Podcast: Inside Spring by Citi embedded finance, payments services

Citi’s end-to-end digital payments, Spring by Citi, is looking to expand its use cases in payments acceptance and foreign exchange by tapping Citi’s consumer bank — the U.S. Personal banking business, Managing Director and Global Head of Spring by Citi Vineeth Subramanyam tells Bank Automation News on this episode of “The Buzz” podcast. 

Spring by Citi launched in 2020 and has a global presence in 23 markets. The payment acceptance and merchant acquiring service sits inside the $1.7 trillion bank’s Service business and is built on Citi’s Services payments network.  

The solution is to use the consumer bank to:  

• Improve payment approval rates in markets where Citi is also the issuer; and 

• Connect with the bank’s foreign exchange team to determine how Spring can serve clients with cross-border needs. 

“There is an opportunity there for us to really work with our consumer banking colleagues to dig a little bit deeper and solve for why certain payments are getting declined,” Subramanyam says. 

Listen to “The Buzz” to hear Subramanyam reveal how Spring is tapping the consumer bank to expand its services. 

Subscribe to The Buzz Podcast on  iTunes, Spotify, Google podcasts, or download the episode. 

The following is a transcript generated by AI technology that has been lightly edited but still contains errors.

Vineeth Subramanyam 09:19:44
absolutely first. First of all, let me start by saying, Thanks Whitney for having me on it’s a pleasure to be speaking with you today. So I’m Vineet Subramaniam. I’m the Global Head for the spring business at Citi Spring. Spring by Citi is our payment acceptance and merchant acquiring service. We are part of the payments team inside Citi, which sits within the services organization. I joined Citi a couple of years ago after having spent a number of years at visa. I was most recent, recently in the cyber source division of visa, where I used to run the payments product group, all the connections into payment processors, alternative payment networks and so on. Also spent time in a couple of other teams inside visa on the innovation side, which were bringing to market products like Visa Checkout. And then in between, there spend some time advantiv on the acquiring and processing side of the value chain. And at this point, I’d spent time at a payment network, at a payment gateway on the acquiring processing side, at a so sort of a wallet product, product with Visa Checkout as well. The one place where I hadn’t worked was a big global bank, and that’s, that’s what brings me to the city in my current role at Spring.

Well, now you’re checking that box, yes, exactly.

Whitney McDonald 09:21:19
Well, maybe we can break into spring a little bit more here.

Vineeth Subramanyam 09:21:22
So in a nutshell, what it is is we enable our clients to accept payments in a variety of different forms, whether it is card and non card payment methods. So think, think of ACH local alternative payment methods in various markets around the world. In addition to cards, we’re present in about 23 markets around the globe. We’re always thinking about which markets to add, which payment methods to add, depending on feedback that we get from clients, and taking a look at market dynamics as well, we sit within the payments or organization, and just to give you a sense of how how that fit is at the payments level, we want to serve clients across the entire journey of their payment flow. We had shared this in detail in our in our investor day last year as well. We call it the Accept, hold, pay continuum. So accept, certainly referring to payment acceptance. That is where spring sits. We’re right at the front end of that continuum, going into hold, which is where the funds are coming in. They go into a city account. There’s, there’s a lot of typical banking services that we offer there with cash and treasury management and then going out to pay which, which is paying out from that account to a variety of constituents, whether it’s suppliers, part, partners, vendors, customers, etc. So that’s a little bit about spring and sort of where we sit along that continuum, I think, in terms of our typical client, sort of ideal client, we do serve a variety of use cases there. Our ideal client, in very simple terms, is any client to the bank that wants to accept payments directly from customers, and we serve clients that are trying to set up a new online presence. There’s certainly a class of those clients where they want to host a checkout solution. They want payment gateway, payment processing and payment acquiring all in one. There are those clients that are maybe looking to expand to other markets around the world. They may be accepting payments in certain markets today, and they want to expand somewhere else. With our Global Press presence, we’re able to help help them consolidate providers and come come to us. We have a couple of other use cases as well, where clients are looking to improve their payment approval rates. They’re they’re trying to merge things with their FX solution. And so on. So any client where we can take the best of what we have in terms of city client, city assets, in terms of the bank, and marry it with payment acceptance would would be a great candidate for us.

Whitney McDonald 09:24:38
Great. Thank you. Now I understand that spring launched in 2020 and I know that you just mentioned, it’s global, it’s grown. There’s different use cases. Maybe you can kind of tell me a little bit how spring has changed or adapted since 2020 How have you grown or changed or added?

