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News

Many people have learned to use new services. This is good news for tech companies, says Libor Čížek from Citi Commercial Bank

16.12.2020
Company: Deloitte

Thanks to automated solutions, the usual banker skills of years past are no longer enough. Communication with clients is more technical and project-managed by various implementation teams focusing on the development of services for digital economy companies, from e-commerce to software to fintech. “Cooperation therefore requires involvement of IT people on both sides,” says Libor Čížek from Citi Commercial Bank, where he leads a section focused on services for digital companies. He adds that “as for other trends, it is mainly about shifting the bank’s corporate customer experience closer to the retail banking customer’s experience, despite the higher complexity of services in the corporate world.” Another key aspect is the digitisation process, which has been accelerated by the ongoing pandemic.

The world has changed, and we will change with it. A sentence like this could have opened a meeting at Citi when the specialised division dedicated to commercial banking for digital companies was taking shape. This division focuses among other things also on cooperation with fintechs, whether via direct investments as part of Citi Ventures or by establishing cooperation in the development of new solutions. “We have innovative labs and accelerators all over the world which cooperate with fintechs to develop the most innovative products. This allows us to tap into their experience and bring global solutions for Czech companies,” points out Libor Čížek, Digital Companies Head at Citi Commercial Bank.

And digital companies have an increasing share in the economy, which is especially apparent in the Central European region, where Deloitte organises the Technology Fast 50 CE programme with Citi as its partner. “Digital economy’s share in the GDP is growing, as is the volume investments from venture capital funds, and technological companies themselves are growing too. In short, the region has good prospects for more and more successful companies that will compete for the main prize in the Fast 50 category in the future and can now be seen among Rising Stars,” says Libor Čížek. One of these companies is FF Trader, a company that uses the FTMO platform to look for capital market traders and which has become the fastest-growing Rising Star in Central Europe for the second time running.

Automated solution with a minimum of manual interventions

The developments are naturally affected also by artificial intelligence, which has already found its way into banking. “At present, it is used in particular for payment reconciliation, where products have already been developed that include AI components and are able to learn payment matching algorithms to increase the share of automatically matched payments as much as possible.”

Technology companies very often operate internationally. From a bank’s point of view, they are specific especially because aside from automation, they wish to find a unified and efficient solution for all the markets where they operate. “They require the same thing that their offer to their own customers, meaning scalability, possibility to add more and more products into one banking platform. What is key for them is the possibility to manage their finances in all territories from one place and in the same way. This makes global cash flow management easier for them across all continents and countries.”

Digital companies: 5 basic steps on the way to international expansion

  1. Set key expansion milestones, keep track of all local specifics (market, customers, competitors)
  2. Plan your financing (own resources, bank loan, bonds, stock exchange) including cash flows related to the expansion
  3. Keep track of cross-border cash flow management and related risks, do not forget about transfer back to the Czech Republic
  4. Set the internal infrastructure for the expansion in advance (human resources, internal processes, products)
  5. Ask others about their experience with successfully completing such an expansion.

The requirement for as much digitisation as possible is supported by the fact that tech companies put a lot of emphasis on efficiency. “They want solutions that will be significantly automated and require minimal manual interventions,” Libor Čížek points out. And that is precisely what Citi responds to. “Our goal is to transfer to corporate banking what we as regular consumers know from contact with a bank, namely the fact that it is as digital as possible. For example, operating all account functionalities from a tablet, worldwide. Another big topic is international payments, especially smaller ones, where we are working, on the one hand, on speeding up processes and increasing efficiency and transparency, and on the other hand on decreasing costs,” Libor Čížek summarises his response to the question of how corporate banking is changing.

Financing vs. tech companies

“We have a team within Citi corporate banking that focuses on technological companies, which includes IT and software companies, fintechs and e-commerce entities. This team creates special know-how and works with the latest products,” says Libor Čížek. “However, our cooperation does not concern only banking, we try to assist our clients with their other needs too. For example, if they are looking for an investment partner – a venture capital company.”

Where is banking headed in the area of corporate services and what can banks bring to this segment?

As with other companies, it is primarily digitisation and approximating the experience of retail customers, for example by controlling a global corporation’s account from a mobile phone. In addition, corporate customers increasingly often use direct connection between their ERP system and the bank, allowing immediate exchange of data across markets where the customer operates and opening the door for automated solutions in various areas, for example currency position management or payment initiation. The scope of available fully digital services keeps expanding. Citi is working on the possibility of remote digital opening of accounts. International payments are also an important topic, namely speeding them up and streamlining solutions even for smaller payments, in terms of transaction costs and currency conversion. We cooperate with several fintechs active in this area.

What are the specifics of a technological company from a bank’s point of view and what is important for you in terms of financing?

Tech companies are demanding customers, especially in a more advanced stage of development. However, their challenging requirements for digital solutions move us forward, and we appreciate that. They often do not have tangible assets or security for the bank, so we have to look at financing differently. We focus more at understanding the company’s functioning, its competitive advantages and KPIs.

To conclude, let’s sum up how the current situation has affected financing. What has changed for technological companies?

It depends a lot on the situation of each company as well as on the industry. Some companies have been able to place new issues on the stock exchange and acquire more financing. Other companies focused on cost-cutting to make sure they make it through the crisis, because it is still true that “cash is king”. Companies affected by the current situation can also ask for loans with state guarantees, which make financing more accessible. Then there is the acceleration of digitisation and the growth in the number of new users of digital services – many people have learned to use new services these days and many of them will keep using them. This is good news for tech companies, and so is the fact that there are opportunities now that did not exist before. It is important for companies to define what these opportunities are and to make a plan to achieve them. And perhaps to adjust their product so that they can use its possibilities even today.

Citi Czech Republic is a partner of Deloitte Technology Fast 50 CE.

 

Klára Vyskočilová

kvyskocilova@deloittece.com

Tags: Finance | Business Development | IT |

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