Leader: Clients Demand Innovation in Difficult Times

While market conditions are certainly improving, times are still tough for many corporates and their banking partners. Providers need to continue innovating to ensure that clients have the best tools available for navigating the downturn, says Marilyn Spearing, Global Head of Trade Finance and Cash Management Corporates at Deutsche Bank.

As always, the third quarter of the year will see a number of important conferences taking place around the world – Sibos in Hong Kong starting on September 14, the AFP Annual Conference in San Francisco in early October and EuroFinance in Copenhagen from October 21-23 being among the most prominent. We are hoping for a quieter season this year – last year’s conference season coincided with some of the most tumultuous market conditions in living memory (including the Lehman Brothers collapse, which came on the eve of Sibos 2008).

Indeed, while it has been a difficult year, the situation is now looking brighter. Markets have stabilised considerably and the financial landscape is beginning to settle down once again, though the effects of the crisis and subsequent downturn are still being felt. Indeed, while transaction banking has been a relatively stable area throughout the crisis, the low interest rate environment in many countries, and a drop in trade volumes in some markets, has certainly had an impact.

Despite the relatively favourable fortunes of transaction banking, many average-sized players will be facing a range of difficulties at this time. Pressure to reduce costs may have led to investment budgets being curtailed and this is likely to have been accompanied by a downward adjustment in credit and risk appetites. And all these factors will be multiplied for those banks that have taken government support in the form of taxpayers’ money.

Unfortunately, conditions such as these can sometimes lead to a stifling of innovation as costs and risk – and, for some, survival – become the key priorities. And this comes at a time when many corporates will be desperate for their banking partners to continue innovating and bringing new products and solutions to market to assist them in navigating the choppy financial waters.

However, despite the tough conditions, some providers – at both global and regional levels – have distinguished themselves by continuing to innovate to help clients make the best of the rapidly-changing conditions. Indeed, at Deutsche Bank we have remained focused on innovation to enable client success throughout the crisis, and 2008 and 2009 have seen the development and launch of several new products and services.

For example, thanks to unprecedented conditions in credit markets, liquidity and working capital management have become priorities for many corporates. In this respect, Deutsche Bank has continued to develop both its cash management solutions – such as notional pooling and global cash concentration – and its range of financial supply chain management (FSCM) tools to ensure clients are able to make the best of current conditions and position themselves favourably for when recovery begins in earnest.

In terms of specific products, FX4Cash is one example of an initiative that has been extremely well received. Leveraging Global Transaction Banking’s (GTB) payment expertise and Global Markets’ (GM) leading position in foreign exchange, FX4Cash is a cross-currency payments solution for corporates and financial institutions that can yield substantial cost savings for both.

So, while the crisis and subsequent downturn may have led to a curtailing of internal investment and product innovation for many providers, some banks are still committed to maintaining their client-focused approach despite market conditions. Indeed, continued innovation is critical during a period such as this and those institutions that continue to deliver in this area will certainly be the ones that distinguish themselves in the eyes of their clients.