The Four Growth Missions at the Heart of Treasury Transformation

From back office automation to company transformation.

Amit Agarwal and Debopama Sen, global co-heads of payments, Citi Treasury and Trade Solutions, told Karen Webster that the technological “COVID toolkit” crafted over the past few years helped firms navigate commerce’s shift  to online channels.

CFOs and treasurers now are looking at technology not just as a means to automate the processes and functions already in place — technology is also a means of transforming the company itself. And along the way, the stage is set for seamless payment experiences that get money where it needs to go when it needs to get there.

But no matter where things are shifting, one rule remains critical, said Agarwal: Everything boils down to the balance sheet. A steady, cash-rich balance sheet and healthy cash flow are critical in order to fund growth.

There are a lot of good ideas chasing capital, Agarwal said, and at the same time executives need to be mindful of the digital assets and presence they want to create. The shiny new tech toy may ultimately prove to be just a distraction.

Secular Shifts, Digital Shifts

Agarwal said that the secular movement to improve commercial banking, reconciliation and optimize liquidity will continue. But increasingly, Citi’s clients across all segments, from financial institutions (FIs) to small businesses to governments, are facing disruption as they also seek new growth opportunities.

“As every company is going digital,” he said, “and they’re trying to create digital customer journeys.” In order to serve those ambitions — a proverbial North Star guiding Citi, said Agrawal — the Treasury and Trade Solutions group has sought to foster “client growth missions.”

There tend to be four growth missions operating at any one time, and are interdependent. They include 1) globalized commerce — providing the payment rails that help clients go global no matter the payment modality; 2) help clients sell online; 3) embed financial services into platforms (so enterprises can offer payments to their end users; and 4) helping FIs manage the challenge from FinTechs and digital-only upstarts.

Sen noted that the drive to go digital cuts across all sectors, and notably has been transforming verticals such as mobility. Increasingly, we’re moving toward a future with new business models, where self-driving cars will have embedded payment solutions that transact, automatically, or buy consumers’ coffee during the morning commute. Those scenarios, in turn, open up new opportunities for media firms, through data and artificial intelligence (AI) platforms that are seeking customer engagement. Other ecosystems such as health care are evolving rapidly toward digitization, and B2B will be catching up soon as Citi continues to connect instant payment rails around the world. Interoperability weaves through and enables each of those growth pillars.

As Sen noted of cross-border payments, “They are evolving quickly, but let’s first start by reminding ourselves about the areas of friction: Speed, cost, availability, transparency and even the choice of payment methods.” Cross-border B2B is seeing a generational uplift in modernization of payment rails around the world, Sen remarked, partly driven by regulators, through the internet and the appeal of instant payments, too. Citi, for its part, will be launching a new service, 24/7/365 U.S. Dollar Clearing, enabling enterprise clients to offer end users the ability to conduct dollar-based commerce any time of day or night.

Agarwal contended that the consumerization of payments will touch every industry, and secure and digital options such as QR codes and digital IDs are critical considerations as so many firms look to move direct to consumer.

“A lot of the mobile technology and the payment technology sitting on the back of APIs is all coming together to create consumer-like experiences,” he said.

Looking ahead, Agarwal said the role of the treasurer is changing. These executives are increasingly accountable and interested part in making sure that the new business models that the commercial sides are driving have the right imperatives in place from a treasury standpoint.

“The payment volumes are exploding,” he told Webster, “and you might think that we are well into digital this journey. I would suggest that we are probably still at the early stages.”