Citigroup managing director of Global Corporate FX Sales Flavio Figueiredo said Malaysia, alongside the rest of Asian emerging markets, provides healthy challenges and innovative solutions to the group's forex segments. [NSTP/MAHZIR MAT ISA]

KUALA LUMPUR: The emerging economies (EM) play a big part in the global Citigroup foreign exchange (forex) business and Malaysian contribution is at the forefront of the global banking group.

Citigroup managing director of Global Corporate FX Sales Flavio Figueiredo said Malaysia, alongside the rest of Asian EMs, provides healthy challenges to the group's forex segments.

"EMs are very diverse and market flows are growing faster than the developed markets. There is also the emerging of standardization of FX processes, which is becoming an efficiency priority” he said in an exclusive interview with The New Straits Times.

"Technology is the key change drive and solution enabler. In fact, Corporate FX Sales in Asia processed 23 per cent more transactions than the year before and on average, seven out of 10 trades are executed through automation," he said.

Figueiredo explains that in the more advanced nations like the United States and Western Europe, forex automation is already at the 97 per cent range.

Though this is something that he wants for the EMs and Malaysia, Figueiredo is also well aware of the regional limitations.

"As of now, about 70 per cent of the Malaysian forex business is already automated, and though this is on par with the rest of the region, we aspire to push that up to the 90 per cent range within the medium term,” he said.

"Central bank regulations are key to our business and forex is pretty much a borderless business. With automation comes speed."

Despite focusing on larger multi-national companies that helped the bank facilitate an average of US$4 trillion of flows daily, Citigroup is willing to take on the ever-growing 'digital natives' firms.

Digital natives firms are tech-centric companies that are borne out of technology, asset lite and have the amazing capability of scaling its business very quickly.

Some digital natives firms that comes to mind are tech ride-sharing firm Grab, e-commerce giant Alibaba and accommodations provider Airbnb.

"Digital natives are mushrooming everywhere and even more so in EMs than in the advanced nations. We believe that this is a combination of a young population, higher education quality as well as deep internet and mobile phones penetration," he said.

"Digital natives present a new segment for Citi's forex business because these companies scale very fast and as they innovative their business, we too have to innovate our offerings. From a forex point of view, dealing with these firms are low risk but with healthy returns."

Figueiredo also noted that digitalisation of e-commerce have grown very rapidly and Malaysia as a market offers a huge potential.

“We do see this segment has grown tremendously here in Malaysia and on top of our FX Solutions, what we can offer local e-commerce companies the opportunities to go global by leveraging on our network,” he said.

“We have multiple engines for client-led growth and are poised to capture opportunities anywhere we see them around the world,” he said referring to CitiFX Pulse that provides real time Spot FX, outright Forward FX and Swap FX pricing in over 700 currency pairs 24 hours a day.

Corporate users dealing over CitiFX Pulse platform grew 12 per cent year on year (YoY) with more than 12,000 trades booked in excess of US$2.4 billion in volumes.

In Malaysia, there are currently 300 active bases and 500 active users using the CitiFX Pulse.

The Malaysian side also saw 12,000 trades go thru FX Pulse, up 12 per cent YoY, which represents about 20 per cent trades which are booked directly by client.