Citi and Ant International join forces to provide enhanced FX payment solutions for airlines

Citi and Ant International have partnered on an AI-powered solution to enhance FX transactions for corporate customers in the airline industry. Through the partnership, Citi and Ant International are piloting the use of Ant International’s Falcon Time-Series Transformer (TST) Model for an enhanced FX risk management solution.

Developed with aviation clients as an initial use case, the solution aims to offer greater payment solutions for the airline industry, which processes billions of payment transactions annually. 

According to a report from McKinsey, the airline industry processes about 2.9 billion payment transactions annually, valued at $1 trillion. However, there is a lack of tailored solutions from the payments industry that enable airlines to lower their associated payment costs. 

Airlines spend over $20 billion annually on payment-related expenses, accounting for 3% of the industry’s total revenue. With airline travel set to continue growing, the joint solution combines Ant International’s experience with airline payments and Citi’s robust FX solutions to help the bank’s clients manage their FX costs more efficiently.

“The 30% hedging cost savings Ant International has achieved for the pilot airline customer show the cost efficiency that can be achieved with AI-enabled FX hedging. We are excited to expand the solution with Citi to serve more businesses and industries,” said Kelvin Li, General Manager of Platform Tech at Ant International.

Ant International’s Falcon TST Model is a transformer architecture-based big data model with close to 2 billion parameters. By integrating the latest time series forecasting algorithms, the TST Model predicts future data points by learning complex patterns from large historical data sets using AI technology. The model helps businesses improve the efficiency and accuracy of their cash flow and FX exposure forecasts, allowing them to reduce hedging and overall FX costs.

By pairing the Falcon TST Model with Citi’s Fixed FX Rates solution that simplifies the FX risk management process for businesses selling online in multiple currencies, the combined solution helps businesses mitigate the risks associated with currency fluctuations by securing FX rates for a defined period. 

FX rates are locked in and agreed upon, providing businesses with greater predictability in budgeting, pricing, and profitability. Citi’s Fixed FX Rates solution supports over 70 currencies and is widely used by clients across various sectors, including Airlines, Travel, and e-commerce.

With Ant International’s AI-enabled forecasting capability, businesses may utilise Citi’s enhanced solution to improve the accuracy of their sales and FX exposure forecasts. Ant International has already achieved an accuracy rate of more than 90% in the company’s own use cases and expects the solution to help the airline industry reduce its overall FX hedging costs as forecast accuracy continues to improve.

“We are constantly evolving our products and solutions to support new use cases built on our clients’ priorities,” said Sam Hewson, Global Head of FX Sales at Citi. 

“Citi’s Fixed FX Rates solution supports some of the world’s largest e-Commerce and Travel names, and this innovative solution sees us leveraging best-in-class technology capabilities in the broader ecosystem to accelerate go-to-market use cases,” Hewson added.

By combining Ant International’s Falcon TST model with Citi’s Fixed FX Rates solution, Citi has successfully completed FX transactions for one of the leading carriers in Asia, reducing the carrier’s FX hedging costs in initial live transactions. 

Looking ahead, the Citi-Ant International partnership has shown a broader trend of financial institutions embracing AI to address long-standing inefficiencies in complex industries like aviation. If successful, this pilot could serve as a model for similar applications in other sectors where large volumes of cross-border transactions are the norm.