Citi is one of the leading global banks utilising digitisation and emerging technologies to help move the industry forward. Having recently been named the ‘Best Bank for Digitalisation’ in the 2023 GTR Leaders in Trade Awards, members of the Treasury and Trade Solutions (TTS) Global Trade Data, Partnership and Innovation team share their outlook for the future of digital trade, and the innovative tools that will power it.


A legacy of innovation

Having been one of the first trade banks to deploy optical character recognition (OCR) tools to digitise paper documents, and as a trailblazer in the use of artificial intelligence (AI) to improve regulatory compliance requirements, among other advances, Citi has long embraced innovation and new solutions to help shape the future of trade.

In 2022, the bank established its Global Trade Data, Partnership and Innovation team, led by managing director Valeria Sica, which brings together specialists from across its trade services business as well as from Citi Ventures and Citi Innovation Labs, with a mandate to drive the next phase of the digital transformation strategy.

“We changed the way that we do business with the creation of this team,” says Sica, who heads up a group focused specifically on data strategy, a pivotal aspect of the business. “Bringing all of these different skills and perspectives means that our approach is very different from a traditional trade finance banking team in the way that we’re tackling innovation and third-party collaboration.”

The team, which operates separately to, but works intrinsically with, the bank’s business as usual (BAU) functions, is tasked with analysing the pathway to fully digital trade and breaking that down into individual, manageable steps and processes that can be implemented to support the BAU solutions today.

“We’re taking a fresh perspective in terms of how trade can be transformed,” says Ope Olomo, a director in the Partnership and Innovation team. “We’re not like an innovation lab where we’re creating prototypes and thinking about a future that may materialise; we’re impacting the business right from day one.”



Collaboration reimagined

As efforts to digitalise trade gather pace, increased collaboration among industry stakeholders will be key to minimising fragmentation and delivering more value to the evolving needs of businesses. Where once the landscape may have been competitive, over the last few years it has become a lot more collaborative as banks, fintechs, big tech and the public sector work together to transform the way that things are done.

“Collaboration between banks and fintechs will only accelerate moving forward. A lot of that has to do with the fact that we’re finally being honest about what each party brings to the table,” says Bob Petrie, also a director in the Partnership and Innovation team. “While banks have the credibility, scale, reach and balance sheet, fintechs can innovate quickly and apply technology creatively. When these capabilities combine, we’re able to create amazing solutions.”

But it is not only mutual benefit driving banks’ approach. With corporate clients making it clear that they plan to be doing business with both financial institutions and fintechs going forward, stakeholders have little choice but to strategise on how best to work together.

“For Citi, this has prompted a significant investment into APIs, open banking and the modern user experience,” says Petrie. “We’re enabling ourselves to partner more effectively because our clients are demanding it.”

One recent example of finding the right fit with a fintech partner is the bank’s investment in Hokodo, a European provider of b2b buy now pay later and digital trade credit solutions. Together, Citi and Hokodo are partnering on new and innovative payment solutions for b2b marketplaces.

“Pre-partnership, Citi’s b2b marketplace clients wanted all of their suppliers serviced, but we didn’t necessarily have the risk appetite or the cost basis to support the smallest clients, while Hokodo didn’t have the balance sheet to support the largest buyers. Together we have an effective end-to-end solution,” says Petrie.

Alongside fintechs, Citi’s TTS team believes big tech companies will play an increasingly relevant and significant role in disrupting the trade finance industry.

“We’re already collaborating closely with big tech and will continue to rely on them to build our core infrastructure, including cloud solutions and developments in AI, while then bringing in fintechs to solve specific, tailored solutions that need to be rolled out for the industry to move forwards,” says Sica. “Combining the scale, reach and credibility of global brands like Citi with that of the big tech players can have a systemic impact on the finance industry in a way that sidesteps the risk of fragmentation often associated with what smaller fintech players are doing.”


Harnessing emerging technologies

In addition to more established technologies, such as OCR and APIs, Citi’s team has identified several emerging technologies that it believes will play an important role in the future of digital trade, namely AI and machine learning, distributed ledger technology (DLT), smart contracts, the internet of things (IoT) and 5G.

AI and machine learning can be deployed to capture and analyse data in trade transactions to improve regulatory compliance requirements and support fraud prevention activities. “To be able to do that, we need to access data in a permissioned, secure way, which goes back to why data is such a strategic element to our team’s approach,” says Olomo. Linked to this is the ability to leverage cloud infrastructure, which provides processing power and data storage capabilities, while also reducing fragmentation by enabling efficient data sharing.

“When it comes to DLT, we’re looking at it in different ways, one of which is exploring how permissioned, distributed database features of DLT can be used to address cross-border data privacy requirements. If each trade actor or participant can record their data in their respective database nodes and enable permission to access it when required, this can also help in addressing some of the fragmentation concerns in the trade industry.”

“Then, with smart contracts, we’re exploring ways to automate the validation of commercial terms and conditions by ingesting relevant information and event changes via data oracles to trigger commercial actions like payments, exchange of value and refunds. Smart contract-powered rule engines are autonomous, automated and generate decisions quickly and efficiently, and are designed using Citi’s subject matter experience in trade and working capital solutions,” he adds.

Meanwhile, the deployment of IoT technology can help companies connect the physical and digital worlds, giving them real-time access to data. “One of the things we’ve noticed is the disconnect between the flow of goods and services and the flow of funds, which again is part of the fragmentation with the industry today,” says Olomo.

Being able to combine these two flows effectively could unlock considerable potential and can be amplified when IoT is coupled with 5g, which delivers more data faster and more securely, and can be used to connect a new range of IoT devices and applications, he explains.

Citi is exploring the combination of these emerging technologies to embed financial services into processes that are not necessarily finance-oriented, enabling the bank to access new data that can be harnessed to drive financial inclusion, particularly for smaller enterprises that typically struggle to make available the data points required for credit decisions.

Olomo adds: “With our partnership with Hokodo, we are able to extend payment terms of small and medium-sized corporate buyers in B2B e-commerce marketplaces. The credit risk assessment and authorisation are embedded directly within the checkout process using transaction, logistics and profile data obtained from the marketplace. By applying machine learning models, this process is completed within a second.”

As Citi works towards assessing and developing all of the necessary technological capabilities for the end-to-end digitisation of trade, the team emphasises that it does so by prioritising the solutions that provide the greatest service and value to clients.

“Clients are becoming increasingly open to exploring these new emerging technologies and partnering with us to future-proof their systems,” says Sica. “That’s one of the biggest shifts we’re seeing and is central to the digital transition we’re pioneering at Citi.”