From the September/October 2012 issue of Treasury & Risk magazine

Digitization Essentials for Corporate Treasuries: Understanding the Digital Banking Revolution

Hubert J.P. Jolly, Global Head of Channel and Enterprise Services, Citi Transaction Services

Technology has transformed our daily lives more completely and more rapidly than anyone could have expected. Access to email and the internet while on the move is now an expectation for consumers when buying a cell phone (and has resulted in the creation of the new tablet market). The way we interact with our friends and colleagues has also changed with many people belonging to social networks.

At the same time, how we use and store precious information is changing as data analysis improves and the adoption of cloud computing, which uses a network of remote servers hosted on the internet to store, manage, and process data, becomes more widespread.

As consumers have become comfortable with accessing data on the move and storing it in remote locations, those that work in corporate treasury have increasingly sought similar accessibility and functionality in the tools they use for their job. Citi has responded by accelerating its own technological development, including the creation of online banking tool CitiDirect BESM Mobile.

Making the Treasury Mobile

Smartphones and tablets can potentially offer users the same functionality and user experience as a desktop PC in an office. However, Citi recognizes that corporates’ requirements and expectations are significantly different from those of consumers. Moreover, the constraints of mobile phones and tablets potentially limit what is achievable for corporates on such devices.

Citi’s goal in creating CitiDirect BE Mobile was therefore not to emulate the full experience of CitiDirect BESM but to offer users the functionality they want on the move in a straightforward way. For example, the screen size of smartphones and tablets is smaller than desktop PCs, which makes navigation trickier. CitiDirect BE Mobile overcomes this by allowing users to search payments, for example, by currency or amount, so they do not have to scroll through hundreds of queued payments.

Perhaps the most important consideration for corporates is security: they expect the same level of security for mobile access as exists within the office environment. CitiDirect BE Mobile offers users (and companies) complete confidence by using the web-browser of the device rather than a dedicated App, which can leave data on the device after use – making it vulnerable in cases of theft, for example. In addition, it uses the proven CitiDirect SafeWordTM Card, a credit card sized digital device into which user must enter a pin, a challenge and a response.

Appropriate functionality

While there is a strong appetite among corporate users for a mobile online banking experience, Citi’s research shows that users do not want the full functionality of CitiDirect BE on a mobile device for a variety of reasons, including security and complexity.

In response to detailed research of users’ expectations, CitiDirect BE Mobile allows users to receive notifications, access their account balances and transaction status as well as authorize and release payments to suppliers from virtually anywhere at any time. It is also possible to initiate pre-formatted payments for domestic and international funds transfers, although not to initiative new payments (largely for security reasons).

CitiDirect BE Mobile  is customizable so that users can set themselves up to do whatever tasks they require – such as payment or file approval – on a smartphone or tablet. It can be used through most smartphone browsers, including BlackBerry, Apple iOS, Android, Windows and Symbian phone models and is already available in 88 countries worldwide (compared to 96 for CitiDirect BE). Uptake has been extremely quick: total flows over seven months have been $7 billion – $6 billion of which have occurred in the past six months.

In addition to CitiDirect BE Mobile, Citi continues to innovate in other mobile treasury services. For example, its Citi® Mobile Collect offering provides a secure, fast and flexible way to pay using a mobile phone. Replacing cash and checks, Mobile Collect streamlines and simplifies the payment process, increases transaction control and eliminates the risks associated with cash payments. Payments are made and confirmed in real-time over a secure network, reducing the potential for fraud, providing an audit trail and making reconciliation easier.

The broader impact of digitization

The rapid adoption of smartphones and tablets is just one of the ways in which digitization is changing how Citi serves its transaction banking clients. For Citi, digitization is of crucial importance because of the benefits it can deliver to clients as they move away from the use of paper – be it in the form of cash and checks, or the use of account forms and statements. Digitization lowers costs and improves efficiency. It also improves transparency and visibility while enhancing security. Furthermore, digitization can enable improved levels of financial responsibility and inclusion of the unbanked.

One of the most dramatic changes in personal interaction in recent years is the advent of social media and collaborative tools. As social networking has grown, many banks have sought to find ways to leverage its capabilities into transaction banking. However, it is important to be realistic about the suitability of social networking and adopt only those features that bring real benefits to corporates.

For example, Citi’s research has shown that the appetite of businesses for social networking tools is limited – at least from a banking perspective. While the idea of collaboration sounds attractive in theory, in reality companies that compete against each other for business do not want to collaborate in any meaningful way.

Instead, in order to improve its offering to clients, Citi has used some of the ideas from collaborative platforms to upgrade CitiDirect and avoid having to create an entirely new platform that would entail a time-consuming migration for users. Upgrades have improved navigation for users (including user-defined quick tasks) and the use of tools that facilitate greater self-service for customers, including electronic bank account management (eBAM) to digitize account processes, and online global billing and statements. In addition, Citi has invested in greater use of multi-media, such as video, for use in training.

Data and the cloud

Other than the increasing accessibility of information due to cell phone and tablet use, one of the most important digitization trends of recent years has been a change in the way data is used and stored.

Companies increasingly want to gain insights from their data that can help them to improve treasury efficiency. Citi is among the first bank to have established a data warehouse and has set up data governance councils, which clean incoming data to an approved quality standard. That enables the bank to perform data and payment analytics, including the analysis of error information (for different countries, for example). Other offerings based on data analysis include ReceivablesVision®, which increases visibility into receivables data, streamlines accounts receivable processing, strategically manages receivables and accelerates cash flow.

At the same time, there is increased interest in cloud computing for data storage and processing. For companies, cloud computing offers huge potential benefits by enabling better integration between ERP systems and banks.

However, as with the use of cell phones and tablets for online banking, there is an important drawback to the use of the so-called public cloud for corporates: it is not secure enough to protect their commercially sensitive and valuable data. Instead, for companies the focus is on private clouds that are managed in a way that meets recognized standards for security. Citi has worked with SAP, which has developed a private cloud, so that SAP users can communicate directly with the bank instead of requiring direct connectivity and using a batch file.

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