Corporate vision

Citigroup, the biggest bank in the US, knows a thing or two about a compelling customer offer. FST spoke exclusively to Gary Greenwald, Citi’s Global Head of Capabilities and Information Products at Global Transaction Services, about how its innovative new TreasuryVision product is helping corporates get a 360 degree view of their liquidity, while opening up a new business model in digital identities.

FST. Citi piloted its TreasuryVision product in 2005 with PepsiCo. Where are you now in terms of launch/number of users?
GG. Like anything we do here we typically start with one client. So we piloted with PepsiCo and since then it’s been a matter of scaling TreasuryVision globally within Citi’s Global Transaction Services, meaning getting our first few clients in each of our regions and major countries. I think we’re closing in on 75 signed, up and running. And I think there are about 300 or so in some phase of discussion. And that is in every region of our operations. So we’ve made a real effort to train up our client coverage, sales and implementation teams in Asia, in Europe, in North America, in Latin America to roll this thing out. We’re very happy with how this is rolling out and that it’s not just a standalone offering. We’re bundling it with more traditional cash management payments, liquidity type solutions. We very much see it as an integrated piece of a broader Treasury cash management package.

FST. Can you tell us about the technological challenges of aggregating a 100 percent view of a big corporates cash position?
GG. One of the things I tell many of our clients is that it’s often more of a cultural challenge. If you go to a large company that does not have a history of centralized efforts, just the process of group treasury, going out to various affiliates and subsidiaries and asking about their bank accounts and wanting to tap into those information flows, is a cultural change for the company. So first and foremost, they have to deal with that issue. For companies with a history of centralization it comes easier but I do tell our clients not to underestimate the cultural change involved in getting global visibility to cash and liquidity.

Beyond the cultural change, there are a host of technical/technological issues which I would break into a few areas. One is that while in theory we have some level of standards – like an MT 940 or a 942 should be reasonably common across banks, in practice, two things happen. One is that you’ll have companies that are dealing with banks that are not members of the SWIFT Network. So, they are not easily capable of sending an electronic statement in the 940 format. Because of this, we’ve had to extend by other mechanisms, other partnerships, other data aggregation schemes, the ability to get in banks that are not part of the SWIFT Network. We use SWIFT connectivity as a piece of the puzzle.

Even when someone does have a 940 or 942, there are often little nuances of difference and hence the aspects of data aggregation is not just simply putting in a file, but there’s also a good amount of transformation and normalization that goes on. So, there’s a processing task. This is not desktop software stuff. This is big processing engines to get everything normalized into the same format. We’re using an Oracle warehouse with some other tools around it that, on Citi’s side, takes in the feeds from the various sources and runs them through various rules, validations, and normalization.

The other technical challenge is that TreasuryVision attempts to aggregate short-term investment, and even some long-term investment data. And then we’re in a realm where the standards are much fewer and further between. And the mechanisms for transmission are less consistent than just going to a SWIFT message type. So, as we moved into those other asset classes, it has involved a lot of creativity in working out formats with providers of information on behalf of a client.

We’ve had to work all angles, including in some cases having one of our processing shops in India do manual data entry when all else fails. As we move from cash to investments and debt, we’ve had to pull out all the stops of high-tech, medium-tech, and low-tech ways to get the data in. At the end of the day, clients want to come in and get the visibility and are basically saying, “You guys, Citi, figure it out. If you want, share the details, fine, but that’s why we’re having you do it ‘cause we don’t want to be in the data aggregation business. We want to be in the action and execution business.”

FST. What new aspects of the product are you looking to develop? Are you looking to remove some of that manual work and create a more automated infrastructure?
GG. Well, from the internal side, the sausage factory, clearly we’re trying to get as efficient as possible in bringing in the data and making that as robust a process as we can, but most of our effort has been on client visible enhancements to the product.

For example, we’ve started to move to not just end of day data, but real-time data. A number of clients are really starting to use intraday positioning to make investment decisions before closing time. Obviously yesterday’s data is not as interesting as real-time data so we’ve layered that on. Clearly that’s a slightly more complex challenge and you have to kind of do that market by market.

Another thing we’ve done is the quality control and the visibility we give around the data that’s coming in to our clients. We have something we call the chaser e-mail, so when a particular bank has not sent its daily statement by a pre-agreed time, an e-mail gets generated to that bank copied to the client. At the end of the day, if you’re making decisions, you need to have some level of comfort in the data set and what’s a missing value and what’s not. We’ve put some real work into enhancing our forecasting abilities so we have some forecasting tools that we’ve rolled out and continue to get smarter in how those work and how those pull in data beyond banking system data such as the ability to take from an ERP system.

