Citi Perspectives 2024 Corporates Edition

30 | Services Citi Perspectives The road to today: A brief history of next-gen treasury technology The technologies transforming treasury today are rooted in the recent past. It is worth taking a brief look at how they arrived at our doorstep. The origins of DLT are closely linked to Bitcoin, which was invented in 2008 and first used as a digital currency in 2009. One of the greatest advantages of DLTs is that they allow information to be stored permanently, securely, and accurately. The history of DLT is short and, despite all the seeming hype surrounding this technology, adoption has not yet led to a large-scale transformation of the regulated financial system and market infrastructure. That is, until the recent introduction of the regulated liability network (RLN) as a new type of financial infrastructure that uses DLT to create a secure and transparent platform for the exchange of financial value. RLN has the potential to allow customers’ bank deposits (which are liabilities of commercial banks) to be tokenized and exchanged between banks. For the customer, there is no change in the nature of the asset. When the bank tokenizes your deposit, you still have cash in a bank account, and are not left holding a proprietary bank token. Meanwhile, through the RLN, you are able to transfer value across all participating banks and Central Banks. Unknown to many, APIs as a technology originated as early as the 1940s. An API is a set of rules that enables a software program to “speak” with another software program. It was not until the rise of the digital economy and services such as ride-sharing, which rely on the seamless, real-time connectivity of microservices through smartphones, that APIs became truly mainstream. API’s application in the banking industry translates to real-time transmission of data and information. Real-time treasury (RTT) is the concept of adopting instant payments and real-time information delivered via APIs, as well as enabling real-time liquidity management that accelerates the velocity of existing treasury processes. It is important to note that even with the advent of these technologies, current regulations, corporate technology, and payment infrastructures are all in need of modernization in order to fulfill the promise of the future. We predict that such modernization will eventually happen – but we need to all work together on a common thread. Real-time treasury (RTT) is the concept of adopting instant payments and real-time information delivered via APIs, as well as enabling real-time liquidity management that accelerates the velocity of existing treasury processes.