Citigroup
Last November, Euromoney published the results of a survey of 1,061 corporate treasurers asking them to identify the best banks for providing international and domestic cash management and payments services. Bank of America was the top-ranked bank in North America and fourth in the overall ranking of international cash managers; ABN Amro won in western Europe and ranked third overall globally; HSBC was top in Asia and second overall. But the top-ranked global cash management bank ? by a healthy margin and for the third year in a row ? was Citigroup.
Other banks might lead in their home region but none matches Citigroup?s global reach. ?The biggest differentiation between us and everybody else is that we are physically on the ground in so many more countries with business that we own manned by people who work only for us,? says Paul Galant, global head of cash management. ?And that is something I wouldn?t trade for anything.?
Galant sees his challenge as trying to build on something already working well. He is striving to redefine the role of cash management provider into that of a trusted strategic adviser to Citigroup?s corporate customers. ?The large corporations operating in many countries with which we deal are fighting for efficiency, consistency and, above all, control of financial information as never before,? Galant says, ?because today they are operating in the most stringent regulatory environment they have ever seen.?
The bank is testing the definitions of a cash management business and exploring further applications for its core technology. Galant says: ?CitiDirect is our global platform for the initiation of transactions. It has a universal connector kit which makes it simple for companies to connect to and use as a global clearing house of data to better manage their financial information and working capital. But the value of this platform for our clients may increase exponentially beyond that.?
He cites the example of a large pharmaceuticals company that mandated Citigroup towards the end of last year to lead and arrange a global syndicate of banks belonging to e-commerce authentification platform Identrus to re-engineer and transform its drug development process, specifically in relation to clinical testing, so as to cut the costs of testing and improve speed to market.
What have clinical trials for drugs to do with cash management? ?As a financial institution we are in the identity business,? says Galant. ?When someone initiates a payment over our system we?d better be sure we know who that person is. Similarly, pharmaceutical companies need to be able to identify the outside party ? from clinical research organization to a physician ? that may have submitted data during a clinical trial. We have tools for digital certificate management that can confirm the identity of that information provider. The traditional process for pharmaceutical companies in managing this data is quite cumbersome and antiquated and generates huge volumes of paper. Our system might shave hundreds of millions of dollars off the cost of bringing a new drug to market at a time when pharmaceutical companies are facing great scrutiny over the costs of drugs.?
Galant is trying to push the envelope for what the bank?s cash management systems can do, though he won?t do so without a client ? such as the pharmaceutical company ? to foot the bill. ?What we have is a platform not a product,? says Galant. ?The value of our operational know-how is that we can take huge amounts of information from customers, clean it, make sense of it and deliver it.?
That platform can help companies frustrated that they have surplus balances that are not being put to much use in one country and short-term borrowings in another. Increasingly, it will help CFOs who are being asked to sign off quarterly financial statements to have greater certainty about the underlying financial data on which they are based. Galant predicts that more and more corporations will consolidate their core cashflows with a small number of big banks. ?I would not want to have to compete with us on product or technology,? he says. ?In North America, for example, we?re not burdened by the legacy systems of some of our competitors. We?ve built what I feel is the best system, we built it recently and now we?re going to scale the heck out of it.?
