The past year has seen Societe Generale reap the benefits of its long-term investment initiative in its transaction services business across Europe.
The strategy was launched in 2018, when the firm had a strong position in France but had not invested elsewhere in the region. It set itself the objective of investing in cash management, trade finance, factoring and supply chain financing and moved the business from retail banking to global banking and investment solutions.
The results are clear. In 2022, the cash management business was up by 82% versus 2021, trade finance by 17%, receivables and supply chain finance by 19% and cash clearing by 36%. Overall European business grew by 45%.
“We have seen a dramatic improvement in our competitive position over the last five years,” says Alexandre Maymat, previously head of global transaction and payment services at the bank and now head of group inspection and audit. “We have tripled the volume of payment flows that we manage.”
David Abitbol has taken over from Maymat as head of the transaction banking business.
“Our strategy is to develop much more tailor-made solutions in Europe, while the biggest global transaction banking actors, in particular in the US, operate more on an industrial scale,” Maymat explains.
Last year was the first full year of operation for the strategic partnership with cloud-based IT solutions provider Kyriba, through which the bank offers a complete treasury management solution. The system is very modular, offering clients bespoke solutions and very different models for liquidity management. The bank has also dramatically improved its virtual account capacity and extended its offering to seven new European countries in 2022.
The bank has repositioned its trade finance offering, shifting the strategy away from an industrial letter of credit business and towards a more sophisticated guarantee business. Not surprisingly, given the bank’s strength in this field, sustainability plays a big part.
In 2022, it launched a hybrid green and sustainability-linked guarantee for large corporates, offering more flexibility in the business sectors that it can be adapted to. This offers two environmental, social and governance (ESG) components in one guarantee and can potentially be aligned with sustainability-linked revolving credit facilities.
The bank is also working with fintech CarbonChain to build a use case for measuring CO₂ emissions throughout supply chains using letters of credit.
Our strategy is to develop much more tailor-made solutions in Europe
Alexandre Maymat
“We are the first European bank to develop a comprehensive CSR [corporate social responsibility] offering covering factoring and receivables for large corporates and for small and medium-sized enterprises,” adds Maymat.
Societe Generale is also thinking ahead to the potential for blockchain and asset tokenization in the payments space.
“Digital money is currently a tool for investment not payments,” explains Maymat. “We want to be ready when it will become an alternative to the traditional payment means.”
The bank launched an innovation incubator programme in 2022 that led to a partnership with fintech ProsperUs to explore the use of the platform for tokens in addition to traditional currency payments.
“We are testing the capacity of platforms to interact with our systems to process interbank flows through digital currency,” says Maymat. “We have launched our own stablecoin through a subsidiary and are looking at how we can use stablecoins to make payments in the closed environment of corporate deals – for example between head office and subsidiaries. We intend to test this within Societe Generale.”
