Why Industry 4.0 makes partnerships paramount

Naveed Sultan

Naveed Sultan,
Global Head, Treasury and Trade Solutions at Citi

The global economy is undergoing unprecedented change as a result of digitization and other structural trends. In this new environment, companies need to rethink their business and operating models at the same time as collaborating with other relevant market participants, writes Naveed Sultan, Global Head, Treasury and Trade Solutions at Citi.


The defining trends of our time – digitization, globalization and urbanization – are fast reshaping the world. Globalization is facilitating new trade flows between North and South, enabling emerging market firms to become major global players. At the same time, humankind is becoming increasingly urbanized; more than half of us now live in cities, providing a foundation for innovative service-focused companies.

The enabler for the new wave of globalization and the dynamic companies taking advantage of urbanization is digitization. Companies used to take decades to go global; now thanks to digitization new entrants can launch in multiple markets within months. Digitization also enables closer links with consumers – eliminating many parts of traditional supply chains at a stroke – while data analysis gives firms instant insights into consumers’ preferences and desires.

The transformation of business

Digital disruption poses an existential threat to some companies. Large established infrastructures, which previously acted as barriers to entry given the high cost of replicating them, are becoming a disadvantage in many markets. Video rental chains are a good example. When mail order video rental emerged – closely followed by digital distribution – the big chains’ outlets became an unsustainable cost that ultimately sunk their businesses.

Digital disruption is just one facet of a profound change – often described as Industry 4.0 – that is transforming businesses and economies around the world. We are now living through a fourth Industrial Revolution – the first was driven by water and steam power, the second by electricity and the third by electronics and information technology. Industry 4.0 is defined by artificial intelligence, big data, robotics and other technologies that blur the lines between the physical, digital, and biological spheres.

Historically, the winners of one Industrial Revolution have often been the losers of the next. To survive and thrive in the era of Industry 4.0, companies will need to change. Adaptation is not just a question of creating new products or services. To be a winner, corporates need to transform their mindset and culture. They must fundamentally question how they operate and reassess their structure and strategy.

The effects of Industry 4.0 are already being felt by many sectors. But even companies that are currently unaffected should urgently look at their prospects and consider if they need to adopt new technology and re-skill their workforces – the pace of change is only going to accelerate.

How Citi is approaching Industry 4.0

Citi Treasury and Trade Solutions (TTS) recognizes both the opportunities and challenges posed by technological transformation. To create a business with a brighter future, Citi has adopted a three-part digital strategy aimed at building a financial ecosystem for global commerce.

Firstly, we are digitizing our core solutions to give them the connectivity required for the digital age. We are also using data as a strategic differentiator, deploying smart processing, and creating a next-generation client experience. To do this, we encourage disruption from within so that the way that we create solutions and serve customers is continually challenged.

Secondly, we are constantly looking for growth opportunities by designing smarter solutions for increasingly sophisticated treasuries. We are also adopting a segment strategy for digital flows. This entails taking a hard look at our client base and assessing which established companies are well positioned for Industry 4.0, and where they might need help, as well as identifying clients that have the potential to grow rapidly in a new hyper-competitive digital world. Given the scale of change Industry 4.0 will bring, one of our key objectives is to become a trusted adviser to clients.

Thirdly, we are enthusiastically adopting an ecosystem approach. This is a radical step for a bank. In the past, the industry has taken the view that it is uniquely qualified to design financial services solutions and sell them to clients. A decade ago, Citi decided to do things differently. We established a network of Innovation Labs around the world to facilitate a new way to work.

Our Innovation Labs upended the traditional product design process by focusing on collaboration and client interaction, with the goal of uncovering clients’ day-to-day pain points. The change in culture required to make the Innovation Labs work took time and required leadership and effective promotion of digital capabilities. But the effort has been rewarded by the delivery of scores of new solutions that might otherwise have taken longer to come to market.

And our thinking extends beyond the Labs. We believe that true transformation requires an ability to harness knowledge and expertise from across a broad ecosystem that includes academia, industry bodies, our employees and, of course, fintechs.

Partnering for the future

When fintechs first emerged a decade ago, many banks viewed them solely as competitors. We recognized that their relationship with banks was more complex: some had the potential to become fast-growing clients; others could be valuable partners in solution development.

Fintechs’ value proposition is agility, entrepreneurship, and new technology whereas banks deliver value with their scale, connectivity, and trust. By partnering, we can complement each other. We use fintechs’ proprietary AI to help clients match payments and receivables, for example. We also leverage fintechs’ know-how to enhance our overall client proposition, by deploying state-of-the-art cybersecurity capabilities.

These partnerships are a win-win for our clients and fintechs. Clients gain access to advanced technology more rapidly than if we had to develop everything internally. Fintechs can rapidly scale their solutions by leveraging our network, while enhancing their credibility. By recognizing the strength of each partner – and being humble enough to accept you are not best at everything – it is possible to build a partnership that delivers the best possible solutions for clients.

As digitization, globalization and urbanization accelerate, and Industry 4.0 revolutionizes how companies function, we are proud to have been one of the first banks to make the leap to a true collaborative and partnership model – engaging with fintechs, clients and many others. It is only by opening up that companies will be able to prosper in the coming years.