Transaction bank profiles: ING
After several years of restructuring, ING has put transaction banking at the heart of its commercial operations. Despite strength in western Europe, it has yet to recover its position as a top 10 global cash manager.
The flotation in July this year of ING Group’s insurance arm, NN Group, marked a turning point for the Dutch financial services conglomerate.
Since being bailed out by the Dutch government in 2008, ING has been engaged in one of the largest restructurings of its kind in the financial services industry, and the successful sale of shares in its international insurance business was effectively the last piece of this long process.
As a result of the sale, ING has transformed itself into a pure banking institution, and one that has transaction banking as “one of the anchor business lines of its commercial banking strategy,” says Mark Buitenhek, global head of transaction services. “It’s one of the commercial banking product pillars alongside financial markets and lending services.”
Transaction banking has been an important business for ING’s commercial banking operations for a long time, but its positioning has now been re-enforced and its approach recalibrated with the aim of being a “top five player” pan-Europe, says Buitenhek.
Historical analysis of ING’s ranking in Euromoney’s cash management survey shows that it was a top 10 global cash manager for non-financial corporates in the years before the 2008 crisis. Yet, since then it has fallen back and this year is ranked 17th, down from 14th in 2013.
Its performance among financial institution clients has suffered and this year it was ranked 21st globally, according to the survey. On the brighter side, ING’s ranking among financial institutions in western Europe is higher, and for non-financial corporates in the region in particular it is ranked a solid 10th, up from 11th in 2013. But in the Netherlands and Belgium it is ranked a top three cash manager.
ING has a deep and broad international client franchise – spanning multinational corporations, governments and financial institutions –particularly throughout Europe. ING can also service such clients in the US and Asia through its international network, which is a key strength.
Other strengths, according to Buitenhek, include ING’s cash management and overlay solutions; an integrated approach to devising, developing, selling and supporting such customer solutions; and a single point of entry to the bank; and a common approach to service delivery.
|Our clients demand banking services that support their commercial and regulatory requirements on an integrated basis
However, Buitenhek says there are a number of areas in which ING has been improving its platform. Two years ago it launched an investment programme aimed at enhancing cross-border transaction services for its clients across Europe with improved cash management, product and channel capabilities on its platform.
Buitenhek says a number of initiatives are being rolled out over the next couple of years. These include: more standardized products and channels and more consistent billing and reporting; launching a new multi-country/multi-service client portal that offers a single point of access to a wide range of commercial banking products; new and improved cash management capabilities, including an integrated suite of online and host-to-host solutions; and an electronic client trade finance portal.
“Clients want advice, both at the long and short end of the capital spectrum,” he says. “In the past, a CFO or treasurer would talk bank products. Now they are talking about primary processes and want to know what solutions can be offered. It means ING needs to offer solutions in a much more integrated way than simply pushing products.”
ING’s commercial banking business does this, where multi-disciplinary teams take a holistic approach to identify, analyze and address clients’ working capital and financial supply chain challenges, says Buitenhek.
He adds that the expectations of clients are changing too, where they need not a bank but a full-fledged business adviser, which breeds a more strategic relationship.
“As companies of all sizes integrate their financial processes in order to optimise their working capital cycle, they are seeking our advice and expertise on how best to achieve this.”
Buitenhek adds that as corporate treasurers continue to centralize activities such as liquidity and working capital, counterparty and financial risk management, payables and receivables, the need for immediate access to complete and accurate information and predictive data from across their business and across geographies becomes more important.
“Cross-regional regulation is intensifying too,” he says. “Therefore our clients demand banking services that support their commercial and regulatory requirements on an integrated basis. They require a predictable, standardized and uniform approach from their banks.”
Corporate clients are also looking to transact and report anytime and anywhere, says Buitenhek, and this “requires comprehensive mobile solutions across a wide variety of products and a continuous innovation.”
Asked what strategic goals he has for the transaction banking business, Buitenhek says the bank is implementing a new trade and pan-European payments platform that will enable clients to finance, settle and mitigate the risk of their trade online, harmonize its product and service offering, and expand its cash management product features such as end-of-day cross-border cash balancing and fee reporting.