Interview: Citi Global Head Of Commercial Cards Manish Kohli

Citi last fall named Manish Kohli managing director and global head of commercial cards, within its global transaction services unit. A 14-year Citi veteran, Kohli most recently led the firm's growth into new markets in Europe, the Middle East and Africa. Now overseeing the global growth strategy for Citi's commercial and government customers, Kohli spoke to Business Travel News executive editor Mary Ann McNulty about recent investments and business challenges.

How has your business changed in the last few years as a result of the investments and new strategy at GTS?

Business in the last three years double-charged itself; our country footprint has doubled. We've expanded into so many new markets, gone into new product lines, new countries and new client segments. There's been a lot of investment in new product and new product strategies. The expansion was driven by our strategy, where we realized how core to the treasury function that a client's working capital and efficiency agenda is, and how reliant commercial cards are to the direction in which the payments industry was moving. Our largest clients are investing more in emerging markets, and they are insistent in looking for consistency. What they see and get in the United States and Western Europe is what they want in Bulgaria, Romania and Nigeria. Sometimes in response, and sometimes anticipating that trend, we have expanded our business into those markets. Right now we're in 64 markets where we self-issue local currency products, which I would like to believe is significantly higher than the competition. It's our investment strategy and our philosophy to invest our money where we see a positive market trend and client needs go.

How many more markets do you need to be in?

Every time I tell myself that we've run out of markets, we find a few more. As of now we have a lot of focus in Latin America and in certain markets in Asia. There is no right number. We will continue to look for markets where clients are investing, setting up subsidiaries and rolling out global programs.

What percentage of your clients actually issue cards outside the United States?

A very large percentage. We have programs that are parented or sold to clients based in the U.S. and Western Europe, but it's encouraging to see that in some of the emerging markets—some of the Asian, Middle Eastern and Central and Eastern European markets we've invested in recently—large organizations based there have expanded internationally and not only rolled out cards in their home countries, but in international markets too.

What are you doing in China?

China is a big focus for us and also one of the most difficult markets we've had to deal with from a regulation perspective to launch. We have very advanced-stage plans to launch a product in China. It will happen in 2012. We have a very large consumer bank and corporate bank franchise in China. We're doing a joint one-Citi partnership in launching credit card products in China. At this time the technology and infrastructure work is complete, and we're awaiting regulatory approval to launch the business there.

Have your customers been asking for this?

It is the most exciting market launch we will do. On my watch, we've done more than 30 [market launches], but I've never been more excited about a market launch than I am about China. It is such a difficult market, there is so little competition among international players, it's such a large and fast-growing market, and clients so desperately need a product. We have a lot of pent-up demand. We have commitments from a lot of clients to launch as soon as we get regulatory approval.

As the new head of commercial cards, what is your greatest challenge?

The greatest challenge is what clients really want when they buy from us: global consistency. Because of the uniqueness of our model—we self-issue in all markets we do business in—we're uniquely positioned to offer that global consistency. That is our largest trend, which feeds into our largest challenge: While we have the technical ability to do so, we're often constrained by either local regulation or market practices. For example, in some countries, they want call centers to be in-country. We always issue a card in local currency and local language, but I would prefer to centralize my call centers to give clients an absolutely consistent experience. Often, local regulations don't allow us to do that. Regulations may prohibit offshoring or require a data center or support people to be in-country. Working around that and keeping clients transparent to those local landscape differences are the largest challenges we have. I would rather not explain to a client that in a particular market I do something different because the local regulator requires it. We invest in data tools to give clients a very consistent experience so they don't think they are buying a different product country by country.

Acceptance and reporting are the two issues we hear most frequently as varying by country. Do you hear that from clients?

I don't hear of acceptance as an issue. That's good and speaks to our strategy of recommending a scheme—Visa or MasterCard—for our clients. Clearly Amex and Diners have issues of acceptance. Often the challenges are in data. The data that comes from country infrastructure is different. Irrespective of the data source, we have a proprietary data repository called Global Data Repository. It's proprietary to Citi, so it's not a MasterCard- or Visa-sponsored data repository. We capture all that information for p-cards, central travel accounts and T&E cards, enrich that data from alternate sources and then send it back into the data repository so clients can build online reports, queries, etc. We have a few tools and program dashboards that allow them to interrogate that data. Data can be different country to country, but we've often seen that we can average out those differences by our investment in data management. This is fundamentally our business as a data business; settlement, financing and everything else comes second. The most important aspect of our business is data management.

Was the data repository enhanced as part of your global growth?

