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Kyriba and U.S. Bank enable real-time business payments - Industry roundup: 31 March

Account-to-account global e-commerce payments hit US$525bn 

In 2022, account-to-account (A2A) payments continued to grow globally, with the expansion of real-time payment systems helping to provide faster, safer and more convenient payments for consumers at the checkout, according to the Worldpay from FIS Global Payments Report 2023.

The report examines how consumers pay today in-store and online across 40 global markets. Findings from the 2023 report show that in 2022, there were almost 70 real-time payment (RTP) schemes providing high-speed payment rails that helped drive A2A payments to account for US$525bn in global e-commerce transaction value, up 13% from US$463bn in 2021.

A2A payments already have business-to-business (B2B) and person-to-person (P2P) use cases. This research shows that A2A is increasingly a force in person-to-business (P2B) payments. A2A payments flow directly – and often instantly – from a consumer's bank account to a merchant's account, helping to drive down the cost of acceptance for merchants.

“It’s not hard to see why account-to-account (A2A) payments are gathering momentum. While it is significantly more convenient for consumers it also brings a host of benefits for merchants,” said Jim Johnson, President of Worldpay Merchant Solutions, FIS. “A2A payments can reduce the cost of payment acceptance in comparison to cards, while offering the instant settlement of funds and boosting their cash flow. Some merchants are even offering customers incentives to pay with A2A, which is certainly helping it gain traction.”

The growth of A2A in the US mirrors the global trend, with A2A accounting for 9% of e-commerce transaction value in 2022. This is projected to grow to 11% in 2026, fuelled partly by consumer use cases arising from the 2023 launch of FedNow, the new real-time payments network, which will join existing US real-time payment networks RTP from The Clearing House and Zelle.

Global payment trends:

  • The explosive growth in global e-commerce during the first two years of the pandemic cooled in 2022, but only slightly, with global e-commerce transaction value growing by 10% from 2021 to 2022 to reach nearly US$6 trillion.
  • Across the globe, consumers’ use of credit cards remains strong, with credit card transaction value growing 6% in e-commerce and 12% at the point of sale (POS) from 2021-2022.
  • Credit demand is also broadening to alternative credit products: credit card-linked digital wallets, buy now pay later (BNPL) and other POS financing offerings. BNPL accounted for 5% of global e-commerce transaction value in 2022 and is projected to rise to 6% by 2026. POS financing – including BNPL, retailer financing and bank financing – represented 2% of POS transaction value in 2022, a share it is projected to maintain through 2026.
  • Digital wallets continue to be the leading payment method globally, accounting for 49% of transaction value in e-commerce and 32% at the POS in 2022. 
  • Digital wallets are projected to remain the leading payment method across e-commerce (54%) and POS (43%) in 2026, with fintechs, banks, neobanks, super apps, Big Tech and device manufacturers all competing as wallet providers.
  • Cash use continues to fall globally, from 26% of POS transaction value in 2019 to 16% in 2022. By 2026, cash’s share of global POS transaction value is expected to fall to less than 10%.

US payment trends:

  • US consumers continue their long-standing attachment to cards, which accounted for more than two-thirds of POS transaction value in 2022 (credit cards with 40%, debit cards with 31%).
  • Debit cards (20%) and credit cards (30%) comprised half of e-commerce spend in 2022.
  • Despite the popularity of cards overall, digital wallets became the single leading payment method among US consumers shopping online in 2022, with 32% of e-commerce transaction value.
  • US consumers are turning to wallets but not turning away from cards, with 31% of US respondents saying they funded their wallets with credit cards, while 33% indicated funding by debit card.

“Despite the effects of inflation on consumer spending power and the threat of a global economic slowdown, e-commerce has continued to grow in all regions and markets,” Johnson added. “Innovation in payment solutions is running at a hot pace right now, greatly improving the experience for customers, reducing headaches for merchants, and unlocking new avenues for growth. Meeting consumer demand for advanced payments features now can help businesses thrive through economic troubles, while potentially gaining market share from competitors.”


Kyriba and U.S. Bank enable real-time business payments

Kyriba and U.S. Bank have announced they are working together to ease the process of enabling real-time payments for businesses. With new API-powered payment connectors, clients of both U.S. Bank and Kyriba can now send instant payments to vendors, customers, and employees from their U.S. Bank accounts within their existing Kyriba dashboard. For clients of U.S. Bank and Kyriba, these connectors reduce the time and resources required to enable new payment methods.

