Naveed Sultan – Global Head of Treasury and Trade Solutions
Treasury and Trade Solutions
May 7, 2014
Treasury and Trade Solutions
“Partnership is not a posture but a
process – a continuous process that
grows stronger each year as we devote
ourselves to common goals.”
JFK
1
Citigroup Financials – 1Q14 Update
1Q14 Results:
• Revenues of $20.1Bn
• Net Income of $3.9Bn
• Tangible Book value per share increased to $56.40
Progress in key execution priorities
• Loans and deposits growth, with expense discipline
• Citi Holdings losses reduced by over 60% YoY
• Citi Holdings assets of $114bn declined 23% QoQ
• Deferred tax assets reduced by approximately $1.1B in 1Q
Building a safer and sounder institution
• Basel III Tier 1 Common Ratio of 10.4%
• Basel III Supplementary Leverage Ratio of 5.6%
Citigroup 1Q14 Revenues ($bn)
Institutional Clients Group 1Q14 Revenues ($bn)
2
Treasury and Trade Solutions (TTS) TTS underpins Citi’s global business model and client relationships
Wholesale
Cards
Receivables
Liquidity
Management
Services
Trade
Channel
Services
Payments
TTS
as of Q4, 2013
>3,000,000,000,00
0
421,760,000,00
0 140 98
$ value of
payments
processed daily
$ average
deposits and
other customer
liabilities
Currencies
handled by TTS
global platforms
and gateways
Countries
where we
have a
banking
license
TTS approach is client
centric and value driven.
TTS Key Attributes of
Client Engagement:
• Client Experience
• Consultancy
• Solutions
• Innovation
• Technology
• Execution
• Network
TTS’ strong portfolio of capabilities and solutions
3
TTS Strategic Relevance to Citi’s Model
“We will continue to invest in our Treasury and
Trade Solutions business, the backbone of our
global network, while we capitalize on our focus
on the payments side. This business is capital
friendly and not easily replicable. It took us
decades to build and remains the clear global
industry leader.”
Michael Corbat,
Citigroup CEO
2013 Annual Report - Letter to Shareholders
4
“Change is the law of life. And those
who look only to the past or the present
are certain to miss the future.”
JFK
We are Living through Times of Unprecedented Change
5
Major New Regulation passed
every 15-20 years
1950 - Office of Foreign Asset Control 1970 - Bank Secrecy Act 1986 - Money Laundering Control Act
Secular Trends Shaping the Future
Primary Sources: EIU, Roland Berger, United Nations Statistics, WHO Statistics, Forrester Research, Citi Analysis
Globalization
Urbanization
Digitization
Past (1990) Present Future
USA JPN
DEU
USA CHN
JPN
CHN USA
IND
17 % 26 % 33 % EM Trade as % Global Trade Exports share of GDP Exports share of GDP
Largest world economies Largest world economies Largest world economies
43% world population in cities 53% world population in cities 70% world population in cities (2050)
9% world population > 60 years old 11% world population > 60 years old 22% world population > 60 years old (2050)
Mobile broadband subscriptions: None Mobile broadband subscriptions: 1.5bn Mobile broadband subscriptions: 6.5bn (2018)
Internet users: Nominal
Web browser introduced in 1992
Internet users: 2.7bn
39% global penetration
Internet users: 3.6bn (2017)
50% global penetration
0 1.5bn 6.5bn
Regulation
Increasingly complex banking rules passed at an escalating pace in the past 13 years, with indications that pace will continue…
Since 2000 – FACTA, US Patriot Act, SEPA, USAPA Certificate Benchmarking Dodd-Frank Act, Durbin Amendment, Payment Services Directive II, Recovery &Resolution Planning, Basel III,…
6
TTS is a “POSITIVE” Play on Global Macro Trends
Global Network to
service the changing size
and direction of flows
Investments in
Digitalization &
Innovation
Focus on Urban
Ecosystems
Globalization
Urbanization
Digitization
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These Trends Are Shifting the “QUANTUM” & “DIRECTION” of Flows
Source: International Monetary Fund , McKinsey Global Capital Markets 2011, and CTS analysis
