City El Salvador will eliminate cash on its 60th anniversary

The unit will shift to completely digital operation. Thus, the New York branch of the parent company will continue to provide its corporate services without physical equipment.

By moises alvarado
March 18, 2024- 04:32

Citi will celebrate 60 years of operations in El Salvador this week. And it is on the verge of setting a milestone: becoming the country’s first exclusively digital bank. In short, cash, checks, and all physical backups will disappear from your processes. Even the service window will be abolished. For Ana Cristina Lopez, its country officer in El Salvador, this is a logical step in its evolution, as it is not a typical bank that serves people. The City is dedicated to companies and a certain type: companies with international operations.

“95% of our operations were already digital, this is a step towards the future. The reception from our customers has been great. They even congratulated us because this will give them an opportunity to do the same,” Lopez said. Thus, the bank will reduce some of its costs, such as the transfer of physical values.

For the executive, one of the main catalysts for the move was the COVID 19 pandemic that affected El Salvador and the world in 2020, which demonstrated that it could be operated without using physical devices. Therefore, it overthrew many paradigms. Going forward, customers will continue to have their accounts, but will no longer be able to make cash withdrawals or check payments to send funds from their account. To do this, they will utilize the Bank’s extended network as well as the two existing interbank connectivity channels in our country, UNI and Transfer 365, both through the Central Reserve Bank of India (BCR) with government participation.

For Lopez, one reason to make this move to zero cash and checks is because these two platforms already exist, which are efficient and reliable.

“BCR had a highly strategic vision,” he says. “It is surprising that an efficient tool like these has not been promoted enough by the Salvadoran state, because it solves the needs of thousands of Salvadorans every day.

Citi, as stated above, is a purely corporate bank. To understand this concept, you first need to consider that your customers are not people, but organizations.

Citi serves four types of users: multinational companies that have subsidiaries in El Salvador; public area; traditional banks; and conglomerates, i.e. local companies with regional operations.

Ana Cristina López is the head of the City of El Salvador. Photo courtesy of EDH/City.

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If you had to define the city’s operations in one word, you could use crossborder or transnational. In fact, for a client to be able to take advantage of all the benefits offered by the entity, it must have an international business.

“Our products are specific to these types of customers who have these types of needs. If your operations are limited to just one country, the services I have will not work for you,” says Lopez.

This is because Citi El Salvador is, in fact, a branch of Citibank New York, although it has its own operations and capital. Therefore, it is directly connected to a network that is capable of providing global solutions to any company. Do you need currency exchange? Citi can do this because it operates in the country where the currency comes from. Do you need to pay multiple suppliers in different countries around the world? City solves it. And the best part is that it does it automatically.

The bank has a system in which the customer simply has to enter all the information related to his payment and collection into its internal platform. Citi connects to it to function automatically. This eliminates double entry, i.e. entering data twice to perform the same operation. For companies that have to process hundreds of small payments every day, this is a lifeline. And saving hundreds of hours of work.

On the other hand, Citi also acts as an advisory bank, i.e., one that is able to conduct comprehensive analysis to offer the client the exact product that will help them achieve their goals. This is because Citi, which has global operations, already has an extensive catalog of solutions.

To get an idea of ​​what is possible with a bank with these characteristics, you only have to think about a recent process by Citi El Salvador, in which they provided a $350 million loan to a company. But it had a peculiarity: Citi structured the credit, then offered portions of the loan to 13 other banks, which took it over. In this way, the origin of funds can be diversified, making such a large expenditure much safer for the institutions and the company.

Citi has another interesting product, and one that allows its customers to enjoy liquidity, it is known as Trade Working Capital Finance. This applies when a company makes an agreement with its supplier to make payment within 120 days.

But the supplier doesn’t have to wait at all to receive their payment, as they can login to the Citi interface, look for their outstanding invoices and receive the money instantly. However, the customer can repay that payment to Citi within the period agreed with the supplier, i.e. within those 120 days.

It’s a win-win: whoever sold gets the money immediately; The payer gains liquidity, as he will continue to collect from his customers. In this case, this type of bridge loan carries an interest that is established by the user’s rating in the city.

“We are pleased to be able to provide all these services from El Salvador. Above all, because we do it with the best team,” comments Ana Cristina López, Citi’s Country Officer in El Salvador.

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