Published: May 01, 2010
Fortis Bank has a long and respected history of serving the pan-European cash management needs of mid-cap and large corporates. Until the demerger, Fortis Bank was the number one challenger in Europe, with a network spanning 20 countries and 140 business centres. Since the split with Fortis, Fortis Bank Nederland has rapidly rebuilt its cash management network and retains the heritage, culture and absolute commitment to service that clients associate with the Fortis name. In this interview, Roemer Paquay, Head of Transaction Banking Sales for Fortis Bank Nederland discusses the structuring of the bank, looks forward towards the legal merger with ABN AMRO in the second half of 2010 and assesses the business environment in which it operates.
Corporates across Europe have changed the way they work with their banks, and consequently, they now have different priorities when choosing to work with a banking partner. Financial stability and access to liquidity are typically the first priorities, but after this, we see that our clients value a variety of different elements of the service that Fortis Bank Nederland offers today, and in which we continue to invest. Based on close communication with our clients, we have developed some key differentiators in our services:
Service culture. The Fortis name has always been synonymous with a strong service culture, which remains pivotal to our approach both today and in the future once the merger with ABN AMRO has been concluded. Our new transaction banking centres, and the strength of our partner bank network ensure that we deliver local services in the locations that our clients need us most. Looking forward, we will further expand on our multiple award-winning service model.
Centre of excellence in cash management. Treasurers are increasingly looking to their banks for advice and support on defining and delivering an international cash and liquidity management strategy. To address this requirement, we have formed a centre of excellence in cash management, based in the Netherlands, dedicated to the cash management requirements of our large corporate clients. This centre is staffed by cash management experts who have extensive international experience, a deep knowledge of the bank and of our delivery platforms. We use integrated technology internally to ensure that we have full insight into each client relationship.
Short communication lines. As working capital and liquidity optimisation have grown in importance, treasurers have taken on a wider variety of responsibilities across the financial supply chain. As they look across their business on an holistic basis, treasurers are seeking a similar approach from their banking partners. Consequently, in addition to the use of integrated technology internally, short communication lines are key in order to be proactive and responsive towards our clients.
Client satisfaction goals. Enhancing client satisfaction is an ever-evolving objective: when we achieve our targets, we set ourselves even more challenging goals. Client satisfaction is a key metric of our success that we constantly measure and seek to improve.
Connectivity. Treasurers and CFOs are seeking both efficient transaction services for payments and collections, and information tools to obtain visibility and control over their cash position. As companies have banking requirements in different countries, maintain different internal systems and employ different business processes, a bank needs to deliver flexible connectivity solutions whilst ensuring simplicity and convenience. For example, clients of Fortis Bank Nederland will soon be able to take advantage of ABN AMRO’s web-based system Access Online, widely regarded as best-in-class for corporate-to-bank communication. We also actively support SWIFT Corporate Access, and provide a Connectivity HUB for host-to-host connectivity between Fortis Bank Nederland and clients’ internal systems. [[[PAGE]]]
Although it has taken some time to gain traction, there is now a good level of understanding and acceptance of SEPA amongst large corporates. Although some companies have already migrated to SEPA Credit Transfers, a large majority did not initially see the advantages, particularly in countries such as the Netherlands that already have a highly efficient and cost-effective payments infrastructure. Driven by recession, the potential benefits of SEPA are now being investigated further, with companies using SEPA as a catalyst for establishing shared service centres (SSCs) or payment/collection factories. Consequently, we are happy to see both existing and potential clients approaching the bank for advice on the design of their European payment and collection architecture, and seeking advice on how to leverage shared services most effectively.
While there are clearly some advantages to working with a single banking partner, and some clients will undoubtedly decide to do this, the crisis emphasised the importance of credit risk management and financial flexibility, which has led many companies to work with a select group of partner banks. This creates both challenges and opportunities. On the one hand, in order to benefit from an efficient cash management strategy, treasurers need visibility and control over their cash position, which requires open connectivity and a commitment by their banks to support their communication objectives. On the other, they can leverage the specific strengths, specialisation and in-country expertise of individual banks to create a best-in-class banking panel. If companies make use of bank-agnostic technology such as SWIFTNet, the technical barriers to a multi-banking arrangement are removed.
Whether a company chooses to work with a single bank or a selected group of banks, treasurers still need to fulfil their liquidity objectives. Even though SEPA offers the potential to simplify cash management structures, there will still be a place for notional and physical cash pooling, but these techniques are likely to extend further across borders and currencies to increase access to cash. The importance of information to facilitate optimal liquidity management continues to grow, with clients valuing efficiency of transaction processing and completeness, accuracy and timeliness of cash flow information highly.