(1) Includes total value of cross-border investments in equity and debt securities, lending and deposits, and foreign direct investment
Domestic financial assets
0.5-1%
1-5%
5-10%
10%+
Arrow width shows value of cross-
border investments between regions1
Arrow color shows flow opportunity
Traditional flows
Growing
opportunity flows
Australia,
New Zealand,
and Canada
$4.0T
North
America
$65.0T Japan
$26.8T
Western
Europe
$53.4T
UK
$9.7T
Latin America
$6.6T
Emerging
Asia
$24.5T
Russia,
Eastern Europe
$4.3T
Hong Kong,
Singapore, Taiwan
$4.5T
Middle East,
Rest of World
$7.9T
• New corridors of flows
• Rise of Emerging Markets
• Globally integrated marketplace
We are facilitating
new and emerging corridors
Cross-Border Investment Flows
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Macro-Trends Digital Strategy
Digitization - TTS Strategy
Optimize business performance for
Citi and clients through
rich data and analytics
Expand channels and extend reach
through digital technology
Extend core digital platforms,
products, and services
Deliver Platforms and products that
enable channel & device
expansion, and reduced
cycle times
Strategic Priorities
• Enhance end-to-end client experience
• Deliver greater value to our clients
• Leverage our global scale to digitize
financial flows
• Drive competitive differentiation
Our focus is to digitize our entire business and operating model.
Macro Economy
Changing direction of flows &
markets uncertainties
Regulation
Transparency requirements
driven by regulations
Competition
Banks and non-traditional
competitors are expanding
into transaction banking
Globalization
Automation, centralization of
information across
ecosystems
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Decision
making
Innovation
Connectivity
Automation
Product
and Service
Innovation
Risk
Optimization
Digital Transformation Drives Business Value(1)
1- Based on McKinsey & Company, “Finding your Digital Sweet Spot”, November 2013
Extend
• CitiManager
• CitiConnect
• CitiDirect BE Trade
• Supply Chain & Trade Services
Embedded / automated controls and risk profiling
• Electronic data security and paperless solutions
• Tackling fraud and overpayments in Public Sector Flows
Real-time management information system
• Treasury Vision
Optimize
• Receivables Vision / Payment
Analytics
• Treasury Diagnostics
• CitiDirect BE Analytics
Business
Performance
Enhanced
Corporate
Control
Distribution
and
Channels
Deliver
• Services Tracking and Reporting
Systems (STaRS)
• Embedding UX Design standards
• eBAM Digital Account Management
Customer
Experience
Expand
• Recurring Payments
• CitiDirect BE – mobile, tablet
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Holistic Approach Towards Digital & Innovation
CitiDirect BESM Mobile
Award-winning mobile banking
platform for institutional clients to
conduct business anytime,
anywhere – in real time.
CitiDirect BE Trade
Trade clients can perform critical
operational transactions: upload
trade documentation, access Citi
Supplier Finance, and more.
eBAM
Digital application for managing
account opening, signatory
changes and maintenance,
enabling self service in 54 countries.
CitiDirect BESM
Deliver consistent and enhanced
client experience across the
network
Expand channels and capture new
flows
Extend core digital platforms,
products, and services
Optimize business performance for
Citi and clients through
rich data and analytics
CitiDirect BE Analytics
CitiDirect BE Self Service
Best in class self service
capabilities to gain the most
current and relevant information
about accounts, inquiries
and cut off times.
CitiConnect
Whether it’s on mobile, tablet or the
web, clients have a complete and
consistent view of all of their
cash management capabilities.
Access sophisticated
payments and receivables
solutions via interactive
dashboards
CitiConnect integrates payments,
receivables and information with
clients’ data systems from anywhere
in the world.