Vineeth Subramanyam09:24:57
Yeah, sure. So maybe I’ll just take a step back to how it started to begin with, and then come come back to speaking about the journey to today. So spring really came into being in 2020, so this, this was right around the panda pandemic timeframe, and it really started with the observation that there were a lot of our clients that needed to go direct to customer, and this is a trend that we saw going up and up. And certainly, e commerce is growing year on year, and it’s a massive space, and what we wanted to do is really serve our clients where they needed us, and you can certainly think about your typical online retail plays, but there are clients that were fairly new in the space too, and having to figure out on the fly on How to operate in this reality. And since then we have slowly, steadily added countries, we have added coverage, we have added payment methods, and we have expanded the types of clients that we serve as well, so we serve B to C as well as B to B. And we’ve changed also and adapted in the way that we want to come across to clients where they need us. So there are certain clients that want a full end to end solution, where they look for payment gateway and a payment processor, acquirer. There are those clients that are using an existing gateway, or they or they may be connected to a commerce platform, and they don’t really need the hosted checkout solutions, but they only need the acquiring service service, and we can certainly step in and meet them there. And the advantage in why they choose to work with us is really the tie in to all the other things downstream that they get through the banking service, services at Citi, with reporting reconciliation tied to their cash and treasury management, perhaps other services that that they use on the FX side and so on.

Whitney McDonald 09:27:17
Now, when determining what to add, or you know when to add a different consumer to serve, when to determine where to add, you know, a different market to serve, at a different country to serve. I know that you mentioned data goes into that. Can you break that down a little bit more sure?
Vineeth Subramanyam 09:27:36
So what we really do is a lot of this is driven by client commerce conversations. We’re very much a client centric product. We have lots of commerce conversations with clients, and this is where the interconnectivity of the different services that we have at city really comes, comes into play, where we might hear some thing from from a client in a certain form, or a cube QBR for a certain product, and we bring that into into spring, and that becomes a feeder for us to figure out what we want to build or where we want to go. We’re always taking a look at market trends. So we do have our team is struck structured by cluster as well. So I’m the Global global head, but I do have cluster heads in my team that really take a look at what is going on in a cluster basis, and very much in tune with what are the types of payment methods that are up and coming. So if you just take a look at the last five years we have seen tremendous growth when it comes to certain other types of payment methods. Of pics in Brazil for for instance, took off during during this time. UPI is another one that has really taken off as well. Prompt pay is a very interesting payment method in Thailand, and you could, you could go on and on with different payment types, different use case, cases that have taken off. And we really try to marry all of those things with what we are hearing directly from our clients to a. To inform our roadmaps.

Whitney McDonald 09:29:24
That’s a good segue into roadmap. Maybe you could tell me a little bit about what your priority is for this year, what you’re working on with spring, maybe what you’re, you know, bringing to clients based on those conversations, based on what you’re seeing in those markets.
Vineeth Subramanyam 09:29:40
Yeah. Yeah, so, and again, our road roadmap is very much defined by what we hear from our clients, and the way we think about it is, what can we be doing at the end to end of the day to make it a great experience for clients to accept paying payments through us and that really translates into the entire product stack. So when you’re thinking about the product stack, we think about it almost as layers of cake, right? So right at the bottom of that is the foundational elements of payment connectivity. So what types of payment methods we want to add? Which countries do we want to expand to? What’s the payment reach there? Then stepping up from there is the platform services that we want to include there. So recurring payments, subscription payments, Fraud Management Solutions, really thinking about the different use cases that we want to serve, and what’s the impact of that on the types of services that we want to enable. And then sitting on top of that, maybe the entry point into into the stack, is our API of how clients can connect into into us, either through an API or through ISVs or commerce platforms that they work with that then connect to us. And as we think about the next year and beyond, we’re always thinking about where, where are we spending our dollars? Are we spending enough across the board here, and very much thinking about it into in terms of an MVP type of construct, where it is it is better for us to solve for all three layers of the stack for certain segments that we want to go after, versus becoming very good on the reach, but very light on some of the other things, and those are the things that inform our roadmap.

Whitney McDonald 09:31:47
Now, in terms of adoption, is there a certain segment, whether it’s direct to consumer, maybe the business side, that you’re seeing more use of spring, further adoption,

