Shared Service Centers: Leveraging digital to drive efficiency and value creation

Swati Mitra

Swati Mitra,
Global Sales Leader, Digital Client Advisory and Emerging Market Corporate Clients,
Treasury and Trade Solutions, Citi

New technologies offer potential cost savings, efficiency gains and control benefits for shared service centers (SSCs). However, corporates need to plan carefully to realize their goals.

Cost, process optimization and standardization have long been the key drivers for corporates to implement SSCs. However, with the growth of new business models, changes in market infrastructure and new payment instruments, including instant payments and mobile wallets, and growing cyber threats, an SSC digitization strategy is becoming much more important for companies. There is growing emphasis placed on leveraging technology to add value by using innovations such as robotic process automation (RPA) and predictive analytics.

Digitization is gaining increased prominence in SSCs for multiple reasons. Payments and collections are evolving due to e-commerce and emerging technologies, including e-wallets, cards, and the internet of things. At the same time, innovation is opening up new opportunities; artificial intelligence (AI) can be used to help corporates to automate reconciliation processes, application program interfaces (APIs) can integrate bank functionality into ERP systems, and RPA can support repetitive tasks such as bank statement reconciliation and invoice processing.

Perhaps most importantly, digitization offers significant savings – McKinsey research on 120 SSCs showed a 50% increase in efficiency in some back-office functions – while furthering the centralization and standardization agendas that have driven the growth of SSCs in recent decades1.

Preparing for a digital future

While most SSCs are not yet prepared for a full-scale shift to a digital operating model, many are shifting towards knowledge-based activities with greater use of RPA, data and AI. In planning for the future, companies need to understand how and where digital technologies can be applied within an SSC operation. Three technologies stand out as relevant:

For SSCs, these emerging technologies offer common core potential benefits – cost savings, reduced errors, greater productivity, improved governance and control and more timely insights to help the enterprise make more informed decisions.

However, while these technologies are expected to have a significant impact on SSCs, it is important to note that they are at different stages of evolution in terms of their proven resilience, scalability and stability. Corporates need to assess the maturity and stability of any solution, its expected return on investment, as well as the impact on business operations and models, before committing resources.

Working with the right partner

The fast pace of technological development can make it daunting for corporates seeking to leverage innovation to improve efficiency and deliver added value for the business. Fortunately, support is available. Corporates should consider working with a bank that has a proven history of innovation, a track record of consistent investment in technology, knowledge of regulatory and infrastructure changes, and a deep understanding of the changing needs and priorities of SSCs around the world.

Citi partners with more than 1,400 SSCs around the world and continues to expand its portfolio of digital solutions, including Citi® Smart Match, CitiConnect® API, Citi Payment Outlier Detection and Payment Insights, to help clients drive operational efficiency and mitigate risks. As importantly, Citi prioritizes cyber security – a major challenge for companies: 76% of organizations have been the victims of payment fraud – and has developed a cyber security advisory toolkit with checklists, best practices and case studies for clients to consider2.

SSCs will continue to evolve their operating model, scope, technology and talent management strategy to support business units in a dynamic macroeconomic, regulatory and digital environment. Digitization is changing the role of SSCs – they are set to become centers of expertise, with a reduced emphasis on completing lower level manual tasks and a greater focus on knowledge-based processes as well as devising and launching innovative and efficient service options. Citi is ready to support its clients on this exciting journey.

1 How shared-services organizations can prepare for a digital future

2 2018 AFP Payments Fraud and Control Survey Report