In addition to instant RTP Network payments, joint U.S. Bank and Kyriba clients leverage the API connectors to send Zelle payments. The solution also gives businesses real-time visibility into bank account balance and transaction reporting, improving cash flow management.

“The partnership between Kyriba and U.S. Bank enables our customers to reduce payments costs, strengthen supplier relationships, and improve cash visibility and forecasting,” said Bob Stark, Global Head of Market Strategy at Kyriba. “Combined with Kyriba’s real-time fraud detection and account validation, Kyriba and U.S. Bank are delivering secure and compliant payment processing that operates at machine speed.”

“We’re focused on streamlining the process of enabling instant payments for our clients to help them quickly experience the competitive advantage that comes with delivering payments in real-time, 24/7,” added Anu Somani, head of global payables and embedded payments, U.S. Bank. “This is one of many ways we are bringing embedded payments to the market. With real-time APIs, we’re meeting our customers where they are, easily embedding our payment solutions directly into their existing systems.”

Bank API integration promises to streamline bond pricing indications for treasury teams

InterPrice Technologies, a Nasdaq Ventures-backed treasury capital markets platform, has announced it has launched its bank API connectivity to connect corporate treasury teams with their banking relationship partners instantly.

This connectivity transpires from a broadening acceptance in the banking community to adopt more API technology and replace legacy forms of bank connectivity. Corporate treasury teams are also increasingly using API technology to manage cash and payments. 

Using this API connectivity solution, InterPrice says corporate treasury teams can now receive indicative pricing indications across multiple products directly to their InterPrice platform. CFOs and treasurers can then access funding costs from relationship banking partners instantaneously.

The company backed up its claims about the solution with a couple of testimonials from corporate treasurers:

“Having been one of the earliest adopters of the InterPrice platform, we are very pleased to see instant and direct connectivity with our relationship banks,” said Jeff DeMars, Treasurer, Nutrien Ltd. “We are excited to see this scale across the banking landscape around the world.”

“The testing and implementation by both Goldman Sachs and InterPrice was a seamless process completed within less than 24 hours,” commented Dan Morrell, Treasurer, Keurig Dr. Pepper. “Their shared dedication to transforming the way corporate treasury teams receive funding data speaks volumes to their leadership in bringing more efficient workflows to the treasury community.”


Businesses are investing for growth despite a tough economic climate

Businesses have more confidence in their own growth than in the health of the broader economy, according to Stripe’s 2023 Insights Report. The report is based on a survey of 2,500 business leaders from nine countries. A vast majority (80%) expressed pessimism about the economy’s state - a consistent finding across business models, location, and company size. Businesses ranked inflation as their top concern, and 72% reported that their operating costs were higher than a year ago.

Against this backdrop, companies are investing in new products and revenue streams - not simply cutting costs. Most are turning to payments tools to grow their revenue while also looking to automate financial tasks to rein in spending. Buoyed by these opportunities, 65% of survey respondents said they are confident about their growth in 2023.

“In past slowdowns, businesses that succeeded made bold bets while cutting down on waste,” revealed Emily Glassberg Sands, head of information at Stripe. “That’s not easy to pull off when money is tight - but the internet means many more businesses can use that playbook this time around,” 

Two-thirds of businesses said they intend to respond to inflation by reducing costs. At the same time, companies are selective about where they cut. Fewer than 20% of respondents plan to cut spending on core products or services, and only one-third are prioritising hiring freezes. Instead, businesses are slashing operating expenses: 51% prioritise negotiating better rates with vendors, and 70% plan to cut the number of software providers they use.

Many see this decision as a strategic move. When asked to name the top reason they are consolidating software providers, businesses were as likely to cite faster access to data as they were to name cutting costs.

These responses are consistent with business leaders’ frustration about the operational burdens their companies face. Some 60% said their finance teams spent more time on operational work and less on strategy than they did three years ago. In particular, businesses are moving away from building their own payments software. Half of the survey respondents who built their own payments software regret the time and cost involved, and nearly three-quarters said their in-house products led to reduced conversion or higher operating costs.