Vineeth Subramanyam 09:32:04
yeah, so maybe, if I can take that another way, what types of clients are really finding our service? Service really meaningful? I think there’s, there’s a few different types. I would say. Number one, any, any client that wants a global reach where they they may be a client that are in multiple markets around the world, and they don’t necessarily want to go and create relationships in every single market they they want to come to a player that is a large global player that has a lot of different sort of levels of expertise in various markets. So they certainly find our solution appealing. I think, I think another class of clients that find it very appealing are those that are in markets where they where they see a sort of a strong need to improve the payment performance. So when, when, when you’re thinking about approval rates, because city does issue cards in certain markets, and there is an opportunity there for us to really work with our consumer banking colleagues to dig a little bit deeper and solve for why are certain payments getting declined, or why? How can we help clients really improve their approval rates in certain mark markets where we are the issuer as well. So we so we have clients coming to us and asking us about that, saying, hey, city really issues a large Porsche portion of the volume that we see. Can Can you help us figure this out? There are clients that really benefit from the whole end to end service as well. So these are existing clients of the bank that, again, want the ease of turning on another partner that can bring in payments and help them do the. Reporting and reconciliation. So they don’t need to do it on their end, where they may be getting reports from multiple parties, and they’re having to stitch that together. But we can do that for them if we are there in the beginning, the middle and the end. And so those would be the types of clients, in terms of just market verticals. Again, we have gone sort of beyond just just the typical on online reach retail. We have served clients in the insurance space. We’ve served clients in various other markets as well.

Whitney McDonald 09:35:01
Now I kind of wanted to go back to one of the things that you mentioned about the entry point or the APIs, is that something that you’re working on, or that’s already in place, or what? What were you talking about when you were mentioning that? Was that a future statement or improving access to the tech?

Vineeth Subramanyam 09:35:20
Yeah. So we, we do. We do have an API right now that clients can connect to but as we think think about the future, and as we think about bringing in other assets of the bank, that is an area that we’re always improving on in the future, future where clients can connect to us and gain access to more in the future, future. So similar to how you might see that there’s a version one of the API, and then there’s a version two and version three, and each version gives you better, bigger things. That’s sort of how we’re think, thinking of evolving that.

Whitney McDonald 09:36:02
Okay, great. Thank you for clarifying any, any recent, you know, additions or growth that you’ve announced, or that are, you know, worth mentioning that you know, we’re live in this area or that area.

Vineeth Subramanyam 09:36:17
So we are live again in 23 Mark markets. It’s a fairly long list of countries, but these are all the countries that you can think of that drives the majority of E commerce volume out there. But I’ll mention a couple of sort of use cases to give a flavor for the types of things that we’re doing with clients. What, what we really strongly believe in is we do have a bias to co creating with clients. So these, these are not necessarily there. There are certainly a bunch of things that are off the shelf, that are available, but there are certain things that we figure out during conversations with our clients, and we’re having commerce conversations on how to really, again, improve the approval rates. So we’re working with clients where we go back to our Consumer Bank. We’re digging deep into the declines for certain trends transactions, and find finding a path there for the for them to improve that. We’re also connecting strongly with our FX teams to understand how we can serve clients that have a cross border need where they may have customers that are coming in from another country shopping at their website. And there’s, there’s a nice, strong sort of tie in with our cross border FX assets and payment acceptance as well. So those are the types of use case, cases that we want to really sharpen and really bring into the mix as as we think about the future.

Whitney McDonald 09:38:12
Now, maybe we’ll take this full circle here and kind of go back to what you were mentioning at the top of the call. You know what types of payments are growing in different areas. We spend a lot of time covering instant payments. There’s obviously a demand there. So maybe we can kind of end with just a big picture question here on, you know, where, where is embedded finance headed? You know, what are, what are clients really asking for? Are we on the cusp of something different? You know, what’s, what’s the demand here in the embedded finance space, and where is it headed?

Vineeth Subramanyam 09:38:43
Yeah, so I think, gosh, there’s so much that’s going on here. I don’t know where to begin, but I

Whitney McDonald 09:38:52
think I don’t have one specific answer.

Vineeth Subramanyam 09:38:56
So, so, so I think if, if I think about what the world will look like, let’s say five to 10 years. I think, I think I heard someone say once that people tend to overestimate what will happen in the next year, and they try to, and they and they sort of tend to underestimate what will happen in five or 10 years, right? And I think I think much more will change in the next. Five to 10 years, then we think it will. And one area, area that always catches my attention more than anything else, is AI and what’s happening with agentic commerce, and if you’re thinking about the world of sort of automation, and every everything that’s happened in the last, let’s say, five to 10 years or 15 years, everyone remembers when they took their first ride in a ride hailing app, and they ordered the ride, they sat inside, they got out, and they didn’t have to pay, and everything just sort of sort of happened automatically in the background. There’s a lot that’s happened since then into in terms of the subscriptions economy, I think a lot of sort of our lives that have been autumn automated since then as well. And if you think, think about the future. You might have a world where you’ve, you’ve got AI agents that are placing order orders on on your behalf. You have other assistants that are really taking care of embedded pain payments. And you can, you can think of sort of card on file, credential on for on file, all of, all of these, these things with tokenization really coming into into play that makes it very seamless for people to conduct their every, everyday lives and not really have to think about payment as a distinct event that they need to do, but this just happens in the back background. It’s invisible, and of course, it comes with its own challenges and opportunities as well, but that is part of the fun.

Whitney McDonald 09:41:18
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