Cash & Liquidity Management

Achieving Growth and Stability through Transaction Banking In an environment of considerable regulatory and market uncertainty, and growing competition, banks face a dilemma. How do they create certainty for their customers, and differentiate their offering by adding value in new ways?

Achieving Growth and Stability through Transaction Banking

by George Nast, Head of Sales and Client Management, Transaction Banking, Standard Chartered Bank

George Nast

In an environment of considerable regulatory and market uncertainty, and growing competition, banks face a dilemma. How do they create certainty for their customers, and differentiate their offering by adding value in new ways?

Perspectives on transaction banking

Transaction banking is a core business for many regional and international banks, as collecting cash, paying suppliers and financing trade shipments is fundamental to clients’ business. As these services are indispensable, banks often become complacent, treating these relationships as ‘sticky’ and a basic service from which to cross-sell other solutions.

Corporate treasurers often do not give transaction banking the same level of attention. Although important and essential to day-to-day operations, payments, collections and trade finance are often considered commoditised, undifferentiated products. As a result, senior managers pay attention to them only in the event of business interruption, poor service or when a mandate is due for renewal. This contrasts with services such as M&A, equity, or long-term finance, which are considered more strategic and have more board level attention.

Facilitating growth

These perspectives ignore the enormous strategic potential of effective, integrated transaction banking services. Transactional services are not only essential for the smooth running of a client’s business, but can also be a powerful force to help companies grow, strengthen their market position and ultimately deliver greater value to customers, suppliers and shareholders. This is a key focus for Standard Chartered. We have an extensive network of clients of all sizes and industries in the world’s fastest growth markets. Consequently, the value we offer is not simply in the payment and collection services we provide to a particular client, but our ability to bank that client’s entire ecosystem.

For example, by directly financing a customer’s buyer ecosystem, our distributor and buyer finance programmes play an essential role in expanding sales capacity and increasing predictability of incoming flows. Supplier finance strengthens the bonds in a company’s supply chain, securing vital production components by ensuring the viability of key suppliers, and reducing costs in the supply chain by reducing financing expenses.

This ecosystem-based approach transforms our value proposition from being a bilateral provider of basic services to an essential partner to our customers by securing their supply chains and helping them to grow. This is a value proposition that few banks are able to offer. In particular, it requires a deep understanding not only of the client, but the complexities and risks that exist both in that client’s supply chain, and the markets in which it operates. In addition, our strong risk appetite, relationships with regulators in each market, and our ability and commitment to facilitate international trade flows are essential.

From fragmentation to integration

Today, many transaction banks and third-party supply chain platforms position their services to address specific operational issues, such as reducing DSO (days sales outstanding) to optimise working capital. As a result, the value proposition of these solutions is restricted, fragmented, and addresses only operational rather than strategic objectives.

Instead, at Standard Chartered, we deliver integrated services through a single channel for cash management, trade finance and supply chain solutions, supported by our ongoing investment in real-time data and sophisticated analytics. Treasurers and finance managers achieve better visibility over the financial supply chain, and therefore are in a better position to manage risk and make better decisions. Similarly, they can optimise working capital, not only by improving individual metrics, but by identifying opportunities across the financial supply chain based on a range of factors such as available cash, credit ratings of buyers and suppliers, and the potential to extend or reduce buyer and supplier terms.

Across the ecosystem

At Standard Chartered, helping our clients to grow is at the core of what we do

Adopting a more strategic and integrated approach to transaction banking that focuses not only on the operational needs of individual clients, but on achieving stability and growth across the client’s entire ecosystem, represents a significant industry shift and a major opportunity for treasurers and finance managers as well as the banks that support them.

At Standard Chartered, helping our clients to grow is at the core of what we do. Our breadth and depth of network, with a large and diverse client base from large multinationals to the smallest businesses, enables us to be a catalyst for stability and growth across our clients’ ecosystem. By doing so, we are realising the strategic potential of transaction banking, enabling treasurers to deliver top line growth as well as bottom-line efficiency. 

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