Shifting consumer behaviour, new business models, and technological advancements are collectively driving the need for finance, according to Citibank.
Citibank’s GPS report titled ‘Real Time ‘24×7 Finance in an Always-on world’ noted that regulation and policy changes are pushing real-time payments into the mainstream, and real-time finance is no longer emerging, it is the default.
“A new wave of finance firms will emerge – new entrants, upgraded existing banks, fintechs and hybrids/partnerships,” it stated. “Strategic advantage increasingly depends on how effectively institutions incorporate real-time capabilities. Banks and corporates need to fundamentally rethink business models and infrastructure.”
The report noted that real-time cross-border payments are unlocking new opportunities for businesses operating globally, enabling faster settlements, improved working capital management, and enhanced customer experiences.
However, the complexities of cross-border interoperability and regulation remain a key challenge, it stated.
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Citibank noted that the real-time world did not happen overnight: “It has been enabled by advances in foundational technology and supportive regulations that together have enabled the demand for real-time, seamless interactions, particularly in commerce and finance.”
The report noted that there are foundational tech upgrades, and examples include stronger processing power, internet availability, digital connectivity of people, cloud computing, AI, and 5G.
“Cloud computing has reduced capex costs for new digital competitors and increased cost variability for incumbents. Faster data processing power and seamless connectivity are enabling real-time digital interactions, powering day-to-day from streaming, to work email, to payments processing,” it said.
Global computing capacity has increased from 4,900 gigaFLOPS in 2000 to 1.7 billion gigaFLOPS today. Likewise, global median broadband download speeds have increased dramatically, from 127 kilobits per second in 2000 to nearly 95 Mbps in 2024, it stated.
The report noted that with 5G (and beyond), the robust networks with ultra-low latency and embedded security and encryption, even at a hardware level, such as a mobile phone’s SIM card, enable the secure, instant processing of payments.
“By powering connected devices, ranging from wearables to cars, they expand the reach of instant payments beyond traditional banking channels,” it said.
The report said APIs are essential for enabling instantaneity across industries, and APIs facilitate real-time data exchange by providing access to information from multiple sources. They also automate complex workflows by reducing manual intervention and latency, and promote interoperability between disparate systems.
The internet of things is a catalyst for the real-time economy by allowing smart devices such as cars and home appliances to automatically initiate and complete transactions when they are needed, such as the fridge ordering milk before it runs out, it stated.
“A future world of AI agents, combined with IoT, may seamlessly make autonomous micropayments based on pre-determined rules and conditions. The AI agents could be the consumer’s all-encompassing personal assistants or payment agents enabled by payment firms or smart device companies,” Citibank said.
As businesses and financial institutions explore tokenised assets such as stablecoins and central bank digital currencies (CBDCs), the potential for instant, cross-border transactions is expanding, the report stated.
Initiatives like Project Agora, led by the BIS Innovation Hub, focus on improving cross-border payments using central bank digital currencies (CBDCs) and tokenised bank deposits.
Citibank noted that digital identity plays a crucial role in enabling seamless, secure, and scalable real-time payments. “It enhances the customer experience by reducing friction during transactions through quick and consistent identity verification, while also simplifying authentication processes that increase both security and privacy.
“A robust digital identity framework allows financial institutions and payment providers to confirm user identities in milliseconds, facilitating instant, low-risk fund transfers,” it added.