CitiConnect
Global Flows Analytics
Mining Citi’s global transaction flow
data to yield actionable intelligence
and enable clients to visualize their
supply chains and optimization
opportunities
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Leading the Way to the Future – Digital Money Index
Digital
Money
Readiness
Index
Questions Asked
• Does digital money adoption make a difference?
• What factors affect the outcome of a digital money initiative?
• Can we quantify the benefit of adoption to governments, businesses and individuals?
Four Key Pillars to the Readiness Index
Cashless Intensity Consumer Spending via Digital Channels vs Total Consumer Spend
Does Readiness drive adoption?
Ind
ex S
co
re
Correlation 0.79
Global metrics to link digital money adoption with various measures of socio-economic development.
Pillars were further disaggregated into 15
attribute “indicators” that helped to create a
composite score of the preparedness of any
country / economy
Most of the countries that are best prepared for
digital money adoption tend to use less cash but
cultural factors play an important role
Does Readiness drive
adoption?
Stage of Readiness
Groupings based on characteristics exhibited
by underlying pillars for stakeholders to
recognize their nation’s current level of
digitization and provide perspective on
how to progress.
12
TTS Approach to Innovation – Recognized by HBR
“Citigroup developed models for
transaction data to analyse the flow of
money in different parts of the
financial system, uncovering
inefficiencies that hindered its clients’
ability to make effective use of
different payment mechanisms. Over
a five-year period those models have
been honed into a stream of client
services.”
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In order to successfully execute upon our digital strategy, three imperatives have been
established to drive focused execution, allowing for further competitive differentiation.
Digitization - Measuring Impact and Progress
Ensuring digital innovation
is translating into
business results
Partnering to effectively
scale TTS assets
across our market
footprint
Creating a sustainable
competitive advantage
through next generation
digital experiences
Commercialization
Focused Digital Scorecard Client Experience
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Client Experience is a Sustainable Differentiator Client centric approach to client experience
Aligning functions to ensure clients are experiencing more seamless service, streamlined decision making & simplified processes
Performance
Management
Organization
Functions &
Franchise
Processes
Location &
Site Strategy
Technology
Standards &
Platforms
Global
Product
Initiatives
Network
Management
Operations
& Services
Client
Advocacy
Target Client
Model
Redesigning processes to reduce cycle time and client contact points
Leveraging technology to re-engineer delivery mechanism, standardize document repositories and automate process workflows
Refining differentiated service models
Client
15
Enhancing Client Experience-TTS Client Service Progress Tracking
Focus Examples of Progress to date
Content Management Product and Regulatory
Communication
• central knowledge management tool to provide timely and accurate information to clients
is now live for Citi client facing functions in EMEA (TTS, GSG and Banking)
Documentation
Content & Process
Streamlining Documentation
Requirements and Digitizing
Process*
• Streamlined account opening documentation in 47 countries, reducing and eliminating
client paperwork
• 99.9% audit certification request delivered within 7 days SLA (WE + 5 African countries)
• 50% of local account opening documents eliminated in EMEA
Ease of Doing Business through
self service,
automation and
product enhancements
Payment Status Inquiries*
• Leveraging CitiDirect BE real time payment status
Recurring Payments & MIFT
Digitization* • Live in 62 countries
Account Balance widget*
• Payment Analytics - in implementation in Asia
• Receivables Vision - Live with some US clients
Increased
Transparency
Service Tracking and
Reporting Systems (STaRS)*
• Completed rollout in 118 countries
Service
Responsiveness
Technology Change Calendar
Overall Client Contact rate
Client Service Team Coverage
• live for over 50 clients
• improved from 0.27% of total transactions in ‘12 to 0.18% in ‘13
• 3 add’l languages supported in Dublin (Mandarin, Russian, Spanish)
*Available to Clients
Services
Global Product
Network Management
Client Advocacy
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