<p style="text-align: left;">Asia-Pacific Economic Cooperation, or APEC, is the leading economic forum for the 21 Member Economies of the Asia-Pacific region, facilitating trade and investment, economic growth, and regional cooperation.</p>
<p style="text-align: left;">&nbsp;</p>
<p style="text-align: left;">In 2023, the United States is chairing APEC. San Francisco will be the Host City for the AELW in November. APEC meetings throughout this year have focused on regional economic issues, including sustainability, digitalization, women&rsquo;s economic empowerment, trade facilitation, energy security, food security, and health. In concluding APEC 2023, the AELW will bring 21 APEC Economic Leaders, ministers, the private sector, and other stakeholders together to engage on global challenges. U.S. APEC 2023 will be the most significant event with world leaders in San Francisco in recent history.</p>
<p style="text-align: left;">&nbsp;</p>
<p style="text-align: left;">For more information <a href="https://apecceosummit2023.com/program/" target="_blank" rel="noopener" data-link-source="tiny">click here</a>.&nbsp;</p>
<p style="text-align: left;">&nbsp;</p>
<p style="text-align: left;"><strong>Citi GPS Reports:&nbsp;</strong></p>
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<p style="text-align: left;"><span style="font-size: 0.875rem;"><strong><span style="font-family: 'Citi Sans Text';"><a style="color: #0563c1; text-decoration: underline;" href="https://ir.citi.com/gps/8OKEt0wkRXQV0WNWffguTKxO0dMcy7bcrLyhGkC6sLs28QvR7O5s3QJair8P6-pj6Qn0mTF6jspAWz-hln_z0kVd57mtCWsTT9_MKBhGsadOhyM1dieX9xh9iqdkNx8ws911gwRITVLwkGpdlfPv1A%3D%3D" target="_blank" rel="noopener" data-link-source="tiny"><span style="color: windowtext;">&nbsp;APEC Economic Outlook</span></a></span></strong></span></p>
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<p style="text-indent: 2.25pt; margin: 0cm; font-size: 11pt; font-family: Calibri, sans-serif; text-align: left;"><span style="font-size: 0.875rem;"><strong><span style="font-family: 'Citi Sans Text';"><a style="color: #0563c1; text-decoration: underline;" href="https://ir.citi.com/gps/3fE59-00zdVWib8jW6pRcK5px8FAfC17ZjT8TJ6wQUT0Qywqw42wBwQ4077vXxctmMKZxL4GkD0bA_jJifB8e3e1kR17Wrw3YGlxkYHtUTkmudI3GmZezulko6nJb0mqc-VdMPg6s4KEQtl7xqSVcw%3D%3D" target="_blank" rel="noopener" data-link-source="tiny"><span style="color: windowtext;">Food Security v2.0</span></a> </span></strong></span></p>
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<p style="text-indent: 2.25pt; margin: 0cm; font-size: 11pt; font-family: Calibri, sans-serif; text-align: left;"><span style="font-size: 0.875rem;"><strong><span style="font-family: 'Citi Sans Text';"><a style="color: #0563c1; text-decoration: underline;" href="https://ir.citi.com/gps/igUHqeWGfx8Ud3Sf2yLTsN1XOjAohiR5m_HgVuvlR-bROvokEbwAr1JSpsNh7ckXK6niZQ5z3Q4EFN2ZOZa77c2a2Xn4DnVU62PbTEKYhJeXM-uykKXKQzCJ247ddYdNdwG1Ijt799nIisDkBXq3mw%3D%3D" target="_blank" rel="noopener" data-link-source="tiny"><span style="color: windowtext;">Supply Chains</span></a></span></strong></span></p>
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<p style="text-indent: 2.25pt; margin: 0cm; font-size: 11pt; font-family: Calibri, sans-serif; text-align: left;"><span style="font-size: 0.875rem;"><strong><span style="font-family: 'Citi Sans Text';"><a style="color: #0563c1; text-decoration: underline;" href="https://ir.citi.com/gps/2JqDVxV1WeEFOVoKtBjyMuQYg1vFb58-vNOatm1Na-D7v0EsJZHbbmBYMXMYlXszTUb2ZUei306TU3uSUekhs_t9Uc-0DNS5EQ_VVnjnHksEimKp2zuTNlFMY6N10hXR0pn47BBnSEL5O3-WT6eNew%3D%3D" target="_blank" rel="noopener" data-link-source="tiny"><span style="color: windowtext;">Unlocking Climate and Development Finance</span></a> </span></strong></span></p>

Asia-Pacific Economic Cooperation, or APEC, is the leading economic forum for the 21 Member Economies of the Asia-Pacific region, facilitating trade and investment, economic growth, and regional cooperation.

