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How Citi assess and recommend improvements to your corporate treasury

Citi Treasury Diagnostics is an award-winning benchmarking tool designed by Citi to help companies assess the effectiveness of their treasury in six key areas: policy and governance, liquidity, working capital, subsidiary funding and repatriation, risk management, and systems & technology against industry peers and best-in-class companies.

Citi claims that it enables treasury departments to identify opportunities to deliver more value to their firms by assessing where they are in the development of their corporate treasury.

Digital Treasury Index

In the latest Treasury Diagnostics report1[CDE[1], entitled Balancing Digital Aspirations while Addressing Risk Management Fundamentals Citi have used their new Digital Treasury Index for companies which are based on the Citi Treasury Diagnostics responses to provide tangible guidance to help clients in their journey to digitalization. Citi has grouped treasury behaviours into different types (which they call playbooks) dependent on the current treasury maturity level and future digital aspirations of the survey participants, see:

Source & Copyright©2021 - Citibank

In the figure above, the Citi:

  • Digital Treasury Index = the level of digitisation in the company 
  • Treasury Diagnostics Index = the level of corporate treasury development in the company.

Each dot represents the score of each of the 476 organisations surveyed between Jan 2015 and Dec 2020. 

The survey showed that there are major opportunities for improvement today in each treasury area, particularly in Risk Management and Systems/Technology:

Source & Copyright©2021 - Citibank

Where do you fit and what should you do next? 

The report identifies three stages in the development of corporate treasury operation today and lists the actions corporates should take at each stage of their development:

1. Need to strengthen fundamentals

Called “The Best Practices Treasury” which needs to strengthen its fundamentals by:

  • Establishing consistent Treasury Policies, Processes and KPIs to manage operational and risk fundamentals
  • Implementing functionally centralized organization with remit overall Treasury functions performed globally.
  • Centralizing management of Cash and Risk through Treasury centralization constructs; deploy an In-House Bank once feasible
  • Being the catalyst for the organizational deployment of Centres of Scale (e.g. Shared Service
  • Centres) for operations efficiency, control
  • Deploying common backbone infrastructure, (e.g. TMS) across all Treasury processes; advance TMS/ERP external integration
  • Partnering with commercial business to ensure a deep understanding of balance sheet needs, where risk generation occurs.

2. Advancing Data & Digitalization

  • Called “The Digitalizing Treasury” which needs to advance their data and digitization by:
  • Establishing Digital and Data Strategy for Treasury in context of organizational
  • Assessing the Processes and Procedures for opportunities to digitalize
  • Assessing Data availability, timing and veracity to support digitalization. 
  • Assessing current technology stack vs. future state
  • Assessing Talent needs to deliver digital objectives
  • Using assessments to define Roadmap to deliver on Data and Digital Strategy, balancing opportunities, payoffs, and timing
  • Leveraging opportunities to partner with Banks, Technology suppliers and emerging FinTechs to learn, experiment, and progress.

3. The Growth Enabling Treasury

This type of corporate treasury needs to focus on value-added business partnerships by:

  • Defining future state for Treasury in context of business strategy, organizational priorities, and appetite for transformation.
  • Creating new capacity by completing digitalization journey for routine Treasury processes
  • Leveraging Data to transition from reporting to analytics, insights, and forecasting to improve decision quality
  • Experimenting to establish trust in emerging technologies and algorithmic techniques for “best next action” decision-support recommendations and automation
  • Engaging business partners, identifying opportunities for Treasury insights to support growth, and deliver
  • Thinking Data, Thinking Big, Starting Small.

The playbooks help companies to focus their strategy based on an assessment of their: treasury maturity, legacy infrastructure, appetite to digitalize, and aspirations for the role of treasury. 

Two of the report’s authors commented that:

  • “The study suggests that, on the one hand, digitalization offers exciting new opportunities for Treasurers to deliver on their objectives. On the other hand, many companies still need to complete their journey in the fundamentals of liquidity and risk centralization. There is a real opportunity to bring these two aspects together”  Stephen Randall, Global Head of Liquidity Management Services. Treasury and Trade Solutions.
  • The study shows the concrete connection between technology and treasury advancement. At Citi, we also see it shedding new light on how banks can deliver Technology as a Service solution, helping companies advance their treasury technology stack from core automation to advanced decision-support.” Dr Duncan Cole, Principal, Client Advisory Group, Treasury and Trade Solutions  

CTMfile take: This new corporate treasury assessment methodology represents an important extension of how to assess the current level and state of corporate treasury in companies. A ruthless assessment of the current state of your company’s corporate treasury performance and what to do about it is essential, but may not always be welcomed – who wants to be told, “You need to need to strengthen the fundamentals in your corporate treasury operations”? But maybe that is exactly what some corporate treasurers want to be told, so they can tell their bosses to invest in their department?

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