Citibank: We’re moving into a 24/7 payment environment

Real-time liquidity management poised to become “a very different game”

by | June 3, 2021 | bobsguide

Bank treasuries rushing to build up real-time payment (RTP) resources may stumble upon several hurdles, market participants warned, as they face mounting competition to snap up growingly expensive staff and technology.

While ramped-up market demand for real-time services is pushing treasurers to revaluate current infrastructure in order to facilitate RTP, the possibility of a constantly connected world is in fact raising some key staffing and operational concerns.

“We’re going to move more into a 24/7 environment,” said John Davis, deputy treasurer at Citibank, on a panel at this year’s Payments Canada Summit. “The concept of a cut-off time is going to start to edge away, even the concept of a day end starts to become challenged.”

Financial firms will need to gauge whether “the existing model is going to work and going to be sufficient in the long term, or [they need to] think about deploying other types of operations’ models, ” added John David Penner, offering manager at IBM.

Real-time liquidity management will be a “very different game”, he warned, requiring “different staffing needs and intellectual capital” that firms might not have fully factored in yet.

The growing labour and operational costs to operate a 24/7 real-time service means “it’s not just the technology piece that [a company] needs to worry about, it’s also the labour cost,” Penner said. “Labour is not cheap in payments, and it’s getting more expensive.”

“From a staffing perspective, the skill sets that we need are more along the lines of project management, integrated systems, database skill sets […] and finally, strong math skills – because with machine learning, which is all based on math, you have to be able to interpret it,” added Paul Lenzi, director at Bell Canada’s treasury.

Against these challenges, Penner said outsourcing might be an option worth exploring: “Am I doing the right thing by trying to hire all these people into my team, when I could be potentially looking at outsourcing?”

Overall, real-time businesses will have an agility advantage over batch-based firms, said Citibank’s Davis.

However, they will also need to manage some critical complexities that surfaced over the past year: while demand for digitalisation skyrocketed during the pandemic, it also exposed supply-chain frailty, Davis said.

“The resiliency lens is going to get more focus as a result of COVID-19,” he said.

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