 Asia-Pacific Economic Cooperation (APEC) 2023

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Executive Summary

The key drivers behind Asia's faster adoption of technology include underdeveloped infrastructure, especially in retail, banking, and healthcare, as well as high internet penetration, young digital natives, urbanization, a rising middle class, and an entrepreneurial spirit. Key areas where Asia currently holds an advantage over the West include: Super apps — mobile apps that integrate multiple functions under a single umbrella — are unique to Asia, yet they are ubiquitous across the region. Driven by younger demographics and high digital adoption, Asian users are immersed in super apps and enjoy the convenience, ease of use, and multitude of services they provide. Asia leads the rest of the world in adopting mobile payments both online and offline. According to FIS, in 2021, digital/mobile wallets accounted for nearly 70% of the e-commerce transaction value in Asia, more than double that of North America or Europe. Likewise, for purchases at physical points-of-sale, nearly half, or 44%, of transactions in Asia were done via digital/mobile wallets, a share 4-5x larger than in the West. Social commerce is a subset of e-commerce that offers consumers an integrated platform with social features, providing more immersive and interactive shopping experience. Asia was the first region to introduce several social commerce formats, such as livestreaming e-commerce. According to Insider Intelligence, the U.S. is expected to reach China's 2018 level of social commerce penetration in 2026, indicating that China is roughly eight years ahead in social commerce. Short-form videos have revolutionized the way people consume and creators develop video content. The commercialization of short-term videos took off in China, most notably through TikTok. Taking note of this video format's success, Western tech giants have been racing to create their own products with similar features, as the competition for users and advertising budgets intensifies. While South Korea is widely regarded as the "home of eSports," the eSports boom quickly spread to other Asian countries, making the region central to the world of competitive gaming. Over the past decade, countries in the West have followed in Asia's footsteps by professionalizing eSports, organizing eSports tournaments, devleloping successful eSports teams, attracting sponsorships, and supporting a growing livestreaming market. Meanwhile, Asia continues to explore new frontiers in eSports: refining the eSports value chain, popularizing and scaling the mobile eSports ecosystem, and creating eSports hubs. Webtoons — digital comics optimized for viewing on mobile devices — originated in Asia, where the industry continues to dominate, and are now making inroads into Western markets. South Korean companies have launched local-language versions of existing webtoons, venturing outside of Asian markets. They have also acquired local Western players, exporting their respective original webtoon content via acquired platforms. Like anime, manga, and K-pop, webtoons are softly permeating into Western media and entertainment. In Asia, digital healthcare is significant in terms of both scale and penetration. Digital healthcare is reported to have touched the lives of around 1.5 billion people in Asia (in terms of registered users across emerging healthcare platforms), and its user base is continuing to grow. Furthermore, studies suggest the adoption rate of digital healthcare in developing Asia is 2.5 times the rate in the U.S. Moreover, unlike the West, where various scaled players specialize in each vertical of healthcare services, the digital healthcare industry in Asia has evolved from a standalone play to a comprehensive ecosystem of services.

<p>The key drivers behind Asia's faster adoption of technology include underdeveloped infrastructure, especially in retail, banking, and healthcare, as well as high internet penetration, young digital natives, urbanization, a rising middle class, and an entrepreneurial spirit.&nbsp;</p>
<p>Key areas where Asia currently holds an advantage over the West include:</p>
<ul>
<li><span style="font-size: 16px;">Super apps &mdash; mobile apps that integrate multiple functions under a single umbrella &mdash; are unique to Asia, yet they are ubiquitous across the region. Driven by younger demographics and high digital adoption, Asian users are immersed in super apps and enjoy the convenience, ease of use, and multitude of services they provide.&nbsp;<br /></span><span style="font-size: 16px;"><br /></span></li>
<li><span style="font-size: 16px;">Asia leads the rest of the world in adopting mobile payments both online and offline. According to FIS, in 2021, digital/mobile wallets accounted for nearly 70% of the e-commerce transaction value in Asia, more than double that of North America or Europe. Likewise, for purchases at physical points-of-sale, nearly half, or 44%, of transactions in Asia were done via digital/mobile wallets, a share 4-5x larger than in the West.&nbsp;<br /><br /></span></li>
<li><span style="font-size: 16px;">Social commerce is a subset of e-commerce that offers consumers an integrated platform with social features, providing more immersive and interactive shopping experience. Asia was the first region to introduce several social commerce formats, such as livestreaming e-commerce. According to Insider Intelligence, the U.S. is expected to reach China's 2018 level of social commerce penetration in 2026, indicating that China is roughly eight years ahead in social commerce.<br /><br /></span></li>
<li><span style="font-size: 16px;">Short-form videos have revolutionized the way people consume and creators develop video content. The commercialization of short-term videos took off in China, most notably through TikTok. Taking note of this video format's success, Western tech giants have been racing to create their own products with similar features, as the competition for users and advertising budgets intensifies.&nbsp;<br /><br /></span></li>
<li><span style="font-size: 16px;">While South Korea is widely regarded as the "home of eSports," the eSports boom quickly spread to other Asian countries, making the region central to the world of competitive gaming. Over the past decade, countries in the West have followed in Asia's footsteps by professionalizing eSports, organizing eSports tournaments, devleloping successful eSports teams, attracting sponsorships, and supporting a growing livestreaming market. Meanwhile, Asia continues to explore new frontiers in eSports: refining the eSports value chain, popularizing and scaling the mobile eSports ecosystem, and creating eSports hubs.<br /><br /></span></li>
<li><span style="font-size: 16px;">Webtoons &mdash; digital comics optimized for viewing on mobile devices &mdash; originated in Asia, where the industry continues to dominate, and are now making inroads into Western markets. South Korean companies have launched local-language versions of existing webtoons, venturing outside of Asian markets. They have also acquired local Western players, exporting their respective original webtoon content via acquired platforms. Like anime, manga, and K-pop, webtoons are softly permeating into Western media and entertainment.<br /><br /></span></li>
<li><span style="font-size: 16px;">In Asia, digital healthcare is significant in terms of both scale and penetration. Digital healthcare is reported to have touched the lives of around 1.5 billion people in Asia (in terms of registered users across emerging healthcare platforms), and its user base is continuing to grow. Furthermore, studies suggest the adoption rate of digital healthcare in developing Asia is 2.5 times the rate in the U.S. Moreover, unlike the West, where various scaled players specialize in each vertical of healthcare services, the digital healthcare industry in Asia has evolved from a standalone play to a comprehensive ecosystem of services.&nbsp;</span></li>
</ul>

