And The Role Of The Treasury Professional In The New World Order

The Rise Of Machines

June 11, 2014

Treasury and Trade Solutions

2

People And Machines Are Now Partners In Doing Work

• Machines (specifically computers) have significantly changed how we work

• This is especially true in financial services

• We now live in a world where computers and people work together to get a job done

• Computers are especially good at mundane repetitive tasks

• Which leaves financial professionals in a better position to handle strategic tasks

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100 Years Ago – Without Modern Technology

Household Appliances

Health

Cars

Telecom

In 1930 a popular women’s magazine asked readers how many time they wished they could push a button and have all their household chores performed for them. This was decades before modern conveniences like dishwashers and microwaves were on the horizon.

At the turn of the last century, indoor plumbing was not common. Raw sewage was often dumped directly into streets and open gutters which went straight into rivers and lakes, many of which were sources of drinking water. Waterborne diseases were the 3rd leading cause of death.

Source: Greatest Engineering Achievements of the 20th Century National Academy of Engineering http://www.greatachievements.org

In 1904 a grand total of 141 miles of paved roads outside cities. The first crossing of the continent by car in 1903 required 44 days of hard driving.

Telephones were initially sold in pairs. The first customer, a Boston banker, leased a pair for his office and home, plus a private line to join them.

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Payments Have Also Become Tied To Technology

BARTER

In the earliest days, men would trade

their goods directly, without a currency as an intermediary

GOLD & SILVER COIN

(500 BC)

The first coins were created in Lydia and allowed a

single standard to value items and facilitate trade.

PAPER CURRENCY

(1000)

The use of paper money was first

used in china as a substitute for

coinage – allowing for easier transfer

of funds.

WIRE TRANSFER

(1871)

Western Union introduced its

money transfer service, based on

its extensive telegraph network

PAPER CHECKS

(1650)

In Britain goldsmiths and

scriveners created checks to allow for easier trade over

distances.

SWIFT(1973)

SWIFT creates a shared worldwide

communications link and common language for

financial transactions

CITIDIRECT®(2000)

Citi creates the first online web based

platform for performing global

institutional payments

ISO 20022 (2004)

The ISO 20022 standard was

adopted, creating a standard

international language for

payments communication

2000 AD1500 AD1000 AD500 AD0500 BCE

Physical Electronic Computerized

Treasury and Trade Solutions (TTS) Is The World’s Largest B2B BankCiti’s Treasury and Trade Solutions (TTS) provides the world’s largest institutions solutions to manage their cash, finance trade and make payments globally

E-banking in 24 languages around the world

Operate in 100 countries worldwide with domestic payments

in 140

Banking services for 45 of the top 50 FT Emerging 500

Serve 81% of the Fortune Global

500, 400+ of the top 500 banks, and

700+ public sector organizations

Connected to 154 cash clearing

systems globally

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There Are Two General Ways To Make Payments

Mobile

Citi ChannelServices

CitiDirect BE OnlineCitiConnect

File

Machine To Machine Online Banking

Citi's electronic banking platform in online, mobile and tablet versions for anytime/everywhere access

Provides a direct, connection to Citi from a company’s ERP (Enterprise Resource Planning) system and treasury workstation

Tablet

Computers Can Directly Integrate And Make Payments

ConnectivitySecurity

EnrichmentTransformationMulti-Destination-Routing

MonitoringReconciliation

Support of industry standards for communications and custom formats

Unparalleled global reach with TTS capabilities covered worldwide

CitiConnect

Cash and Trade

Single Connectivity Window to Citi’s Cash, Trade, and Card products

Commercial Cards

Issuer Services

Investor Services

Statements and Reporting

eBAM

Citi’s Treasury and Trade Solutions (TTS) provides the world’s largest institutions solutions to manage their cash, finance trade and make payments globally

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Computers Can Also Reconcile Payments

Citi Statements and Reconciliation is a solution designed to facilitate your financial and operational reconciliation through providing data enrichment and itemization

The solution will help increase the efficiency of your account reconciliation processes and move your back office capabilities beyond straight through processing to straight through reconciliation

The solution provides itemization of bulk payments and data enrichment of your transactions. The solution is designed to enhance end of day statements generated from the CitiDirect BESM platform

Statements and Reconciliation allows clients to automate much of reconciliation, reducing manual efforts involved

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9

What Do We Need People For?

Mobile

Citi ChannelServices

CitiDirect BE OnlineCitiConnect

File

Machine To Machine Online Banking

Citi's electronic banking platform in online, mobile and tablet versions for anytime/everywhere access

Tablet

Provides a direct, connection to Citi from a company’s ERP (Enterprise Resource Planning) system and treasury workstation

10

Computers + People – A Powerful Combination

• In 1997 the IBM computer Deep Blue beat the world chess champion Garry Kasparov. This was the first time that the best computer in the world beat the best human in the world

• Was this the end of human / computer chess?

