Citi bets on its ‘crown jewel’
Out of the many ways to identify a customer, focusing on the “whom” has helped Citigroup grow one particular segment of its global business. In this part of the world, that responsibility falls on veteran banker Rajesh Mehta, who is approaching his 40th year with the US investment bank and financial services corporation.
“We are very focused on the companies that make sense for Citi; we want to be the pre-eminent bank to clients with cross-border needs,” says Mehta in a recent interview with
Serving domestic companies domestically is not Citi’s primary strength, says the regional head of Citi’s treasury and trade solutions (TTS) in Asia-Pacific (Apac). “There are hundreds of local banks in every country, so Citi is typically focused on companies and customers with global needs, those that we can support both in their home market and across multiple locations.”
Mehta has led Citi’s TTS business in Apac since 2016. He reports to Citi’s Apac CEO Peter Babej and global TTS head Shahmir Khaliq.
Citi’s “very focused strategy” tackles the “whom” — or identifying international clients. Now, Mehta’s team is expanding on the “what” — the various services offered by the TTS unit.
“If you look at what Citi’s global network does, it enables payments, it enables goods flow and services flow,” says Mehta. “This is the critical backbone of being the pre-eminent bank to companies with cross-border needs.”
On a global scale, Citi leverages its physical network of 95 markets and operations in nearly 160 markets. But how does this relate to everyday operations?
For example, Citi’s TTS unit facilitates FavePay’s QR payment collections from consumers and provides real-time credit notifications through an API.
Citi also helped SingTel’s digitalisation journey in making real-time payments for purchases and billing. Citi designed an end-to-end workflow for SingTel’s collections at their physical store, as well as post-paid billing credit management and an eStore using PayNow. An API generates a unique QR, which fills in all the necessary fields. This was rolled out during the pandemic, where even heading to an AXS machine would have been difficult.
As part of a strategic refresh last year, Citi has divided its financial reporting structure into three business segments: personal banking and wealth management, institutional clients group and legacy franchises. The latter consists of “all the businesses we intend to exit”, according to Citi’s March 15 letter to shareholders.
Citi first announced plans to exit retail banking in 13 countries in April 2021. Closer to home, Citi started 2022 by selling its consumer business in Indonesia, Malaysia, Thailand and Vietnam to United Overseas Bank (UOB) for some $4.9 billion. It later did the same in Taiwan, with acquirer DBS Bank forking out $956 million. It is, however, keeping its existing consumer businesses in four markets: Singapore, Hong Kong, the UK and United Arab Emirates.
Citi is now facing the mass-market customer in a different way — via its TTS unit. “We have now evolved to become a commerce enabler, and not just a financial institution serving your finance needs,” says Mehta. “We’ve got to have a brilliant consumer experience, for our own clients and our clients’ customers.
Our value proposition has moved [and] it’s increasingly pivoting quite quickly in Asia to cater to the rapidly evolving business landscape.”
Mehta adds: “We are your partner to enable sales, to help you create supply chain resilience [and] to give your consumers a superior client experience. So, we’re not just your bank deep in the background. The proposition has changed.”
The crown jewel
Citi’s TTS business resides within its institutional clients group, a segment that also includes securities services, fixed income markets, equity markets, investment banking and corporate lending.
The TTS business has returned handsome figures to Citi’s financials, prompting CEO Jane Fraser to call it Citi’s “crown jewel” in the most recent annual report.
Citi’s TTS business posted a 32% increase in revenue for FY2022 ended December to US$12.2 billion ($16.3 billion), driven by 46% growth in
net interest income and 10% growth in non-interest revenue. This reversed a pandemic-era decline of 4% in FY2021 and 7% in FY2020.
The upswing continued into 1QFY2023 ended March, with revenue of US$3.4 billion up 4% q-o-q and 31% y-o-y. “Strong performance in TTS was driven by higher interest rates and business actions, which included growing deposits, managing re-pricing and driving fee growth,” says Citi.
No surprise, then, when Citi announced in March a new head of TTS for Asean. Citi’s former head of trade for Asean, Anoushka Dua, now reports to Mehta and Amol Gupte, head of South Asia and Asean.
Dua started her banking career with Citi in 2002 and she has been based in Singapore since 2018. “Anoushka’s leadership has been instrumental in transforming the trade business in Asean by building and commercialising structured trade capabilities and amplifying client engagement on working capital solutions,” reads Citi’s announcement.
Mehta, meanwhile, is based in Hong Kong. “We are where our clients are, and we have a strong pan-Asia presence… Singapore is a strong hub for Asean and for the subcontinent of India, Sri Lanka [and] Bangladesh. Hong Kong remains a key hub with its deep capital markets and access to the Greater China market. Both have their distinct advantages and are important financial centres for Citi in Asia.”
Taking bets
Further appointments within TTS reveal Citi’s weightage on the unit. With Dua overseeing Asean, Citi’s TTS operations in Australia and New Zealand have a new head in Kirstin Renner, who also reports to Mehta.
That same week, Citi announced Deven Somaya as its head of emerging commerce solutions within the TTS Partnerships and Innovation Group.
Somaya was most recently the interim head of TTS for Asean and Singapore. In this newly-created role, Somaya “will be responsible for designing and developing new client solutions and developing and incubating new business opportunities across TTS groups and client segments”.
“We have a very different view on innovation in the sense that all our innovations are happening within the business,” says Mehta.
When innovation is foisted onto a product team, the result “tends to be a little more near-term”, says Mehta. “Product people are usually thinking about this year, next year and the year after, as they have P&L [profit and loss] goals to meet. They aren’t necessarily thinking five years out.”
In Asia today, people are making plans for 10 years ahead, but 10 years is a long time, says Mehta. “What we’re doing is saying: ‘Is there stuff beyond the one, two and three years and are we doing enough?’ We felt that we could do more.”
Citi’s seven-day sweeps is one of its new solutions. Launched in October 2022, the cash concentration capability enables clients to mobilise and concentrate liquidity seven days a week. According to Citi, over 150 clients in South Korea are already using the solution for seamless funding of in-country instant payments and short-term working capital needs, to eliminate weekend and holiday overdrafts.
The liquidity offering is currently available for domestic cash concentration structures in the US and South Korea, with plans to expand to additional markets.
As bankers, Mehta and his peers would generally invest in things that have “70%, 80% or 90% chances of success”.
With Somaya’s appointment, Citi wants to take some bets on things with “40% or 50% chance” of success, says Mehta. “A little bit more out there, if you know what I’m saying, rather than the safer stuff only.”
What is the relationship between innovation and business, asks Mehta. “If they’re too embedded in each other, then cutting-edge innovation doesn’t always happen… If you are too far removed from the business, you don’t know what will really move the needle.”
There is a constant calibration of this distance, says Mehta. “Not too close, but not too far. So this is why we’re trying things out. These things are a constant evolution and there’s never a perfect state in a dynamic ever-changing environment.”