The key drivers behind Asia's faster adoption of technology include underdeveloped infrastructure, especially in retail, banking, and healthcare, as well as high internet penetration, young digital natives, urbanization, a rising middle class, and an entrepreneurial spirit. Key areas where Asia currently holds an advantage over the West include: Super apps — mobile apps that integrate multiple functions under a single umbrella — are unique to Asia, yet they are ubiquitous across the region. Driven by younger demographics and high digital adoption, Asian users are immersed in super apps and enjoy the convenience, ease of use, and multitude of services they provide. Asia leads the rest of the world in adopting mobile payments both online and offline. According to FIS, in 2021, digital/mobile wallets accounted for nearly 70% of the e-commerce transaction value in Asia, more than double that of North America or Europe. Likewise, for purchases at physical points-of-sale, nearly half, or 44%, of transactions in Asia were done via digital/mobile wallets, a share 4-5x larger than in the West. Social commerce is a subset of e-commerce that offers consumers an integrated platform with social features, providing more immersive and interactive shopping experience. Asia was the first region to introduce several social commerce formats, such as livestreaming e-commerce. According to Insider Intelligence, the U.S. is expected to reach China's 2018 level of social commerce penetration in 2026, indicating that China is roughly eight years ahead in social commerce. Short-form videos have revolutionized the way people consume and creators develop video content. The commercialization of short-term videos took off in China, most notably through TikTok. Taking note of this video format's success, Western tech giants have been racing to create their own products with similar features, as the competition for users and advertising budgets intensifies. While South Korea is widely regarded as the "home of eSports," the eSports boom quickly spread to other Asian countries, making the region central to the world of competitive gaming. Over the past decade, countries in the West have followed in Asia's footsteps by professionalizing eSports, organizing eSports tournaments, devleloping successful eSports teams, attracting sponsorships, and supporting a growing livestreaming market. Meanwhile, Asia continues to explore new frontiers in eSports: refining the eSports value chain, popularizing and scaling the mobile eSports ecosystem, and creating eSports hubs. Webtoons — digital comics optimized for viewing on mobile devices — originated in Asia, where the industry continues to dominate, and are now making inroads into Western markets. South Korean companies have launched local-language versions of existing webtoons, venturing outside of Asian markets. They have also acquired local Western players, exporting their respective original webtoon content via acquired platforms. Like anime, manga, and K-pop, webtoons are softly permeating into Western media and entertainment. In Asia, digital healthcare is significant in terms of both scale and penetration. Digital healthcare is reported to have touched the lives of around 1.5 billion people in Asia (in terms of registered users across emerging healthcare platforms), and its user base is continuing to grow. Furthermore, studies suggest the adoption rate of digital healthcare in developing Asia is 2.5 times the rate in the U.S. Moreover, unlike the West, where various scaled players specialize in each vertical of healthcare services, the digital healthcare industry in Asia has evolved from a standalone play to a comprehensive ecosystem of services.  

We estimate Asia adopts new technologies 8-12 years ahead of the West, making it much more like a time machine to the future. While its infrastructure has historically been underdeveloped relative to the West's. Asia's high internet connectivity, young and increasingly affluent and urban demographics, and entrepreneurial spirit have driven the region to adopt many technologies at a faster pace. In doing so, Asia provides a glimpse of what the future could look like in more developed, Western economies.

Seven Areas Where Asia Gives Interesting Insights Into the Future

We estimate Asia adopts new technologies 8-12 years ahead of the West, making it much like a time machine to the future.  While its infrastructure has historically been underdeveloped relative to the West’s, Asia’s high internet connectivity, young and increasingly affluent and urban demographics, and entrepreneurial spirit have driven the region to adopt many technologies at a faster pace. In doing so, Asia provides a glimpse of what the future could look like in more developed, Western economies. 

