Published: May 01, 2009
Marilyn Spearing, Deutsche Bank’s Head of Trade Finance and Cash Management Corporates, gives her views on 2008 and the prospects for the Global Transaction Banking division in 2009.
Despite the ongoing turmoil in the financial markets and a difficult year for banking generally, transaction services have been one of the few success stories. And with interest rates reaching record lows and ongoing concern about the integrity of some short-term investment vehicles, efficient cash management has taken on a greater importance for many corporates. Likewise, trade finance and financial supply chain management are also enjoying their day in the sun as an alternative source of working capital funding.
However, even in the context of a renewed focus on transaction banking, GTB fared particularly well in 2008. The end of the year was our 16th consecutive quarter of growth and we comfortably exceeded our publicly stated profit targets. Of course, despite a good year, there were significant challenges to be overcome for all financial institutions. By staying focused on our four key areas – clients, markets, solutions and talent – we negotiated the turmoil well and delivered for our clients.
We are certainly well positioned to have another successful year and there are a number of factors that will stand us in good stead. We completed a significant level of investment in platforms and systems before the current crisis struck and, of course, budgets for this type of activity are likely to have been heavily curtailed in many institutions.
Deutsche Bank has not, as yet, taken any state money in the form of government support, so we are less constrained than some of our competitors. For example, expanding out global network remains a priority and we are free of public pressure to focus investment in our domestic market. Given the work that has gone into developing our state-of-the art transaction platforms, maximum value can be leveraged for clients by increasing our local presence in those markets that remain the most promising for the next few years and beyond. In this respect, Central and Eastern Europe will be a focus in 2009 and China, India and Latin America will also be areas where we seek to increase our number of branches. [[[PAGE]]]
Innovation in this area will continue to be a hallmark of GTB. The changes that the global economy is undergoing, coupled with regulatory reforms – such as the Single Euro Payments Area (SEPA) – and an increasing compliance burden, mean that a new and flexible approach is required in many areas. In this respect, we will continue to develop new solutions to meet with demand from our clients.
The flight to quality in cash management, that has served us extremely well in 2008, is likely to continue into at least part of 2009...
Two good examples of this type of innovation from 2008 are the FX4Cash and Deutsche Card Services initiatives. With FX4Cash, we leveraged GTB’s expertise alongside that of Global Markets (GM) – the area of the bank responsible for foreign exchange – to develop a unique cross-currency payment solution for both corporates and financial institutions. The market reception has been overwhelmingly positive and over 90 major corporates and FIs have now signed up.
The reception from corporates for Deutsche Card Services (DeuCS) has been equally positive. This is a merchant acquiring solution that works on the basis of the tried and tested platforms of Pago eTransaction Services – a former joint-venture that is now wholly owned by Deutsche Bank – and offers a one-stop-shop for card acceptance, payment processing and risk minimisation. Leveraging Pago’s systems means that aside from these core merchant acquiring activities, Deutsche Card Services is able to offer value-added services such as protection mechanisms to detect attempts at making fraudulent transactions.
The service will be particularly attractive to pan-European corporates that receive significant payments through cards and are seeking to cut costs as the recession begins to bite. It also goes some way to completing Deutsche Bank’s suite of solutions and products for the corporate receivables value chain.
Of course, it goes without saying that maintaining operational excellence and our best in class client servicing will be key to distinguishing ourselves during the ongoing market turmoil.
We are particularly sensitive to feedback from clients and seek to react promptly when areas need improvement. In this respect, we are currently overhauling our client on-boarding process, significantly reducing and simplifying documentation and making the process of beginning to do business with Deutsche Bank quicker and easier.
Making good use of appropriate technology will be key to this process. On-boarding is currently a labour intensive activity and by developing tools to, for example, pre-populate forms with the appropriate client data, savings will be made in terms of both time and cost. Measures such as these will also improve accuracy by greatly reducing the scope for human error in the account opening process. And while this is an area where many banks have been criticised and have sought to take action, others – who have fared less well over the past year – may find that attention to reforming this aspect of their business has slipped down their list of priorities.
As I mentioned earlier, we remain optimistic about 2009 and we are well placed to weather whatever the global economy throws at us. The flight to quality in cash management, that has served us extremely well in 2008, is likely to continue into at least part of 2009 as many corporates remain nervous about the quality of their banking partners and counterparties.
Feedback from clients continues to be positive and, internally, GTB will continue to make a strong impression on our colleagues across Deutsche Bank. While transaction services in general will continue to prosper as long as the economic downturn continues, we hope that we will continue to outperform our competitors and expand our market share by gaining new clients, as well as by increasing our share of investment flows from our existing clients.
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