Capital Gain

Corporates And Banks To Drive Digitization

Published: in FINTECH by .

Treasurers met the immediate disruption of the global pandemic last year with a sudden demand for digital solutions from their banks. The name of the game was resiliency, and digital, cloud-based solutions became lifelines for finance leaders working to promote business continuity amid remote workforces, disruptions and business model shifts.

Today, the treasury department has settled into the new normal of the pandemic market, but that doesn’t mean its digital aspirations have waned.

On the contrary, says Manish Kohli, global head of payments and receivables at Citi, treasurers continue to demand solutions that promote resiliency, flexibility, and digitization. What’s changed is how finance teams wish to use those assets with new, evolving goals in mind.

In a recent conversation with Karen Webster, Kohli explained how banks like Citi are now tasked with supporting their corporate customers beyond surviving disruptions like curfews and business closures. Today, financial institutions are exploring corporate payments technology opportunities that empower businesses to thrive in new markets and new business models.

Reshaping Business Goals

In addition to embracing cloud-based platforms that supported uninterrupted financial management in a remote setting, among the biggest disruptions that many businesses experienced last year was the need to pivot and embrace new business models, often with a digital-first mindset.

According to Kohli, corporates and their bank partners embrace a “creative strategy” and a bit of “experimentation in the digital economy” to support that evolution.

For Citi itself, embracing that spirit of experimentation is opening up new opportunities to service businesses. The bank recently agreed to provide services to digital payment platform Stripe for an embedded banking solution that enables the payment FinTech to offer accounts to its own small business customers in the U.K.

Kohli suggested that through the relationship with Stripe, Citi has supported a portion of the small and medium-sized business (SMB) segment market that is beneficial on all sides. Besides providing embedded and integrated financial services for SMBs, Stripe strengthens its value proposition while Citi facilitates new digital experiences and economies.

It’s just one example of how the bank has prioritized developing solutions to support newly digitized business models.

“Small businesses are taking their physical storefronts to digital storefronts,” he said, adding that as a result, these firms will seek financial services and products that are similarly digital-first in nature.

Interconnecting The Payments Infrastructure

Embedded banking solutions are only one portion of a prolific set of financial services and products businesses, large and small, are exploring today as part of their own experimentation with digitization. With more companies prioritizing payments digitization, instant payments have become a more frequent conversation topic between Citi and its corporate customers, Kohli said.

Yet that conversation doesn’t always look like it used to. Whereas businesses had previously considered real-time payments as a value proposition in and of itself, today, they’re more interested in discovering how the capability can enhance their new business models through embedded experiences.

“It’s more about, ‘Can I give an instant wallet and cash experience?’ If you’re an insurance company, it’s about, ‘Can I make claim payments instantly rather than with ACH or check?’” he explained. “For the business model to become more digital, it’s all about, ‘Can we take your digital payment capabilities and have it amplify our business model?’”

Banking partners will have to respond to this shift in demand by opening up their own systems and investing in global solutions that can handle higher volumes of digital transactions and the rising requirement for money to move across borders in an always-on ecosystem. Kohli pointed to Citi’s ongoing investments in various domestic payment schemes and its own infrastructure to integrate and interconnect across those various networks. Doing so could allow the financial institution to support the real-time global payment demand that’s quickly percolating among business customers eager to strengthen their own offering to clients.

Yet again, this evolution will require an experimental spirit.

Citi is assessing potential applications of tokenized financial instruments, including digital currencies, and exploring how they might scale for application in the commercial landscape and integrate with the broader payments system.

“That level of experimentation is going on,” he said, adding that collaboration with the payments and regulatory landscapes will also be an important component of driving progress.

It’s a strategy both banks and their corporate customers will need to embrace moving forward. With treasurers finding their footing after a volatile year, there is room to explore emerging technologies and innovations. But to find success and thrive in the new normal, treasurers — and their banks — must use those solutions to bring value to newly-digitized business models and the customers they serve.



About The Study: The Holiday Shopping Retrospective Study: Merchant Insights For 2021 And Beyond, a PYMNTS and PayPal collaboration, examines consumers’ shopping practices and preferences during the 2020 holiday season and what these mean for merchants now and for holiday seasons to come. The report is based on a census-balanced survey of 2,070 U.S. consumers.

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