Yes, we insourced, so now it's totally owned by us. This was part of an exercise we did a couple of years ago, where we looked at all parts of a value chain: Which are most critical? Which are the differentiators? Which needed an investment? And where was the right place for it? The data repository was one that we felt, with the supporting infrastructure around it, we needed in-house.

Now that the divestures of the Diners International brand to Discover and the Diners North America franchise to BMO are complete, how has that impacted Citi's commercial card business?

In the business I run now, we've traditionally never had Diners in our portfolio. That was something that other parts of the bank owned. Even when Citi owned both the GTS brand and Diners brand, in reality we were positioning two solutions to our clients. The confusion clients had when we positioned two different products has gone away. What clients have really appreciated is the clarity in saying, "This is the product that we offer and invest in, and this is the only product we're offering."

What types of card products are in your portfolio?

I'm responsible for all commercial cards in any part of the world: public sector, financial institutions and large corporate, across all product lines—so procurement, travel and entertainment, fleet, virtual card accounts, meetings and events. Increasingly we're trying to move further down the payments spectrum, and that falls within my responsibility.

Who is Citi trying to sell to—only large, or midsize and small too?

Our focus is predominately on large corporations of the world: multinational, transnational organizations and large government and financial institutions. A lot of our solutions, because they are inherently multi-language and multi-currency, resonate with those organizations. We don't have a lot of focus in the commercial card space toward the small and midmarket sector. Where Citi as a firm has local commercial business, we support those efforts. But if we look at all the countries we're in, there are only a handful of countries where we're really offering solutions to the midmarket or small market. Clients we sell commercial cards to are typically clients of the bank, people with whom we have credit relationships or cash management relationships or all the other services you would expect from a bank operating in multiple markets. We already have the dialogue at a very senior level with them. Often we'll introduce a commercial card sales specialist to them. The actual sale is done by our specialist sales team only because that is the quality of dialogue that clients want. Our client base is the top 5,000 corporations by size globally. That speaks to my point about the lack of active focus on middle market. With that focus, we typically deal with a fewer number of clients, but the same client in 40 to 50 markets.

Last fall you announced plans to issue chip-and-pin cards to your U.S. cardholders' global travelers. How many clients have asked for such cards?

A lot of clients have asked for it, and we honored those. Clearly the population that asked for it is those who travel to Europe. I was a little surprised by the demand. I thought it would take some time for people to get familiar with it, but the level of education and awareness was very refreshing. A lot of clients headquartered in Europe had demands much earlier, so that development was done earlier. In that population, as soon as we launched chip-and-pin, there was a land grab where many clients asked for it.

When will commercial cardholders be able to use mobile phones linked to an account to pay for trains, cabs or other travel expenses?

We've done something on the prepaid and consumer side, but on the commercial side, nothing has been developed yet. We're framing our strategy and talking to the ecosystem. We have a reasonably broad mobile strategy, starting from simple alerts and moving to mobile applications on devices, which is under development. In terms of building something specifically for payment initiation, there's a workstream where we're looking at various options. We've been polling our ecosystem and having conversations with acquirers, Visa and MasterCard, as there's no fun in making a device if the acceptance network can't fully support mobile. At our last client advisory board, this was one of the topics, and some clients expressed interest in having mobile solutions. Clients are aware of the alerts, work on the 3D Secure—one-time passwords on mobile devices—and work on the mobile application space. But on using mobile as the payment initiation channel, the realization is only starting now. The reason clients would want it is for speed, but if they still have to wait for a receipt, is that really a benefit? I find it encouraging that some of the largest clients and corporations are now thinking in more granular detail about the benefits that mobile payment could offer to them and whether they want to partake in it. The process has started, but it's still a couple of years away.

Do you expect credit card fee surcharging to expand to the United States?

There's a lot of speculation about whether it will be allowed, but I'll give you the client's take. Clients dislike it. They don't just dislike it because it's incremental fees. When they are looking to procure, they would like fully loaded costs. With the majority of industry buying on corporate credit cards, there is an expectation that when an airline like Lufthansa gives a quote, it builds it into their fees. When they don't, it's like the budget airlines in Europe, which might charge £1 for the fare but charge for going to the loo and everything else. Influential clients in Europe are saying airlines have really got it wrong. If airlines are not going to build [card costs] into the total price, [clients] will add a conservative number of what they could be charged to cost comparisons. I don't think they're making a lot of friends with the surcharging practices.

Who do you consider your biggest competitor?

We think our model is very different and unique. While we do complete with Amex to some extent, I think our largest competition is other modes of payment: checks, invoicing processes and, in certain cases, wire payments. It's not that I don't really look at Amex and J.P. Morgan as competitors—they are competitors—but there are other forces here too.