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Reflections on the Year Ahead

by Paul Simpson, Head of Global Transaction Solutions, Bank of America Merrill Lynch

Paul SimpsonAs we enter 2014, I want to reflect on some of the trends that we have seen over the past year, and how these are likely to evolve in the year ahead. While treasury departments face a wide range of challenges and opportunities, there are some key issues that are common to companies in all industries and regions.

The evolving regulatory environment brings with it uncertainty and change, and there is understandably much dialogue around the approaching SEPA end date. We believe that corporations of all sizes, whether their activities are domestic or cross-border, have no time to lose in completing their migration plans. Companies should work with a trusted bank advisor that has the expertise and solutions to support migration. This is vital to minimising compliance risk and enabling treasurers to position their company to leverage the opportunities for standardisation, centralisation and harmonisation that SEPA presents. Additionally, banking partners can play a critical role in helping companies understand the new constraints proposed by Basel III and Dodd-Frank, and to construct solutions that comply with the new rules.

While many large companies have already built up considerable experience in doing business internationally, there’s an increasing trend for small to medium-sized enterprises (SMEs) to seek growth in new markets. At Bank of America Merrill Lynch, we are seeing year-on-year revenue growth of 40% amongst our US middle market clients as they expand internationally. In Mexico alone, more than 160 of these US clients have tapped our cash management and trade solutions to support their business expansion. We expect this number – and globalisation generally – to accelerate in 2014. We are preparing to support this trend – and our clients’ growth ambitions – by investing in our services and our solutions that will help them reach their goals while minimising risk and ensuring they have visibility and control of cash. We are actively supporting flows between countries such as Japan and Brazil, including supporting Japanese FDI as well as companies expanding their customer base in the country. In contrast, smaller banks are stepping back from non-core markets and solutions in which they are unable to invest to the required level.

Corporations are also seeking new sales channels across their geographic footprint. For example, a growing number of companies, from small retailers to the largest eCommerce companies in the world, are leveraging Bank of America Merrill Lynch’s transaction services to drive efficiency and support innovation through web-based and mobile channels.