Asia as a Time Machine to the Future

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The world of cross-border payments is at an inflection point. As the ecosystem is shaken up by new competition and technologies, there will inevitably be winners and losers. All players must remain nimble and adapt if they are to retain their market share and thrive. This report examines the challenges and opportunities faced by market participants at this pivotal time. The fierce level of competition in cross-border payments is unsurprising given the rewards on offer. There is a race emerging — between new entrants and existing players, often with new business models — to seize a slice of the cross-border payments wallet. The evolving landscape is also driven by changing behaviors, and heightened expectations, with consumers seeking a streamlined, transparent, 24x7 real-time experience, both domestically and across borders. These expectations have crossed over to the corporate and institutional client market as well. New business models, such as direct-to-consumer offerings, marketplaces, and shared economy models, are also spurring change in the payments world. Competition is increasingly multi-faceted within the industry. Payments are moving away from traditional instruction methods, which are tied to batch and files, and moving toward application programming interface (API) connectivity. This is leading to a heightened opportunity for both FinTechs and other participants that will be enabled through traditional financial infrastructures. Regulation is also increasingly fostering innovation via initiatives such as open banking and there has been a consequent increase in players that can deliver technology nimbly and leverage digital client experiences as a differentiating factor. This report builds on qualitative contributions from key market infrastructure experts — from within and outside of Citi — FinTechs, and a diversified set of banks spanning across four continents. It also outlines the key findings from a proprietary survey of more than 100 of Citi’s financial institution clients. Their priorities were resoundingly clear: Speed, cost efficiency, and transparency are critical to delivering best-in-class client experiences. We examine what it takes to deliver such an experience, explore technological innovation across the traditional fiat currency stack — including alternative payment methods and other industry-driven developments — and draw connections to the fast-changing digital asset space. Digital assets have yet to scale; however, interesting use cases, such as smart contracts and real-time liquidity, are already emerging. Artificial intelligence has captured significant mindshare in 2023 and could act as a catalyst for change in the payments market. While leveraging the pace of innovative change, it is also imperative to stay focused on safety and soundness for clients while continuing to comply with the needs of the evolving regulatory landscape. As we show in this report, best-in-class client experiences — leveraging new technologies — can address clients’ key pain points and have the potential to transform cross-border payments for the benefit of all. Citi is proud to play a key role in this journey, and we hope these insights help you both understand and benefit from the dynamic future of cross-border payments.

<p>The world of cross-border payments is at an inflection point. As the ecosystem is shaken up by new competition and technologies, there will inevitably be winners and losers. All players must remain nimble and adapt if they are to retain their market share and thrive. This report examines the challenges and opportunities faced by market participants at this pivotal time.</p>
<p>The fierce level of competition in cross-border payments is unsurprising given the rewards on offer. There is a race emerging &mdash; between new entrants and existing players, often with new business models &mdash; to seize a slice of the cross-border payments wallet.</p>
<p>The evolving landscape is also driven by changing behaviors, and heightened expectations, with consumers seeking a streamlined, transparent, 24x7 real-time experience, both domestically and across borders. These expectations have crossed over to the corporate and institutional client market as well. New business models, such as direct-to-consumer offerings, marketplaces, and shared economy models, are also spurring change in the payments world.</p>
<p>Competition is increasingly multi-faceted within the industry. Payments are moving away from traditional instruction methods, which are tied to batch and files, and moving toward application programming interface (API) connectivity. This is leading to a heightened opportunity for both FinTechs and other participants that will be enabled through traditional financial infrastructures. Regulation is also increasingly fostering innovation via initiatives such as open banking and there has been a consequent increase in players that can deliver technology nimbly and leverage digital client experiences as a differentiating factor.</p>
<p>This report builds on qualitative contributions from key market infrastructure experts &mdash; from within and outside of Citi &mdash; FinTechs, and a diversified set of banks spanning across four continents. It also outlines the key findings from a proprietary survey of more than 100 of Citi&rsquo;s financial institution clients. Their priorities were resoundingly clear: Speed, cost efficiency, and transparency are critical to delivering best-in-class client experiences.</p>
<p>We examine what it takes to deliver such an experience, explore technological innovation across the traditional fiat currency stack &mdash; including alternative payment methods and other industry-driven developments &mdash; and draw connections to the fast-changing digital asset space. Digital assets have yet to scale; however, interesting use cases, such as smart contracts and real-time liquidity, are already emerging. Artificial intelligence has captured significant mindshare in 2023 and could act as a catalyst for change in the payments market.</p>
<p>While leveraging the pace of innovative change, it is also imperative to stay focused on safety and soundness for clients while continuing to comply with the needs of the evolving regulatory landscape.</p>
<p>As we show in this report, best-in-class client experiences &mdash; leveraging new technologies &mdash; can address clients&rsquo; key pain points and have the potential to transform cross-border payments for the benefit of all. Citi is proud to play a key role in this journey, and we hope these insights help you both understand and benefit from the dynamic future of cross-border payments.</p>

Our vision to be the preeminent banking partner for institutions with cross-border needs grows ever more relevant every day. With international networks fully engaged and payment activity continuing to grow across borders, clients need solutions that meet their global needs.

Our industry is on a journey to reach the next phase of evolution within cross-border payments. We’re partnering closely with financial institutions, FinTechs, corporates, and industry experts — all of whom have contributed their perspectives in this paper — to continue building best-in-class experiences for clients and using technologies such as artificial intelligence and digital assets to make it happen.

I’m excited to see the immense opportunity that the next five years will bring as we work together to transform cross-border payments.



