For James Lee, Citi’s EMEA Sector Head Tech, Media and Telecoms, Treasury and Trade Solutions, the impact of the 5G revolution will be felt far and wide. The active participation at MWC of companies from not just the traditional mobile tech and infrastructure sub-sectors, but increasingly from associated sectors such as automotive, social media, e-commerce, FinTech and gaming, is testament to the potential transformational impact of 5G. It also means treasurers from many sectors will be at the financial forefront as businesses all over the world begin leveraging the opportunities and meeting the challenges set by this new age of communication.
This may sound grandiose, but the technological difference between 4G and 5G is night and day in terms of volumes of transmittable data and the latency of transmission, explains Lee – Gbps vs Mbps today. 5G adoption is heralding a new industry dynamic as many smaller, high-growth companies see opportunities through 5G, and some unexpected partnerships form among the major players.
Opportunities include greater potential for remote industrial monitoring systems, further development of autonomous vehicles, and the expansion from virtual reality (VR) to augmented reality (AR). The latter will, for example, be seen in the consumer space, in live gaming applications, and in real-time ‘tele-mentoring,’ such as 5G remote mentoring for complex surgeries between one surgeon and another, as was demonstrated at MWC this year at the Hospital Clinic of Barcelona.
Naturally, as new ground is broken, challenges arise. The telecoms industry is heavily regulated, says Lee, and recurring fees for 5G licencing and mobile ‘spectrum’ costs are a heavy burden for the mobile network operators (MNOs), who are also facing major capital investments to deploy 5G-capable infrastructure.
5G represents a conflicting opportunity for MNOs – by 2025, data consumption is forecast to grow 400% from 2018 levels; however corresponding revenue growth is forecast at 1%. Mobile telecoms is a huge enabler for commerce – data-driven value creation is estimated to be US$4.6trn by 2022; however it is forecast that 95% of the value created will be taken by over-the-top (OTT) end-user experience providers such as Alibaba, Amazon, Google and Facebook, with only 5% enjoyed by the MNOs.
Driven perhaps by such metrics, MNOs like Vodafone and O2 recently announced the sharing of 5G-enabling infrastructure in the UK; with partnering clearly in vogue, Mercedes and BMW used their MWC platform to announce a US$1bn all-electric autonomous mobility JV programme.
The huge growth in mobile wallets, particularly in developing markets, is also seeing some exciting new partnerships. African MNO giants MTN and Orange announced in November 2018 the pan-African JV, Mowali, enabling mobile wallet payment interoperability between MNOs, it brings together 100 million mobile money accounts and mobile money operations in 22 sub-Saharan African markets.
Treasurers in the midst of this evolving environment have the opportunity to deliver new efficiencies and to support the business, says Lee. This is seeing the rise in adoption of tools such as virtual accounts, and companies leveraging payments- and receivables-on-behalf-of (POBO and ROBO) structures to truly deliver efficient in-house bank structures. There is renewed focus too on working capital management, with sector players deploying trade solutions such as supply chain finance and sales financing solutions (to support sales growth) to great effect. Virtual Card Accounts (VCA) solutions are also providing working capital benefits as well as helping clients leverage detailed payments data to better analyse B2B spend.
Indeed, says Lee, a key focus at Citi is to give clients across all sectors more timely and usable data and insight. In launching CitiConnect API, for example, Citi is supporting the two-way flow of real-time payments and collections data between Citi and our clients, he says.
With innovative technologies facilitating the growth of new trading models, such as direct-to-consumer, and the expansion of instant ‘micro-payments’, there is increased pressure on treasurers to support the underlying businesses evolving needs. Fortunately, the quest to become more efficient in supporting these new models and financial flows is strongly buoyed by banks as they roll-out API and real-time payment concepts.
Citi is taking it further, states Lee, partnering with the fintech HighRadius for the delivery in 2018 of Citi Smart Match, a sophisticated auto-matching reconciliation tool for receivables that leverages artificial intelligence and machine learning. Recently Citi announced the development of a Digital Consumer Payments Business to enable institutional clients to collect from consumers through a wide variety of payment methods (including cards, e-wallets, Request-to-Pay and Open Banking), reflecting the growing shift towards direct B2C sales.
With these advanced tools, and the disruptive concept of ‘Industry 4.0’ much in evidence at MWC, notions such as technology-assisted financial inclusion in emerging territories gain ground. With the impact of Industry 4.0 and the 5G opportunity, Lee reasserts his belief that “treasuries should continue to develop a deeper understanding of and support for their underlying business.” With support from banks such as Citi, doing so will lead to the emergence of the next generation of “true business-enablers,” not just in tech, media and telecoms, but across the board.