Curated by leading financial journalists, Sibos Issues brings you all the latest news and views from the conference</strong>. The complete PDF of this year's Preview edition will be available soon. </p> Mobile payments transaction volume is expected to soar in the coming years, but what is driving this huge growth and how has the pandemic both hindered and helped the development of the payments industry?</strong></p> The COVID-19 pandemic has distorted all aspects of life. At one stage this year, more than one-third of the world’s population was in a form of lockdown. Global GDP growth has been hit hard and social distancing is now the new normal. Governments across the world have been compelled to close off large swathes of their economies, central banks reignited quantitative easing to stimulate activity and financial institutions have been forced into finding new ways to support their customers.</p> For banks, digital onboarding of new customers, providing additional financing and other forms of financial relief has taken top priority. For non-banks, especially retail businesses, many have moved to contactless payments, triggered by the World Health Organization’s fears that banknotes may spread coronavirus.</p> The shift toward more flexible means of making payments is far from new, but as companies adapt to the pandemic, demand for more seamless and instant means to make payments has become acute. And although the pandemic has forced financial institutions to think hard about where to focus their priorities, clearly supporting clients to manage their cash is going to be one of them.</p> </figure> It’s important not to ignore the market infrastructure changes or the new business models or customers who have different business needs… "</p>Balaji Natarajan, head of payments and cash managements for Asia, ANZ.</cite></blockquote> </div></div> “The current point in the interest rate cycle and the economy in recovery scenario implies a great need for prioritisation in directing investments and obtaining the best value for spend,” said Balaji Natarajan, head of payments and cash management for Asia, ANZ. “At the same time, it’s important not to ignore the market infrastructure changes or the new business models or customers who have different business needs… In the medium-term, the transformation in customer business process to digitise and an emerging data driven business model of digital economy will be the key demand drivers. Fundamentally, a need for money and flow-appropriate digital mode of business.” </p> According to Mordor Intelligence, an India-based research consultancy, the transaction volume of the global mobile payments market is expected to more than triple to just around $4.6 trillion within five years. Countless other pieces of similar research have the trend on roughly the same trajectory. Technological advances in smartphones, digital payment cards, and point of sale (POS) at retail terminals are fuelling this market growth, the consultancy says. Government initiatives across the world are also providing a supportive environment for digital payment growth. Driven by fears of rampant tax evasion and money laundering, a general push towards a cashless economy is high on the agenda for many. </p> Italy is a good case study. With one of the lowest rates of credit cards usage in Europe, the country which invented the balance sheet in the 15th century, also admits to having the highest VAT frauds in the region. In a bid to stem this criminal activity, the government has committed $3 billion to incentivising the use of electronic payments over cash.</p> Such developments should be music to the ears of people like Gonca Latif-Schmitt, global head of commercial cards, of Citi’s Treasury and Trade Solutions business, who is banking the future of its card business on an increasingly cashless society. </p> “We will be focusing on expanding our virtual card footprint in key markets, executing on a “mobile first strategy” to ensure our cardholders and programme administrators have access to our digital tools from wherever, whenever, and leveraging strategic partnerships to expand the scope of commercial cards,” says Latif-Schmitt.</p> </figure> We will be focusing on expanding our virtual card footprint in key markets, executing on a “mobile first strategy"</p>Gonca Latif-Schmitt, global head of commercial cards, of Citi’s Treasury and Trade Solutions business</cite></blockquote> </div></div> Citi’s vision is predicated on what it calls its five strategic pillars. These comprise platform standardisation and market growth, B2B solutions, digital transformation, next-generation data platform and the next-generation service model.</p> The US bank’s conversion to a mobile-first strategy is shaped by its global footprint. Activities in strategic markets such as China, for example, provide a useful insight into this. “In China, consumer payments are almost exclusively made via a mobile device. We are now investing in technology so that we can integrate into WeChat and AliPay in China in order to provide our commercial cardholders with an experience similar to what they have in their consumer lives,” said Latif-Schmitt. </p> </figure> In China, consumer payments are almost exclusively made via a mobile device "</p>Gonca Latif-Schmitt, global head of commercial cards, of Citi’s Treasury and Trade Solutions business</cite></blockquote> </div></div> In the corporate space, it appears treasurers of the world’s largest companies are also comfortable with the direction of travel. Based on research conducted by East & Partners, a banking consultancy, anxiety about the lack of human interaction that a digital/mobile first world may present is minimal, with only 8% of the top 100 companies in the US (based on annual turnover) admitting it was a worry.</p> These results are a positive signal for new entrants to the market. Goldman Sachs is one such example. Having recently decided to move into the transaction banking market, the investment bank believes its lack of legacy banking infrastructure provides it with an edge.</p> “We had the advantage to talk to a large number of clients who told us about the lack of modern infrastructure from their providers, and what they needed to do their jobs more effectively,” said Chad Wallace, global head of digital, product and design at Goldman Sachs.</p> </figure> We had the advantage to talk to a large number of clients who told us about the lack of modern infrastructure from their providers"</p>Chad Wallace, global head of digital, product and design at Goldman Sachs</cite></blockquote> </div></div> “We were able to take all the input, and designed and built an innovative platform to solve their challenges… In a nutshell, we’re digital and we’re nimble – clients can be onboarded in one-to-two days on average and we can open accounts in 10 minutes because our systems talk to each other.” </p> A more digital world is clearly not without its own set of risks, as the pandemic has exposed. In early May, the FATF (Financial Action Task Force) released a stark warning about the money laundering and terrorist financing threats emerging from COVID-19. Although similar in nature to what authorities have seen time and time again – the operational capacity to tackle them effectively amid social distancing and work-from-home policies has placed a greater burden on institutions to remain alert and effective. </p> If financial institutions can focus time and investment on ensuring payments are both secure and seamless, then there really is very little reason why global mobile payments volume won’t continue to swell.</p>