Citi is preparing for the future by joining Lynx, Canada’s new high-value payment system

As Director, Head of Product Management, Treasury and Trade Solutions for Canada at Citi, John Davis played a central role in Citi’s onboarding to Lynx, Canada’s new high-value payment system. We sat down with him to learn about the experience, the benefits he foresees Lynx delivering to Citi’s Canadian clients as well as his outlook on the future of payments.

Tell us about your role at Citi, what is your involvement in payment products and services?
I’m Citi’s Product Management head for our cash management, commercial card and trade finance businesses in Canada. My role includes management of the roadmap for innovation for these businesses in Canada, as well as financial performance and risk management. I also regularly advise our largest clients operating in Canada on global best practices and key considerations for success in the Canadian market. In payments, my team and I have been working to roll out next-generation capabilities for e-commerce collections, automation of reconciliation, and to augment the digital client experience we offer. We’ve also been investing in our infrastructure to ensure that we’re well positioned to offer the largest companies in Canada capabilities that are truly world class.

Why is Citi becoming a Lynx participant? What benefits will Lynx deliver your clients?
Citi’s business is growing in Canada, so becoming a Lynx participant is a natural part of our evolution here. The modern financial market infrastructure that was deployed for Lynx was a catalyst for Citi’s decision to become a participant now. Being a Lynx participant will better position Citi for the future, for example, delivering the benefits of changes like ISO20022, which are coming for Canadian wires. Direct Lynx participation simplifies our architecture and enables us to deploy systems that are already used for high-value payments in other markets globally to support payments in Canada. Looking forward, Citi’s direct connection to Lynx’s high-value payment infrastructure is important to our high-volume e-commerce and financial institution clients and is important to our growth in that priority market segment. Joining Lynx as a direct participant will give us greater control of our payment queue and servicing processes which also benefits our clients.

Citi is a global financial institution. How does Lynx compare to high-value payment systems that Citi participates in other jurisdictions?
The application and infrastructure deployed for Lynx strikes a good balance between being both modern and having technological advantages relative to older high-value payment systems, while also being proven in several markets. Lynx API capabilities are an example of this. As an ISO-enabled system (in 2022), Lynx positions Canada well to be one of the first high-value payment systems to migrate to ISO XML wires. This will enable much richer structured data in payments to support new use cases and automation. Lynx has a well-thought-out risk management model that was built to meet modern standards for a systemically important payment system. Lynx liquidity savings mechanism and gridlock busting will increase efficiency and speed up payments for businesses in Canada.

What are you most excited about for the future of payments?
Technology is enabling new use cases and opening the value chain for payments. This increases competition and creates a very dynamic market environment where there is always something new for our clients. ISO is coming for payments and the richer data it supports powers the application of other technologies to enable efficiency, automation, and better decision-making.

E-commerce continues to accelerate. Payments are an important enabler for the online marketplaces and communication technology that is revolutionizing our society. It is exciting to be part of. I think online identity is an exciting and important space, which could enable a better and safer client experience. It is important as a control to reduce fraud and friction in the client experience.

Payments is a network business where there is both competition and collaboration. Citi has received good support from other banks in the industry in testing and preparing for Lynx. And we’ve worked with Payments Canada and our competitors to update rules to modernize payments in Canada. Upcoming changes will make the Canadian payments market more accessible to new participants, and this will help spur innovation, competition, and further payment network developments that really benefit Canadians.