Since being appointed Citis global head of treasury and trade solutions in mid-2011 Naveed Sultan has made it a priority to improve the banks technology, a move he says is crucial to ensuring transaction services remain a key plank of the banks global strategy. We are at a time of unprecedented change, driven by globalization and regulation, Sultan told Euromoney. Treasurers are facing unique challenges on multiple fronts: economy, regulation, liquidity and operational and supply chain management; technology is central to the solution. Our approach is to help clients adapt their operating models to those changes. As regulation and capital costs inhibit capital markets and investment banking, Citi is among banks putting greater emphasis on payments, trade finance, custody services and cash management. Citi Transaction Services, composed of treasury and trade solutions as well as securities and fund services, has been a beneficiary. The increased focus resulted in TTS revenues rising 6% in 2012 over 2011. Citi Transaction Services posted around $11 billion of revenue in 2012, compared with a total of $70 billion for Citigroup. Net income for the transaction services unit was $3.5 billion compared with $7.5 billion for the group as a whole in 2012.
A home bias among transaction service providers and the challenge of sustaining capital and investment in global banking infrastructure have created opportunities for Citi, says Sultan.
A crucial plank in the banks strategy has been the evolution of its longstanding CitiDirect interface into CitiDirect BE (Banking Evolution) for corporate clients, and specifically the introduction of new mobile platform CitiDirect BE Mobile. In 2012, Citis treasury and trade solutions team delivered more than 1,000 enhancements on CitiDirect globally and launched CitiDirect BE in 36 new countries.
CitiDirect BE Mobile connects corporate, public sector and financial clients to an array of mobile banking services, including the ability to initiate payments and authorize transactions.
Payment and other transaction-related authorizations, as well as intraday liquidity, are important functions because they allow executives to make decisions and action them while they are away from the office, Sultan said.
Take up for mobile has been significant, with value growth running at 7.24% weekly in 2012, and weekly volume growth of 6.84% (8% in EMEA). The service is now used in 88 countries (50 in EMEA) by around 6,300 clients, with $41 billion in transaction value processed using mobile capabilities.
Upcoming initiatives aim to add online investments to the current payments and trade services offerings on mobile, enabling treasurers to place overnight funds using mobile, as well as introducing capabilities to handle manually initiated fund transfers with reduced risk.
In the third quarter Citi expects to expand its mobile services to tablets in select countries. The service, aimed initially at senior executives, will include dashboard capabilities with analytic functionality.
Through a dashboard display, we intend for CitiDirect BE Tablet to allow senior decision-makers to act on various analytics and insights, Sultan said.
Some of the fastest growth in mobile services has come in countries where transactions were previously dominated by cash. In February Citi announced the launch in the Dominican Republic of Citi Mobile Collect, a new provider payment solution that makes it possible for the countrys 80,000 neighbourhood grocery stores and other small businesses to replace cash payments to their suppliers with mobile transactions.
The solution helps small businesses open a bank account and perform transactions, using mobile phones as the primary tool for merchants to complete financial transactions with providers who are Citi corporate clients. Companies using the service in its pilot stage include Philip Morris Dominicana and Frito Lay Dominicana.
Latin America and Asia are huge opportunities for us, and Africa is a significant opportunity, Sultan said. The opportunity in Africa is that mobile banking penetration is about 50%, while banking penetration is significantly lower, so you can deploy mobile technology to leapfrog an entire generation of banking infrastructure.
The growth of technology-based solutions is being driven by the evolving role of corporate treasurers, Sultan says. The job of the treasury has expanded significantly to focus on risk management, counterparty risk and liquidity and supply chain management, and our aim to make sure the technology-driven solutions can reflect the broadening of the role.
One area where the role of technology is also increasing is supply-chain finance. Citi wants to help multinationals looking to support suppliers by making sure invoices are paid more quickly, Sultan said.
In the UK, the bank has been mandated to provide supply-chain finance for the NHS with pharmacies.
|Naveed Sultan, global head of treasury and trade solutions, Citi|