The 2023 Insights Report compiled survey findings from 2,500 founders, enterprise executives, heads of payments, and CFOs at major businesses across Australia, Brazil, France, Germany, Japan, Mexico, Singapore, the UK, and the US.


Evolving hedging for a quantum future

QC Ware and JPMorgan Chase have completed a study of quantum ‘deep hedging’, paving the way for future increased risk mitigation capabilities in financial services. In a new paper, the pair examined two questions on how the practice of deep hedging - reducing risk for a portfolio utilising data-driven models that consider market frictions and trading constraints - might be improved with quantum computing. 

The researchers first examined whether quantum deep learning could improve classical deep hedging frameworks. Then, using quantum reinforcement learning, they studied whether a new quantum framework could be defined for deep hedging.

The study found that deep hedging on classical frameworks using quantum deep learning enabled models to be trained more efficiently. The research, conducted on Quantinuum's H1-1 quantum computer, also demonstrated the potential for future computational speed-ups, which could be implemented on noisy intermediate-scale quantum (NISQ) hardware. 

Deep hedging on new quantum frameworks also enabled quantum value functions to:

  • Efficiently learn the expectation and distribution of returns.
  • Offer improved performance via a quantum actor-critic reinforcement learning model.
  • Appropriately train quantum policies. 

The quantum application could offer improvements for deep hedging in both classical and quantum environments - it leverages quantum machine learning methods to improve at times accuracy and trainability on high-performance GPU hardware, which will be helpful in financial services as quantum computing becomes more commercially accessible. 

“We are taking deep hedging to its next logical evolutionary step,” said Iordanis Kerenidis, head of Quantum Algorithms at QC Ware. “The results achieved with JPMorgan Chase demonstrate the huge potential and applicability of quantum machine learning, both today, by using quantum ideas to provide novel models with classical hardware, and also leveraging the continuously more powerful quantum hardware we anticipate in the future.”

“This work helps to pave the way for the bank to incorporate quantum computing into its deep hedging.” added Marco Pistoia, Managing Director, Head of Global Technology Applied Research, JPMorgan Chase. 


Deutsche Bank, Morgan Stanley, U.S. Bancorp and Wells Fargo join Versana’s digital data platform

Versana has announced the addition of four new banks – Deutsche Bank, Morgan Stanley, U.S. Bancorp and Wells Fargo – as investors in its digital data and technology platform that it hopes will transform the $5 trillion syndicated loan market. The financial institutions have invested capital, intend to contribute loan data and will become platform clients. 

In this funding round, Versana raised US$40m of new equity capital, which includes follow-on investments from founding investors Bank of America, Citi and J.P. Morgan. 

Versana was created to address the US leveraged loan market’s operational inefficiencies and technological fragmentation. The platform, which launched late last year, is the market’s first real-time, multi-tenant solution centralising corporate loan data flowing directly from administrative agents’ books and records. By providing greater transparency into loan level details and lender portfolio positions, the platform facilitates straight-through processing and, it says, long-term scalable market growth, enabling participants to convert from legacy manual processes to a self-service platform.

The addition of three more administrative agents – Deustche Bank, Morgan Stanley and Wells Fargo – is expected to increase Versana’s future deal coverage for all market participants. U.S. Bancorp is Versana’s first buy-side-focused investor.

“Converting from analogue to real-time digital processes through a transparent and centralised platform will greatly improve data quality and streamline system fragmentation,” said Cynthia E. Sachs, Founding CEO of Versana. “With the addition of our four new investors, we expect to have more than 75% of US loan market deals on our platform in real-time, an enormous achievement considering we launched the company only one year ago.” 


Citi brings new lending opportunities to Sweden 

Citi Securities Services has announced Nordnet AB, a pan-Nordic digital platform for savings and investments, as the first Swedish client to start lending through its Citi Securities Lending Access platform. The solution should enable Nordnet to expand its securities lending programme to new markets and client segments.

The solution digitises and automates the entire securities lending lifecycle. Co-sponsored by Citi Ventures' D10X programme, Citi Securities Lending Access combines the bank’s lending platform and fintech technology from Sharegain to offer clients lending programmes tailored to the needs of underlying individual investors as well as traditional lenders. 

The solution looks to democratise the securities lending industry by enabling access to a broader spectrum of investors through their existing banks, brokers or investment advisers. Citi says it also brings new pools of untapped and diversified securities to borrowers for the first time.

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