Jane Fraser, CEO, Citi

Growing Revenue Pie Is Attracting Competition <div>With a revenue pie already at over $200 billion and expanding&nbsp;at a high single-digit annual growth rate, and flows expected to reach $250 trillion by 2027, competition in the cross-border&nbsp;payments market is increasing. Over 40% of banks have already lost at least 5% of market share to FinTechs, and 89% expect to lose at least 5% of their share to FinTechs in the next 5-10 years.</div> 

<div>With a revenue pie already at over $200 billion and expanding&nbsp;at a high single-digit annual growth rate, and flows expected to reach $250 trillion by 2027, competition in the cross-border&nbsp;payments market is increasing. Over 40% of banks have already lost at least 5% of market share to FinTechs, and 89% expect to lose at least 5% of their share to FinTechs in the next 5-10 years.</div>

Growing Revenue Pie Is Attracting Competition

The Pain Points <div>In domestic transactions, consumers experience payments that&nbsp;are largely instant and fully traceable. Increasingly, these same&nbsp;expectations are being applied to the more complex crossborder&nbsp;space. This is driving a &ldquo;consumerization&rdquo; of corporate&nbsp;expectations, increasingly underpinned by a focus on speed,&nbsp;transparency, and cost efficiency.</div> 

<div>In domestic transactions, consumers experience payments that&nbsp;are largely instant and fully traceable. Increasingly, these same&nbsp;expectations are being applied to the more complex crossborder&nbsp;space. This is driving a &ldquo;consumerization&rdquo; of corporate&nbsp;expectations, increasingly underpinned by a focus on speed,&nbsp;transparency, and cost efficiency.</div>

The Pain Points

Keys to Winning Share for Banks <div>The changing cross-border payments space will favor those&nbsp;elevating and concentrating on the client experience. While&nbsp;over 50% of banks see the need to revamp their front ends&nbsp;to improve client experience, over 60% of respondents point&nbsp;to the need to upgrade their core infrastructure.</div> 

<div>The changing cross-border payments space will favor those&nbsp;elevating and concentrating on the client experience. While&nbsp;over 50% of banks see the need to revamp their front ends&nbsp;to improve client experience, over 60% of respondents point&nbsp;to the need to upgrade their core infrastructure.</div>

Keys to Winning Share for Banks

Where Are Clients on their API Journey? <div>83% of banks recognize application&nbsp;programming interfaces (APIs) as&nbsp;the key technology to improve client&nbsp;experience. It is the&nbsp; enabler allowing them to expand their network&nbsp;through partnerships with network&nbsp;connectivity providers, elevate their&nbsp;capabilities, and deliver true digital&nbsp;client experience. Many incumbents,&nbsp;however, have to upgrade their&nbsp;legacy systems in order to take full&nbsp;advantage of APIs.</div> 

<div>83% of banks recognize application&nbsp;programming interfaces (APIs) as&nbsp;the key technology to improve client&nbsp;experience. It is the&nbsp; enabler allowing them to expand their network&nbsp;through partnerships with network&nbsp;connectivity providers, elevate their&nbsp;capabilities, and deliver true digital&nbsp;client experience. Many incumbents,&nbsp;however, have to upgrade their&nbsp;legacy systems in order to take full&nbsp;advantage of APIs.</div>

Where Are Clients on their API Journey?

Delivering Best-in-Class Client Experiences <div>To address the cross-border payment needs of clients looking&nbsp;for speed, cost efficiency, and transparency, financial institutions&nbsp;need to partner to deliver a digital-first client experience.</div> 

<div>To address the cross-border payment needs of clients looking&nbsp;for speed, cost efficiency, and transparency, financial institutions&nbsp;need to partner to deliver a digital-first client experience.</div>

Delivering Best-in-Class Client Experiences

The world of cross-border payments is at an inflection point. As the ecosystem is shaken up by new competition and technologies, there will inevitably be winners and losers. All players must remain nimble and adapt if they are to retain their market share and thrive. This report examines the challenges and opportunities faced by market participants at this pivotal time. The fierce level of competition in cross-border payments is unsurprising given the rewards on offer. There is a race emerging — between new entrants and existing players, often with new business models — to seize a slice of the cross-border payments wallet. The evolving landscape is also driven by changing behaviors, and heightened expectations, with consumers seeking a streamlined, transparent, 24x7 real-time experience, both domestically and across borders. These expectations have crossed over to the corporate and institutional client market as well. New business models, such as direct-to-consumer offerings, marketplaces, and shared economy models, are also spurring change in the payments world. Competition is increasingly multi-faceted within the industry. Payments are moving away from traditional instruction methods, which are tied to batch and files, and moving toward application programming interface (API) connectivity. This is leading to a heightened opportunity for both FinTechs and other participants that will be enabled through traditional financial infrastructures. Regulation is also increasingly fostering innovation via initiatives such as open banking and there has been a consequent increase in players that can deliver technology nimbly and leverage digital client experiences as a differentiating factor. This report builds on qualitative contributions from key market infrastructure experts — from within and outside of Citi — FinTechs, and a diversified set of banks spanning across four continents. It also outlines the key findings from a proprietary survey of more than 100 of Citi’s financial institution clients. Their priorities were resoundingly clear: Speed, cost efficiency, and transparency are critical to delivering best-in-class client experiences. We examine what it takes to deliver such an experience, explore technological innovation across the traditional fiat currency stack — including alternative payment methods and other industry-driven developments — and draw connections to the fast-changing digital asset space. Digital assets have yet to scale; however, interesting use cases, such as smart contracts and real-time liquidity, are already emerging. Artificial intelligence has captured significant mindshare in 2023 and could act as a catalyst for change in the payments market. While leveraging the pace of innovative change, it is also imperative to stay focused on safety and soundness for clients while continuing to comply with the needs of the evolving regulatory landscape. As we show in this report, best-in-class client experiences — leveraging new technologies — can address clients’ key pain points and have the potential to transform cross-border payments for the benefit of all. Citi is proud to play a key role in this journey, and we hope these insights help you both understand and benefit from the dynamic future of cross-border payments. Our vision to be the preeminent banking partner for institutions with cross-border needs grows ever more relevant every day. With international networks fully engaged and payment activity continuing to grow across borders, clients need solutions that meet their global needs.

