2,500 engineers. It’s obviously a very competitive market, and it’s hard to attract technology talent at that scale when everybody’s competing for it.
“The thing that’s really important to me is what the engineer’s experience at Citi is, because if they have a great experience here, they will attract other engineers. The best talent will deliver the best software. It’s a self-fulfilling cycle.”