Established banking institutions are fighting back against the fintech companies that are revolutionizing the sector and laying siege to its customer base.
Citigroup announced on Tuesday its plans to development its own consumer-payments platform that would allow payments from many of the world’s most popular digital wallets.
Citigroup’s announcement comes two weeks after the partnership between Barclaycard and Ant Financial was formed, which threatens to open up UK spenders to the digital payment app AliPay, used by 800 million Chinese; nine days after Fidelity’s $35 billion acquisition of WorldPay, which analysts say is a means to “play the structural growth in digital payments”; and six days after HSBC spoke publicly for the first time about its digital-only banking offshoot known as Project Iceberg.
With digital banks like Revolut and Monzo grabbing headlines, money transfer specialists like TransferWise shaving 80 percent off the cost of overseas payments, and with any number of payment apps and e-wallets emerging or expanding their current reach, banks and merchants risk falling a long way behind unless they embrace digital payments and technology.
In Citigroup’s case, it says it wants to “extend our leadership beyond the B2B payment space by developing capabilities to enable institutions to collect from consumers in a globally consistent and seamless fashion."
What Citi won’t be doing is seeking to develop its own cryptocurrency, in step with J.P. Morgan. Per its global head of innovation for treasury and trade solutions, Gulru Atak, “Citicoin” is no longer on the agenda, and the bank now believes there are better, non-crypto ways of improving payments. “Leveraging the \[current\] payments ecosystem,” which includes SWIFT, the vast messaging network to which 11,000 institutions have been onboarded, is simply less of a challenge than attempting to move all of those banks over to a new blockchain-enabled system, Atak said.
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