Our industry is on a journey to reach the next phase of evolution within cross-border payments. We’re partnering closely with financial institutions, FinTechs, corporates, and industry experts — all of whom have contributed their perspectives in this paper — to continue building best-in-class experiences for clients and using technologies such as artificial intelligence and digital assets to make it happen.

I’m excited to see the immense opportunity that the next five years will bring as we work together to transform cross-border payments.



Jane Fraser, CEO, Citi Growing Revenue Pie Is Attracting Competition <div>With a revenue pie already at over $200 billion and expanding&nbsp;at a high single-digit annual growth rate, and flows expected to reach $250 trillion by 2027, competition in the cross-border&nbsp;payments market is increasing. Over 40% of banks have already lost at least 5% of market share to FinTechs, and 89% expect to lose at least 5% of their share to FinTechs in the next 5-10 years.</div>  The Pain Points <div>In domestic transactions, consumers experience payments that&nbsp;are largely instant and fully traceable. Increasingly, these same&nbsp;expectations are being applied to the more complex crossborder&nbsp;space. This is driving a &ldquo;consumerization&rdquo; of corporate&nbsp;expectations, increasingly underpinned by a focus on speed,&nbsp;transparency, and cost efficiency.</div>  Keys to Winning Share for Banks <div>The changing cross-border payments space will favor those&nbsp;elevating and concentrating on the client experience. While&nbsp;over 50% of banks see the need to revamp their front ends&nbsp;to improve client experience, over 60% of respondents point&nbsp;to the need to upgrade their core infrastructure.</div>  Where Are Clients on their API Journey? <div>83% of banks recognize application&nbsp;programming interfaces (APIs) as&nbsp;the key technology to improve client&nbsp;experience. It is the&nbsp; enabler allowing them to expand their network&nbsp;through partnerships with network&nbsp;connectivity providers, elevate their&nbsp;capabilities, and deliver true digital&nbsp;client experience. Many incumbents,&nbsp;however, have to upgrade their&nbsp;legacy systems in order to take full&nbsp;advantage of APIs.</div>  Delivering Best-in-Class Client Experiences <div>To address the cross-border payment needs of clients looking&nbsp;for speed, cost efficiency, and transparency, financial institutions&nbsp;need to partner to deliver a digital-first client experience.</div> 

The world of cross-border payments is at an inflection point. As the ecosystem is shaken up by new competition and technologies, there will inevitably be winners and losers. A race is emerging between new entrants and existing players, often with new business models, to seize a slice of the cross-border payments wallet. The evolving landscape is driven by changing behaviors as the streamlined, transparent, 24x7 real-time payments experience of consumers is crossing over to the corporate and institutional client market Best-in-class client experiences, leveraging new technologies, can address clients' key pain points and have the potential to transform cross=border payments for the benefit of all.

Who Will Be Moving $250 Trillion in the Next Five Years?

Future of Cross-Border Payments 

Following pandemic-related disruptions, supply chains are in a state of transition. To avoid future backlogs and disruptions, many solutions are being explored including a switch from just-in-time inventory to just-in-case, as well as near-shoring and on-shoring. Technology can play a significant role in securing global supply chains via automation, software, and connectivity. New technology developments can be utilized from production to storage, delivery, and recycling. One of the more interesting observations about the COVID-19 pandemic era was the way in which it expanded words and phrases used in general conversation. Prior to the pandemic, it was unlikely that people routinely talked about the effectiveness of mRNA vaccines or how long a virus could stay viable on a shopping bag. And conversations about the daily trip to the supermarket suddenly incorporated phrases like “supply chain disruptions.” We started writing about supply chains back in December 2021 in our report Global Supply Chains: The Complicated Road Back to Normal. At the time, global markets were unbalanced. There was strong demand for goods, as many who were sitting home due to lockdowns or remote work were clicking on “Add to Cart.” On the supply side, border closings and lockdowns kept production sites shuttered. At the time, we noted that because there was more than one cause or event that had gotten us into that situation, one single solution would not relieve the stress. Then came the armed conflict between Russia and Ukraine, which added a new layer of supply chain pressure and new challenges for the global economy. Together with the issues from the pandemic, the supply chain management practices that prevailed in the years before the pandemic were questioned, especially whether global supply chain structures were robust, cost-effective, and reliable, and whether the demand for goods was relatively smooth and predictable. With vulnerabilities in supply chains exposed, we noted that many firms would feel the need to take the lessons from supply chain disruptions on board and adjust their operations. One of our suggestions was to embrace digitalization and technology more broadly throughout the supply chain. Although technology had been slowly added over the year into the production and distribution areas of the economy, we believe the recent supply chain disruptions are proving to be a catalyst for technology adoption. From robotics in manufacturing and automated guided vehicles in warehouses, new technologies in the production area of the economy can help to automate processes, increase productivity, and lower costs. In the delivery sector, technology can help decrease delivery times and novel transportation solutions can lower delivery costs. New technology such as artificial intelligence and machine learning can help companies bring products to market faster and more efficiently. Finally, digitization and documentation can help keep supply chains running smoothly. In our full report, we look at 20 different areas of supply chain technology that could help companies enhance their supply chain management practices. Some are technologies that are already used in practice, while others are more conceptual. All are likely to help lead to a more stable global supply chain. Hopefully supply chain technology can ensure that future conversations about the trip to the market will center around what’s for dinner instead of what’s missing on the shelves.