FST. At last year's SIBOS you announced that you had piloted a money transfer to BNP Paribas, authorised by an electronic signature, can you tell us about this development? Why are electronic signatures such an exciting development for you guys?
GG. The SIBOS announcement came from a slightly different etymology; think of it this way; in the old days, when corporate cash management was very much done by a web interface, or before that a Windows or terminal emulator interface, someone would log on to a system and make a payment, right? And that being an online tool, the bank that was executing the transfer knew who the person was. And before we released the payment, we could authenticate you against an entitlements database and say, ‘Aha, is he/she allowed to make a million sterling payment off of account 101?’

As companies have moved, particularly the large companies, away from online banking for the bulk of their payments and into straight through processing, one of the things that happens is that once the bank gets a file sent in an appropriate way by the corporate, we will execute it. But if there’s 100 payments in there, we don’t ask who authorized it; we just execute them. That’s the contractual agreement with the client.

A number of corporates have stepped back and said, ‘well, wait a second – just because I am moving to straight through processing, which is clearly a very beneficial evolution and one with a lot more efficiency, why should I give up that layer of control about who exactly released that payment and why can’t the bank do some sort of check?’ So, that led to the work that we announced first at SIBOS last year and we’ve now extended with a couple of other companies in major global cash management deals.

What we’ve put in place with them is the ability for the individual payment transaction to be digitally signed by the person who inputs them, approves them, and so on. And that digital signature is wrapped along with the payment instruction, sent over to us as a big file, but on our side we are able to now do an additional layer of validation and control that we weren’t able to do when you just send us a file and we say we’ll execute it.

FST. And how else are you looking to develop the use of electronic signatures? What’s the business model?
GG. The business model starts with clients. We did another pilot test last year, separate from the one you saw on Danone and BNP, which was a slightly different space involving digital signatures, which had to do with bank mandates. And as you may know, that is a paper process and one that hasn’t changed in 100 years. If you’re the assistant treasurer at a company and you’re on 100 bank accounts at ten banks and you move to a new job, you get 100 pieces of paper that have to be signed, notarized often, and appended with various board and corporate resolutions. It flows through with old fashioned wet signatures and sooner or later the entitlements are changed.

And you would think that that’s a very simple global search and replace problem, right? Go onto some computer screen and select all accounts where you are the signatory. Replace with Hilary and hit ‘okay’. And it is, from an IT point of view, a pretty Mickey Mouse problem. Except for the okay button because any self-respecting bank lawyer would say that the legality of the okay button on a computer screen is not quite the same as a true contractual signature, so that’s where the digital identities come in.

So I start the business case by asking whether there is there demand out there to get more efficiency effectiveness via the use of digital signatures and paperless processes? And in fact, one of the troubles of the digital identity business historically has been it was a bit of a solution searching for a business problem. The issue is not about the mechanics of digital identities, per se. It’s about what you can use them for.

FST. And in terms the industry model going forward, it won’t be by definition an exclusive position you’d take. There are other banks that could offer a similar service?
GG. Look, the analogy I just used; you could have a credit card business, you need merchant acceptance, right? So, we’re kind of in the realm of getting the identity equivalent of merchant acceptance, which is a whole lot of places where digital identities and digital signatures could add real value and solve real problems, particularly for corporates.

At a certain point there will be a level of maturity where just like in the corporate credit card market, we’ll compete with other banks when a large corporate says, ‘I need 1000 or 5000 digital identities,’ we’ll put forth our offering. And it’ll have something that perhaps at one point in time will be commoditized. It’ll have other things that are differentiated and we’ll go head to head with others. But right now it’s at a much earlier stage of maturity. And in fact, one of the reasons it’s taken so long is, in my opinion, not enough time has been spent on applications and uses of digital signatures. Too much time has been spent on theological arguments around the infrastructure layer and the technical standards and issues like that and I’m much more focused on where to use these things.

FST. What’s the kind of strategy going forward with this? Are you going to break this out into other markets such as retail?
GG. I think in five years time we will see a much richer and more robust set of uses for digital identities and digital signatures both in B2B transactions as well as C2B and B2C transactions. I think that’s a natural evolution. I think there’s some early discussions that I actually am not ready to give a whole lot of detail on both with our consumer part of Citi and some partners. So, maybe we can leave this as watch this space. Give us a little time and we’ll probably have some more interesting nuggets for you that we can share, but we clearly are thinking about that. But I want to nail corporate – I want to nail B2B first.