Digital Transactions Authoritative, insightful and timely information for payments professionals
Nearly 90% of financial-institution clients predict 5% or more of cross-border market share will be forfeited to fintechs within the next 10 years, according to a study from Citicorp that canvassed more than 100 financial-institution clients.
Why is this important? “The Bank of England estimates that the value of cross-border payments is set to increase from almost $150 trillion in 2017 to over $250 trillion by 2027, equating to a rise of over $100 trillion in just 10 years,” Citi says in a statement.
To compete against fintechs, 83% of banks are turning to application programming interface code—the shorthand is APIs—as the key technology to improve the client experience, Citi says. “It is the enabler allowing them to expand their network through partnerships with network connectivity providers, elevate their capabilities, and deliver true digital client experience. Many incumbents, however, have to upgrade their legacy systems in order to take full advantage of APIs,” the report says. Indeed, nearly 70% of those surveyed intend to make core infrastructure upgrades.
Cross-border payments also are expected to continue to rely on the U.S. dollar, the report says. “The international usage of the Chinese renminbi has risen but remains below Japanese yen and British sterling usage levels and substantially below euro levels,” it says. “We strongly expect that the dollar will continue to serve as the leading international currency through the end of this decade and likely well beyond. The world’s preference for the dollar flows first from the deep and liquid capital markets in the U.S. In this respect, we view the U.S. dollar and U.S. markets as unrivaled.”
As for where the competition will come from, 60% said fintechs will be among the top competitors, followed by banks, 20%, and disruptors, 18%.