<h3>Following pandemic-related disruptions, supply chains are in a state of transition. To avoid future backlogs and disruptions, many solutions are being explored including a switch from just-in-time inventory to just-in-case, as well as near-shoring and on-shoring. Technology can play a significant role in securing global supply chains via automation, software, and connectivity. New technology developments can be utilized from production to storage, delivery, and recycling.</h3>
<p>One of the more interesting observations about the COVID-19 pandemic era was the way in which it expanded words and phrases used in general conversation. Prior to the pandemic, it was unlikely that people routinely talked about the effectiveness of mRNA vaccines or how long a virus could stay viable on a shopping bag. And conversations about the daily trip to the supermarket suddenly incorporated phrases like &ldquo;supply chain disruptions.&rdquo;</p>
<p>We started writing about supply chains back in December 2021 in our report <a href="https://www.citigroup.com/global/insights/citigps/citi-gps-global-supply-chains" target="_blank" rel="noopener" data-link-source="tiny"><em>Global Supply Chains: The Complicated Road Back to Normal</em></a>. At the time, global markets were unbalanced. There was strong demand for goods, as many who were sitting home due to lockdowns or remote work were clicking on &ldquo;Add to Cart.&rdquo; On the supply side, border closings and lockdowns kept production sites shuttered. At the time, we noted that because there was more than one cause or event that had gotten us into that situation, one single solution would not relieve the stress.&nbsp;</p>
<p>Then came the armed conflict between Russia and Ukraine, which added a new layer of supply chain pressure and new challenges for the global economy. Together with the issues from the pandemic, the supply chain management practices that prevailed in the years before the pandemic were questioned, especially whether global supply chain structures were robust, cost-effective, and reliable, and whether the demand for goods was relatively smooth and predictable.</p>
<p>With vulnerabilities in supply chains exposed, we noted that many firms would feel the need to take the lessons from supply chain disruptions on board and adjust their operations. One of our suggestions was to embrace digitalization and technology more broadly throughout the supply chain.</p>
<p>Although technology had been slowly added over the year into the production and distribution areas of the economy, we believe the recent supply chain disruptions are proving to be a catalyst for technology adoption.</p>
<p>From robotics in manufacturing and automated guided vehicles in warehouses, new technologies in the production area of the economy can help to automate processes, increase productivity, and lower costs. In the delivery sector, technology can help decrease delivery times and novel transportation solutions can lower delivery costs. New technology such as artificial intelligence and machine learning can help companies bring products to market faster and more efficiently. Finally, digitization and documentation can help keep supply chains running smoothly.</p>
<p>In our full report, we look at 20 different areas of supply chain technology that could help companies enhance their supply chain management practices. Some are technologies that are already used in practice, while others are more conceptual. All are likely to help lead to a more stable global supply chain.</p>
<p>Hopefully supply chain technology can ensure that future conversations about the trip to the market will center around what&rsquo;s for dinner instead of what&rsquo;s missing on the shelves.</p>

Production and Storage <p>While humans still perform 72% of manufacturing tasks, the use of robots is on the rise, including Automated Mobile Robots (AMRs) and Automated Guided Vehicles (AGVs). Lower costs and higher speeds can be achieved through technologies such as Robots-as-a-Service (RaaS) subscriptions and 3D printing. While warehouses are still largely manual, the use of Automation Storage and Retrieval Systems (AS/RS) is growing.</p> 

<p>While humans still perform 72% of manufacturing tasks, the use of robots is on the rise, including Automated Mobile Robots (AMRs) and Automated Guided Vehicles (AGVs). Lower costs and higher speeds can be achieved through technologies such as Robots-as-a-Service (RaaS) subscriptions and 3D printing. While warehouses are still largely manual, the use of Automation Storage and Retrieval Systems (AS/RS) is growing.</p>

Production and Storage

Delivery and Recycling <p>Globally, automation at container terminals remains low despite evidence it increases throughput and reliability while reducing costs. Other technologies such as autonomous trucks, hyperloop transport, automated parcel sorting, and automated last-mile delivery technologies can produce further efficiencies in logistics.</p> 

<p>Globally, automation at container terminals remains low despite evidence it increases throughput and reliability while reducing costs. Other technologies such as autonomous trucks, hyperloop transport, automated parcel sorting, and automated last-mile delivery technologies can produce further efficiencies in logistics.</p>

Delivery and Recycling

Decision Making <p>The Internet of Things (IoT) is providing greater visibility over supply chains and enables better decision making through artificial intelligence (AI) tools. Greater connectivity from 5G enhances these capabilities, with quantum computing expected to further optimize supply chains. As sensor costs fall, the number of IoT-connected devices is expected to rise significantly.</p> 

