Treasury Today Country Profiles in association with Citi

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Relentless relevance in a rapidly changing world

Rajesh Mehta, Asia Head of Treasury and Trade Solutions, Citi

Just under a year into his role as head of Citi’s Asia Pacific Treasury and Trade Solutions franchise, Rajesh Mehta offers his regional insights. He explains how Asia is entering a new growth phase, one that offers a wealth of opportunity for corporates to grow their businesses and revenues.

Rajesh Mehta

Asia Pacific Head, Treasury and Trade Solutions
What have been your initial impressions since beginning your new role in Asia Pacific?

Over the past three decades, Asia Pacific has been the world’s most dynamic region. Its dramatic economic growth and increasing population have provided corporates with an unrivalled opportunity to grow their businesses. Many multinationals have taken full advantage of this opportunity, with Asia now accounting for a large portion of revenues.

Today, we stand on the cusp of a new dawn in the region, one defined by changing economic, demographic and technological forces. Forces that are unveiling another layer of untapped growth potential.

Crucial to this opportunity is the region’s growing middle class, with an insatiable appetite for consumer goods, technology and services. This is transforming the global consumer landscape and by 2020 we expect that China, India and Indonesia will represent the largest, third largest and eighth largest middle-class markets in the world.

Increasing internet usage and the penetration of ever-cheaper connected mobile devices are enabling access to this thriving consumer base by corporates. As a result, eCommerce is rapidly becoming the primary sales strategy for companies seeking to grow in the region. To put this opportunity into perspective, the value of eCommerce here is expected to be US$2.6trn by 2020.

To meet the changing needs of Asia’s thriving consumer base, multinational corporates are transforming their business models as they look to become local players in the markets in which they operate. At the same time, we are seeing Asian corporates taking advantage of this opportunity, moving out of their home markets and becoming regional and multinational champions.

In both cases, Citi is well placed to support corporates’ growth ambitions. Asia is a vital region for the Citi franchise and the bank has been active here since 1902. It has a deep presence in all the key markets. We are therefore equally adept at supporting multinational clients with their localisation strategies and eCommerce strategies as we are at helping emerging Asian champions scale and tackle the challenges of doing business across multiple markets.

You mention the challenges of doing business across multiple markets. How do these challenges in Asia manifest themselves?

The challenges that many corporates currently face go back to the geopolitical changes witnessed over the last few years. The world order is changing. Be this because of Brexit, Trump, security issues in the Korean peninsula, or China’s increasing geographical influence (for example via overseas direct investment and Belt & Road initiative); all have a ripple effect that impacts corporates and the real economy.

One of the first areas impacted by geopolitical instability is trade. Indeed, since the financial crisis, geopolitical instability has been present in every part of the world. As a result, global trade has failed to recover, as many initially thought it would, in the wake of the crisis. Data recently released by the ICC is consistent with this trend. It highlighted that 2016 was the weakest year for global trade since the crisis. The same year also saw half the UK population vote for Brexit and the withdrawal from the single market, essentially shunning free trade in Europe.

The multi-faceted and constantly evolving nature of these challenges means that we have had to redefine what it means to be a transaction bank.

Asian trade is not immune from these global trends, but the impact is less acute. This is primarily because of the large volume of intra-Asia trade. This has forged a dynamic and vibrant trading ecosystem encapsulated in the region. Intra-Asia trade is also something that we expect to see grow in the coming years, despite geopolitical uncertainty, or because of it, as corporates diversify and look to take hold of opportunities in emerging markets such as Vietnam and the Philippines.

The ripple effect of geopolitical instability and economic uncertainty is creating challenges for corporates in other areas, however. Most notably, it is forcing regulators in some markets to put in temporary measures that stop, or limit, a corporate’s ability to repatriate cash. This has been an issue for many of our clients who have grown used to the increasingly liberalised nature of markets such as China and Malaysia; both of whom have recently retightened currency controls.

Volatility in currencies, interest rates and commodities, created by the political and economic uncertainty, is also creating challenges for corporates. This volatility is making it near-impossible for corporates to accurately predict their cash flow, making it hard to ensure that liquidity is available where needed.

What is Citi doing to help its clients overcome these challenges?

The multi-faceted and constantly evolving nature of these challenges means that we have had to redefine what it means to be a transaction bank. No longer can we simply be a provider of banking products and services; today we must be a partner to our clients, deeply embedded in their operations, in every market they choose to operate in.

In practice, this means a few things. Firstly, we must ensure that we provide them with the tools that give them visibility over the exposures they face. Then together we can work in partnership to develop solutions and strategies to manage these risks.

