Coronavirus: Urgent need to adapt will push tech solutions in transaction banking

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By:
Kanika Saigal
Published on:

Digital solutions embraced as corporates get used to remote working and as banks adjust to the new normal.

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Lisa Robins, global head of transaction banking at Standard Chartered, vividly remembers the September 11 terror attacks on New York’s twin towers and what followed. At the time, Robins lived in New York and was working for JPMorgan.

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Lisa Robins,
Standard Chartered

Thousands of lives were lost and many more were completely turned upside down. In a communal act of defiance New Yorkers continued to go about their everyday lives as best as they could. Nevertheless, it was obvious to Robins that things were never going to be the same again.

This wasn’t just about the impact on US foreign policy, surveillance and immigration, much of which continues to affect our lives today. There were also some subtle changes to how everyday business was run, changes that transaction bankers needed to overcome to support their corporate clients.

“In the immediate aftermath of the attacks, no planes flew in or out of New York,” says Robins. “One consequence of this for us was that people were unable to send cheques internationally or within the US anymore,” remembers Robins. “We needed to come up with a solution.”

Corporates and individuals increasingly started to use credit and debit cards, and later online transactions, to pay their clients and vendors. While Robins admits that the US is still behind the curve and cheques are still widely used, the volume of cheques written has been on a steady decline in the US since the early 2000s.

In 2000 the number of automated clearing house (ACH) debit transfers stood at 2.1 billion compared with 42.6 billion cheque payments, according to the Federal Reserve. In 2018 – for the first time in the US – the number of ACH debit transfers, 16.6 billion, exceeded the number of cheque payments, 14.5 billion.

“Some of the solutions we turn to during a crisis often already exist, but what changes is the urgency to adapt.” says Robins.

The coronavirus pandemic is having a similar effect. People are working from home, are less likely to transact with physical cash and all actors throughout the supply chain need help to stay afloat.


Some of the solutions we turn to during a crisis often already exist, but what changes is the urgency to adapt 
 - Lisa Robins, Standard Chartered

Both banks and their clients need to adapt to the new normal and part of this is using digital solutions to ease some of the pressures felt by corporates. This could be through contactless payments, video and telephone conferencing, and leveraging technology for cash management and trade finance.

Blockchain in trade finance is another solution that could gain momentum under the current conditions. As Robins says, transaction bankers have been advocates of blockchain in trade finance for some time, but, despite a number of successful trials, blockchain technology has yet to enter the mainstream.

“Digitizing or tokenizing payment through blockchain allows working capital to flow from one end of the supply chain to the other safely and efficiently so no link can be missed out,” she says.

“These are not pie in the sky, distant solutions. They already exist and I think that the speed at which paperless solutions in trade finance is adopted will accelerate, given current circumstances.

“We are making virtue out of necessity,” she adds.

Responsibility

Lisa Robins believes that banks have a responsibility to their clients and the wider community to maintain some semblance of normality.

On April 1, Standard Chartered announced that it created a global fund of $50 million to assist those affected by the pandemic – $25 million to support emergency relief in its most affected markets and the rest to help communities recover from the economic impact of the virus in the medium term.

A day earlier, the bank announced $1 billion in loans to be earmarked for companies providing goods and services to help the fight against the virus, as well as those planning to switch into manufacturing products in high demand during the pandemic.

“We are seeing high demand for funding through the $1 billion financing programme and have already approved over $75 million of facilities in the first week; and we will be looking to further support a variety of smaller and more established companies that are helping to fight Covid-19,” says Robins.

“The focus will be keeping these businesses in business and getting the goods and services to where they are needed so they can help with the relief effort.”

Senior bankers at Standard Chartered also believe they have a personal responsibility to help. In another announcement made on April 1, board members and management team members at the bank all pledged to make their own personal contributions to the relief effort. Details of each donation, however, will not be made public.

“These donations and preferential loans have been born out of a desire to ensure that the real economy continues to function and we support our communities,” says Robins. “Look at just one example: in Bangladesh the garment industry has lost $3 billion in orders due to the pandemic, which will have huge ramifications throughout the supply chain. But this isn’t just one isolated case; it is being replicated throughout the world,” she says.

“Given the global repercussions, now is the time for all of us to come together and help where we can.”

The bank’s financial results will be announced on April 29.