Executive View: Munir Nanji, Citi

Published: Apr 2017
Munir Nanji

From an economic and political perspective, 2016 was a very interesting (and often challenging) year for businesses around the world. From your conversations with clients in Asia Pacific, what were the key issues for APAC-based corporates and how has this influenced their areas of focus and what the treasury function has been doing?

Munir Nanji

Asia Pacific Sales Head,
Treasury and Trade Solutions

Published: April 2017

From an economic and political perspective, 2016 was a very interesting (and often challenging) year for businesses around the world. From your conversations with clients in Asia Pacific, what were the key issues for APAC-based corporates and how has this influenced their areas of focus and what the treasury function has been doing?

The main events of 2016 can be attributed to three very large shifts in the global political, social and economic landscape. The most important has been the increasing loud vox populi or the ‘voice of the people’. In 2016, we recognized there was a majority of people who craved for institutional change, which manifested itself in the UK’s decision to leave the European Union and the election of Donald Trump in the United States.

These events have impacted treasurers, bringing the management of political and policy risks to the fore. If we consider Trump’s tax amnesty proposal – many of the Fortune 500 companies have a lot of cash sitting outside of the US, with much of this in Asia – if the proposal is ratified into law, we could see liquidity being drained out of Asia. Treasurers of affected companies will then need to decide on the best option if the laws go into implementation. Needless to say, it will be interesting to see the potential impact this could have on the Asian liquidity hubs such as Hong Kong and Singapore.

This trend of vox populi is linked to a process known as ‘de-globalisation’. Historically, the general consensus had been that the world is better off interconnected and globalised.

Fast forward to 2017, there is now a debate around whether a globalised world is indeed beneficial. With the US recently pulling out of the Trans Pacific Partnership (TPP), the potential trade impacts have been widely dissected. In short, they will be detrimental for companies trading with the US and for us in Asia Pacific. Many Asian corporations currently benefitting from tax breaks when doing business with America will now face disruption to their operations.

Another interesting area to observe this paradigm shift is how this trend impacts corporate investment. Will American companies be more hesitant to place investment dollars offshore into Asian economies? If they are, then we may well see a large amount of pressure in trade volumes and a shake-up in foreign exchange businesses. Not all countries will be impacted in the same way. Those with a high savings ratio and fairly closed economies like India and Indonesia will likely benefit. But then countries like China, Singapore and Hong Kong might face more challenges should liquidity drains out.

The third big area of focus, which again is interlinked, is changes in fiscal policy. A confluence of factors such as the impending US interest rate hikes, the strong dollar, and weakening currencies in the rest of the world will force treasurers to think about which currencies to keep and how to bridge currencies they are invoicing. The question of hedging and adapting their financial positions will become important tasks.

For many treasury departments and banks, technology continues to be a key area of focus. How do you expect treasury technology to develop over the coming years and will we begin to see more ‘cutting edge’ technologies enter into the mainstream?

If we fast-forward to where the world is heading with all the digital disruption that is taking place, we believe there is going to be a shift in how treasurers work, increasing productivity and efficiency gains. There are, of course, some trends that treasurers are already familiar with, such as the digitisation of paper and the proliferation of faster payment systems.

This shift to digital creates lots of new and exciting trends. The cloud, for instance, is changing the whole piece around data management and storage, allowing treasurers to share information more easily with their partners both inside and outside of the company. More data stored in the cloud will also enhance the usefulness of mobile apps, as treasurers will have all the data they need at all times. These apps are also becoming increasingly smart and pushing information to treasurers, providing them with what they need when they need it. In brief, storing data in the cloud allows the treasurer to be more nimble day-to-day.

The cloud will also facilitate the use of more and more big data. As a bank, this helps us to understand our clients better, hence we are able to advise them in all areas and provide insights that they probably would not have before. This makes the whole process more clear and transparent. The more this data is mined, the easier it will be for banks to utilise artificial intelligence (AI) to better support our clients. This will be especially evident when treasurers are creating financial models and simulating ‘what-if’ scenarios. Today this is quite a manual and time-consuming process, but through the use of AI that is leveraging a plethora of data sources, this could be done instantly. In addition, the AI will build models based on what it is seeing in the data, which could be more accurate than a human might be looking for, enabling treasury professionals to be a lot more effective and proactive as market conditions change.

These are just a handful of trends, but what is clear is that a treasurer’s world is going to gradually change as digitisation and technology takes a bigger share of their world. A treasurer who is smart, who is visionary, will be able to leverage this and will succeed.

How can treasurers best decide where to invest their time and resources?

There is no one clear and direct answer to this. At Citi, we bank the full spectrum of companies in Asia: large clients going global, local and regional firms, and then the multinationals coming into Asia. Each is in their own world of what to do here and are dealing or adapting with different things in their own way.

One trend that does bind many of these companies though is the amount of education that is needed, especially in the upper echelons of these companies. Change in the organisation needs to be driven from above, but quite often the top-level doesn’t understand the change that is happening at an intimate level.

It is here that banks such as us can be guiding lights for many corporations. We do not only talk about digitisation but also live it through our innovation labs and other ventures. It is important that we are able as a bank to go out there and share what we do internally and with our customers, so that clients are able to assimilate and apply these ideas to their own operations.

What else is on the agenda for Citi for this year and how are you aiming to further benefit your corporate customers across the Asia Pacific region?

We have talked about the impact of politics, social issues, economics and technology on our clients and these are creating pressures from multiple sides. Our role then, as a bank, is to guide our clients through this and highlight what these trends mean for their business and what they can do.

Advisory, which is already very important, will therefore only become more crucial. As a bank with a global reach and a vast network, we are well placed to provide our clients with insights and information from around the world that impact their business. A subset of that is going to be around digital advisory. We are heavily investing in this space and it is going to become more important in terms of how we position ourselves and how we become the clients’ advocate, making sure that they are educated, but at the same time helping with the journey they embark on.

The dark side of digitisation, cyber-security, will also be an important area of focus for us. We are looking to make sure our clients are more educated and aware that there are all kinds of cyber risks and threats. We will continue to spend quite a lot of our time protecting clients from a myriad of cyber-attacks and making sure and educate our clients on what they can do to prevent the risks that they may encounter.

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