Second to this, we must make sure that we are a valued source of real-time information for our clients. This is about taking our observations, knowledge and insights from all the markets that we operate in and serving these up in a contextualised and actionable form to our clients. One of the most effective ways that we have done this is to play back the data we have on our clients and their peers, to share insights on what is industry best practice, and what our clients could do to drive greater efficiency and cost savings. Also, in an environment of fast-paced local regulatory change, responding to market volatilities and geo-politics, we serve as the voice of local nuance.

The objective of these combined actions is to make sure that we remain relevant to our client base in this rapidly changing environment.

Why is digitisation critical for Citi and what is the bank’s digital philosophy?

I firmly believe that this is an unequalled moment in history for transaction banking. A decade on since the financial crisis, every bank has recognised the value of this business and the value we can bring to our clients. And today, this value is only increasing as we become more deeply embedded in the ecosystem of our clients. To harness this opportunity and stay relevant to our clients, we must forge ahead and continue to deliver innovative solutions and services.

Our aim is to be a global and simple bank for our clients. Digitisation enables this. That is why it is core to everything that we do today. To achieve these objectives, we are taking some lessons from the new generation of technology companies, many of whom are our clients. Although these companies operate in a wide-range of sectors, they all have four core traits. They are focused on the client experience, they are innovative, they can scale almost infinitely, and they are agile, meaning that if something does not work as intended, they can pivot to something else. It is these traits that we are embedding into the core of the bank’s culture.

In practice, this philosophy is borne out in several different ways. For instance, we have innovation labs around the world, including a dedicated transaction banking lab in Singapore. We very much see these as the bridge to the horizon. The aim of the work in these labs is not to disrupt, but to connect the world today with the world of tomorrow.

That does not mean that we are not looking to disrupt ourselves by harnessing the ideas of fintechs. In fact, Citi runs and is actively engaged in several accelerator programmes where the objective is to innovate and scale at pace with partners in the ecosystem.

Advisory is another important part of Citi’s digital strategy. As a bank that has invested heavily in digital technology, we are a market leader across all industries. We want to use our expertise to help our clients also become market leaders. We do this by offering them insight into what we have done and how the same tools, techniques, and lessons learnt might be utilised within their own businesses.

One area that our clients are especially interested in now is cyber-security. In recent months, there have been numerous large-scale attacks on enterprises in the region that have seriously disrupted business. To enable them to understand this complex space, we are providing advice and holding practical sessions around best-practice in cyber-security. These sessions are proving especially popular.

What digital products has the bank recently launched?

It has been an exciting 12 months at Citi and we have seen many long-term projects come to fruition. For example, in February, we published a suite of transaction banking APIs. These provide our clients with a modern and innovative way to connect with and consume banking services straight from their ERP or TMS system. The power and potential of this form of connectivity will only grow. We aim to publish many more of these for different services in the coming year.

Elsewhere, we have solved a common pain point for treasurers by digitising the security token required to access their corporate bank accounts. Before, treasurers were required to carry a physical hardware token to generate a login passcode. Today, Citi’s MobilePASS solution allows treasurers to use their personal mobile devices for secure authentication instead.

Across the world, the role of the treasurer is changing. They are increasingly moving away from being cash managers and becoming sales and supply-chain supporters, cyber-risk managers, tax experts and most importantly, growth-enablers for the business.

In another landmark, we launched the first paperless cross-border payment solution for corporates in India earlier this year. The solution, created in partnership with the Indian government, substantially reduces the time, effort and cost of each transaction by facilitating quicker trade payments.

Citi also continues to invest in innovative technology like blockchain. Earlier this year, we commercialised our first blockchain solution in partnership with NASDAQ. This pioneering project creates a bridge between the traditional financial system and the blockchain.

We are also investing in our back-end processes to enable us to better service our clients. It is early days, but we are beginning to leverage things like machine learning, AI, robotics and optical character recognition. We are already seeing the benefits that these technologies can offer in improving accuracy, reducing cost and providing much faster feedback to our clients. In the future, this will enable the development and deployment of new services for our clients.

It is important to mention that, no matter where we are investing, our clients are always front of mind. Increasingly, we are leaning on our clients to guide our product development. To provide an example of this, recently we showcased ten potential solutions to a group of our clients. We then asked them to pick five that would be most useful to them, and we have now begun to put these five into development.

How does Citi plan to build on this and continue to support its clients in Asia in a rapidly evolving world?

Across the world, the role of the treasurer is changing. They are increasingly moving away from being cash managers and becoming sales and supply-chain supporters, cyber-risk managers, tax experts and most importantly, growth-enablers for the business.

Considering these changes, we must continue to adapt the products and services we offer so that we may continue to drive relentless relevance in a changing world. Citi is widely regarded as the world’s best transaction bank; we must not rest on our laurels. We will, therefore, continue to invest, to allow us to deliver data, analytics and insights to our clients in real-time, presented in a relevant, contextualised and actionable way. We have made great progress towards this goal and will continue to strive towards this goal.

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