Research @ Citi Episode 36: Beyond the Basics in Financial Services
Jun 4, 2025
In this engaging discussion, Keith Horowitz, U.S. Large Cap Banks Analyst at Citi, shares insights from the recent conference focused on disruptive trends in financial services. He emphasizes concerns around banks' payment systems and the rapidly evolving private credit markets. The conversation highlights the complexities of deregulation, examining its potential benefits versus the hype surrounding it. Additionally, they explore innovative cross-border payment solutions and the implications of current M&A trends in the banking sector.
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Banks' Disruption Risks
- Banks face disruption risk primarily in their payments franchise and private credit markets.
- Legacy payment infrastructure limits banks' ability to offer real-time, cross-border services, while private credit growth mainly impacts lending margins.
Private Credit's Impact on Banks
- Private credit has evolved from middle market non-investment loans to investment-grade corporate finance.
- While it takes share from banks, it is not an existential risk due to banks' fee revenues and deposits sustaining returns.
Finality's Payment Innovation
- Finality offers a real-time, 24/7 cross-border wholesale payments solution using central bank accounts.
- It improves banks' liquidity efficiency and customer service while leveraging legacy infrastructure.