US banks take mature TS market to next digital level
The North American market is already at a point of sophistication with its tech-led banking and treasury capabilities. US transaction bankers reveal the next stages of the market's digitization.
The North American transaction banking market has reached a point of sophistication in its products and services. To push innovation forward, the next step is to develop new platforms. The race is on to create a fully digitized method of corporate banking.
Michael Fossaceca, head of Citi treasury and trade solutions, North America, says: “In the US, we are operating in a mature market. We work with our clients by providing core services, but we also go beyond by providing them with data and analytics to help them make better-informed decisions.”
The result of this is the expectation of ever-more sophisticated ways of using technology. Having an efficient tech on-boarding process and being able to provide the clients with good mobile functionality is no longer something that will set a bank apart in transaction services.
Therefore, it is their individual services that will make the difference.
We are seeing the emergence of more fast-growing technology companies
Citi has developed the eBAM through its CitiDirect BE platform, which allows the management of several accounts from one access point. Documents can be submitted electronically, making the process of opening and managing accounts paperless in Citi’s US and Canadian branches.
This offering provides a granular level of detail, and the challenge lies in utilizing that data to their full extent. The shift to a digital approach of making and receiving payments means the banks now have a wealth of data available.
Citi has established the treasury advisory group to help its treasury and trade clients to analyse their flows, and identify opportunities to see best practice in their business and working capital utilization.
“We are using technology the way it is meant to be used, and this is an exciting time,” says Fossaceca.
Clients have built up their internal enterprise resource planning (ERP) platforms to the most modern structures. Now they want to capitalize upon their sizeable investments in their tech infrastructures.
And it is not only the MNCs that are now using globally connected ERP systems and adopting internal payment structures. They are looking further down their chain to find even greater levels of efficiency.
Jon Richman, head of trade finance and financial supply chain, Americas, at Deutsche Bank, says: “In the supply chain finance space, ability to structure large programmes and to provide extensive cross-border coverage with efficient supplier on-boarding are becoming the key differentiators – more so than the technology platform.”
The pace of change in the tech space is being pushed through by the new entrants to the market, who are innovating at a rate the banks would be unable to replicate. What the banks can do is step up to the table to assist them in their business development needs. The banks are approaching it as an opportunity to both access the newest developments in payments tech, and to potentially on-board the next multinational tech company while they are still at incubator stage.
“We are seeing the emergence of more fast-growing technology companies,” says James Volkwein, head of trade finance and cash management for corporates, Americas, at Deutsche Bank. “What they all have in common is incredibly lean structures. What they need is transparent help and support with obtaining financing.”
The move to a tech-based method of operating comes with its own unique set of challenges, as the threat of cyber attacks emerges as a very modern concern that sits alongside long-established problems around FX risk and fraud. In the past, fraud would have related to individual transactions, but now the industry is learning to contend with the risk of entire databases being replicated.
Businesses are looking to improve efficiency and security in their payments to other companies and to consumers
Dub Newman, BAML
For corporates stepping up their tech provisions for the first time, they are looking to their bank for cyber-security advice.
“We’re actively helping clients with cyber security by providing education so they understand where they could have gaps in their systems,” Galen Robbins, head of global transaction services for commercial banking, business banking and small business, at Bank of America Merrill Lynch (BAML).
The bank has also been investing in bulking up its systems against the evolving threats by creating a client-centric online platform to help address their concerns around the digital threat.
“One highlight is our new fraud-prevention portal, which provides clients a library of helpful information and resources, including white papers, webcasts, a podcast series and videos,” adds Robbins.
Even as it excels in the use of new technology for corporates, the US still has some space to grow when it comes to its use of everyday tech as its dependence on paper is a slow and costly method of operating.
Dub Newman, head of North America global transaction services, BAML, says: “Businesses are looking to improve efficiency and security in their payments to other companies and to consumers. As an example, non-repetitive payments to consumers have been causing difficulties for companies in several industries.”
BAML’s digital disbursements has taken a step to combating the dependence on cheques. The mobile payments platform has enabled corporates to make payments direct to their recipients, and without the need for detailed account information. The removal of sending out and processing cheques from the payment process has brought about a 75% reduction in the cost of the payments.