<p>The Internet of Things (IoT) is providing greater visibility over supply chains and enables better decision making through artificial intelligence (AI) tools. Greater connectivity from 5G enhances these capabilities, with quantum computing expected to further optimize supply chains. As sensor costs fall, the number of IoT-connected devices is expected to rise significantly.</p>

Decision Making

Digitization and Documentation <p>Less than 10% of trade documents are fully digitized, but this is changing with the Digital Documentation Initiative (dDOC). Interoperable Digital ID systems and digital payments (including blockchain and tokenization) in the supply chain may bring further change, helping to improve supply chain resilience and increasing transparency to stakeholders.</p> 

<p>Less than 10% of trade documents are fully digitized, but this is changing with the Digital Documentation Initiative (dDOC). Interoperable Digital ID systems and digital payments (including blockchain and tokenization) in the supply chain may bring further change, helping to improve supply chain resilience and increasing transparency to stakeholders.</p>

Digitization and Documentation

Following pandemic-related disruptions, supply chains are in a state of transition. To avoid future backlogs and disruptions, many solutions are being explored including a switch from just-in-time inventory to just-in-case, as well as near-shoring and on-shoring. Technology can play a significant role in securing global supply chains via automation, software, and connectivity. New technology developments can be utilized from production to storage, delivery, and recycling. One of the more interesting observations about the COVID-19 pandemic era was the way in which it expanded words and phrases used in general conversation. Prior to the pandemic, it was unlikely that people routinely talked about the effectiveness of mRNA vaccines or how long a virus could stay viable on a shopping bag. And conversations about the daily trip to the supermarket suddenly incorporated phrases like “supply chain disruptions.” We started writing about supply chains back in December 2021 in our report Global Supply Chains: The Complicated Road Back to Normal. At the time, global markets were unbalanced. There was strong demand for goods, as many who were sitting home due to lockdowns or remote work were clicking on “Add to Cart.” On the supply side, border closings and lockdowns kept production sites shuttered. At the time, we noted that because there was more than one cause or event that had gotten us into that situation, one single solution would not relieve the stress. Then came the armed conflict between Russia and Ukraine, which added a new layer of supply chain pressure and new challenges for the global economy. Together with the issues from the pandemic, the supply chain management practices that prevailed in the years before the pandemic were questioned, especially whether global supply chain structures were robust, cost-effective, and reliable, and whether the demand for goods was relatively smooth and predictable. With vulnerabilities in supply chains exposed, we noted that many firms would feel the need to take the lessons from supply chain disruptions on board and adjust their operations. One of our suggestions was to embrace digitalization and technology more broadly throughout the supply chain. Although technology had been slowly added over the year into the production and distribution areas of the economy, we believe the recent supply chain disruptions are proving to be a catalyst for technology adoption. From robotics in manufacturing and automated guided vehicles in warehouses, new technologies in the production area of the economy can help to automate processes, increase productivity, and lower costs. In the delivery sector, technology can help decrease delivery times and novel transportation solutions can lower delivery costs. New technology such as artificial intelligence and machine learning can help companies bring products to market faster and more efficiently. Finally, digitization and documentation can help keep supply chains running smoothly. In our full report, we look at 20 different areas of supply chain technology that could help companies enhance their supply chain management practices. Some are technologies that are already used in practice, while others are more conceptual. All are likely to help lead to a more stable global supply chain. Hopefully supply chain technology can ensure that future conversations about the trip to the market will center around what’s for dinner instead of what’s missing on the shelves. Production and Storage <p>While humans still perform 72% of manufacturing tasks, the use of robots is on the rise, including Automated Mobile Robots (AMRs) and Automated Guided Vehicles (AGVs). Lower costs and higher speeds can be achieved through technologies such as Robots-as-a-Service (RaaS) subscriptions and 3D printing. While warehouses are still largely manual, the use of Automation Storage and Retrieval Systems (AS/RS) is growing.</p>  Delivery and Recycling <p>Globally, automation at container terminals remains low despite evidence it increases throughput and reliability while reducing costs. Other technologies such as autonomous trucks, hyperloop transport, automated parcel sorting, and automated last-mile delivery technologies can produce further efficiencies in logistics.</p>  Decision Making <p>The Internet of Things (IoT) is providing greater visibility over supply chains and enables better decision making through artificial intelligence (AI) tools. Greater connectivity from 5G enhances these capabilities, with quantum computing expected to further optimize supply chains. As sensor costs fall, the number of IoT-connected devices is expected to rise significantly.</p>  Digitization and Documentation <p>Less than 10% of trade documents are fully digitized, but this is changing with the Digital Documentation Initiative (dDOC). Interoperable Digital ID systems and digital payments (including blockchain and tokenization) in the supply chain may bring further change, helping to improve supply chain resilience and increasing transparency to stakeholders.</p> 

Following pandemic-related disruptions, supply chains are in a state of transition. To avoid future backlogs and disruptions, many solutions are being explored including a switch from just-in-time inventory to just-in-case, as well as near-shoring and on-shoring. Technology can play a significant role in securing global supply chains via automation, software, and connectivity. New technology developments can be utilized from production to storage, delivery, and recycling.

Improving Efficiency, Resilience, and Transparency

Following pandemic-related disruptions, supply chains are in a state of transition. To avoid future backlogs and disruptions, many solutions are being explored including a switch from just-in-time inventory to just-in-case, as well as near-shoring and on-shoring. 

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