• Playchess.com held a “Freestyle” competition in 2005 – changing the game

– Humans and computers could partner– The chess machine called Hydra – the “grandson” Blue

played– A Grandmaster with relatively good computer could

easily beat Hydra – But there was a surprise winner…

• The winner was 2 OK players with 3 laptop computers – but this system of players, computers and the interface worked better than the competitors

• This is an example of Man Computer Symbiosis a term coined by JCR Licklider in 1960

Source: “The Chess Master and the Computer” by Garry Kasparov, New York Review of Books, February 11, 2010

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Humans And Computers Are Partners

Human Computer

Man Computer Symbiosis(Humans + Computers)

●Selling Services

●Managing Audits

●Dealing with Crises

●Connecting to other machines:to efficiently transport data (e.g., CitiConnect ®)

●Process/Match large amounts of routine data: – looking for exceptions (e.g., Straight Through Reconciliation)

Category Human Machine

Cost Cheaper and more flexible

Build a better UI allowing humans to do their job

Strategy Set and measure goals Analytics capabilities

Judgment Personal accountability Provide appropriate controls

Improvements Analyze trends to increase efficiencies

Provide data to allow humans to improve performance

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Man Machine Symbiosis – Automobile Example

• Today, cars are very closely linked to people during the driving experience– Cars today are “Drive by Wire”– GM issued its recall because when the car

turns off, people could no longer drive –there was no power steering, no power braking and airbags shut off

• But humans are still needed for a number of things:– Cost: Advanced computer features (self

parking, accidence avoidance) are still very expensive today

– Strategy: People still need to decide where to go (for now)

– Judgment: People are still needed to be responsible in case there are accidents – in case something truly exceptional happens

– Improvements: Car designers are continuing to advance the system

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Cost: Cheaper And More Flexible

• Key learning: Make simple tasks simple to perform

• Home Screen: The CitiDirect BE platform provides a home screen view that will allow clients to perform all of their functions more quickly and easily

• Shortcuts: Customizable shortcuts provide one click access to most used functions

• Quick Tasks: Allow users to easily authorize and release payments and do other common tasks

Human Computer

• Humans are more flexible and multipurpose

• Getting a human up to speed is much easier than programming a machine

• Provide access to the electronic system

• Allow humans to get their jobs done quickly and easily through an optimal User Interface (UI)

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Strategy: Set And Measure Goals

• Market Data: Provide broad information to make strategic decisions

• Deep Analytics: Allow managers to make analytical and intuitive decisions on money management

• Set Liquidity Positions: Interactive viewing, analytics and reporting capabilities over their structured accounts

Human Computer

• Setting cash management strategy

• Setting standards on connectivity options

• Understand market trends and other experience to make business decisions

• Provide access to key market data and analytics

• Provide capabilities to analyze data

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Judgment: Personal Accountability

• CitiDirect BE Mobile: Allows senior client users to authorize payments even when they are not in the office

• Maker / Checker: To improve control, there should always be a separation between a person inputting a payment and authorization

• Customizable Authentication: Different types of transactions require different levels of risk (and therefore authentication). The CitiDirect BE platform offers 9 levels of customized authentication

Human Computer

• The ultimate arbiter of controls and authentication

• Provide accountability for high value transactions

• Provide data that allows for simple and easy understanding of risks

• Flexible infrastructure to manage security and controls that companies need

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Improvements: Analyze Trends To Increase Efficiencies

• Payments Analytics: Identify trend and opportunities to improve straight through processing

• Receivables Analytics: Streamline receivables reconciliation through consolidated transactional information.

• Scorecards: Provide summarized information to measure progress against goals

Human Computer

• Manage exceptions and manually process them

• Analyze data and make system improvements

• Capturing large amounts of data and storing and transforming it for analysis to improve system performance

• Highlighting exceptions

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Conclusion: Computers + Humans Beats Either One Alone

1. Machines have made a large impact on how we live today across every industry including finance

2. Computers are good at some areas:• Connecting to other machines:

to efficiently transport data (e.g., CitiConnect)

• Process/Match large amounts of routine data: – looking for exceptions (e.g., Statements and Reconciliation)

3. But people still have a place through advantages in:

• Cost: Cheaper and more flexible • Strategy: Set and measure goals • Judgment: Personal accountability • Improvements: Analyze trends to

increase efficiencies

My Son’s First Try At Human Computer Interaction

Man Computer Symbiosis

19Presentation Type (optional) | Date of Presentation

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