Before the crisis, treasurers were increasingly focusing on optimising processes across the financial supply chain in order to enhance working capital; some of these initiatives were placed on a back burner during 2008-2009, but an efficient financial supply chain is again an important priority. This is leading to a variety of new demands amongst corporate clients.
Short communication lines are key in order to be proactive and responsive.
Firstly, companies are seeking real-time financing that is closely aligned with the company’s liquidity profile, so the tenor of borrowings is linked to the timing of collections. We offer tailored structures to support this, such as reverse factoring and short-term liquidity solutions.
As part of the move towards financial supply chain optimisation, and largely triggered by SEPA, our clients are also considering e-Invoicing more seriously. The experience of SEPA has already illustrated that if an information standard is feasible for payments and e-mandates for SEPA Direct Debits, it should also be achievable for electronic invoices. The invoicing process is a critical step in every company’s financial supply chain, due to the close relationship between invoice, payment or collection and financing, so achieving efficiencies in this area is an important priority. E-Invoicing will become increasingly important, and as such, we continue to develop the high-end e-Invoicing solutions that we have offered to large corporates for several years.
The drive towards an effective financial supply chain and working capital optimisation has a variety of additional implications in terms of clients’ cash management needs. One of these is the increased focus on corporate cards, which we see as a rapidly developing area. Clients are looking beyond travel and entertainment (T&E) and purchasing cards into prepaid cards, providing convenient solutions for customer incentives and distributor payments that can be rolled out regionally or even globally. Furthermore, by enforcing payment controls and enabling complete auditability over payment processes, they help companies to comply with internal and external compliance requirements. Both Fortis Bank Nederland and ABN AMRO are very active in delivering tailored, highly efficient card solutions, and we remain committed to delivering best-in-class solutions in this area. [[[PAGE]]]
Another key trend that continues to be instrumental to business growth at Fortis Bank Nederland is the rapid growth of eCommerce amongst our clients both in Netherlands and internationally. The Netherlands is, in many ways, a flagship for eCommerce across Europe due to its efficient and secure payments infrastructure. Fortis Bank Nederland has been a pioneer in supporting our clients to optimise their eBusiness strategy to drive brand loyalty and revenue growth.
The payments market as a whole is going through a radical transformation, encouraged by SEPA and the PSD. For example, non-bank entities are now competing in the payments space, referred to under the PSD as payment service providers (PSPs). There is already a selection of very strong companies in this market with a growing market share, particularly in payments linked to eCommerce. These companies are likely to consolidate, leading to a smaller number of strong, global PSPs. As a result of this development, and declining transaction margins, we would expect a number of banks to review their strategy on whether to continue as payment processors.
Clients of Fortis Bank Nederland have continued to enjoy the full range of pan-European cash management services through our partnership with BNP Paribas. We will open dedicated transaction banking centres in Belgium, France and Germany in 2010. The centre in the UK is already in live operation. These new centres provide full-service capabilities and together will support 80% of our clients’ international requirements. Outside of these countries, we work closely with a strong partner bank network, delivering a cohesive range of cash management products and services. Over time, we will continue to expand our international banking network, adopting a selective approach so that we focus our activities in the countries in which our clients are most active. Building a network from scratch brings considerable advantage in terms of choosing the right locations, establishing optimum working practices, ensuring technical synergies and delivering cohesive products and services.
The legal merger between the two entities will be concluded in the second half of 2010 and represents an extraordinary opportunity for our clients to leverage the best of both legacy banks. The combined Fortis Bank Nederland and ABN AMRO business will employ 30,000 staff, across 350 branches with operations in 20 countries. Together, the two banks support five million retail customers and one million commercial clients.
Building a network from scratch brings considerable advantage.
The brand name of the new bank will be ABN AMRO and it will aim to be the bank of choice for Dutch-based corporations and a selected group of corporates internationally. The two businesses are already working closely together to prepare for integration, and our clients will benefit from further capabilities both in the Netherlands and internationally. For example, ABN AMRO has concluded a partnership with Royal Bank of Scotland that will enable our clients to access services across the bank’s full international network. The new and combined bank will benefit from the professionalism, experience and expertise for which both banks are well known, together with a commitment to innovation to help our clients achieve operational efficiency and strategic advantage. The new ABN AMRO will aim to bring best-in-class in customer service and satisfaction, and to employ the right people who bring the skills, expertise and in-depth market knowledge to support our clients current and evolving business needs.
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