Published: January 01, 2014
Treasury’s needs are constantly evolving due to operational, economic, technological and regulatory changes. This requires banks to provide the functionality and flexibility to support their clients. Gautam Jain, Global Head of Client Access at Standard Chartered Bank, explains how this can be achieved so corporate treasuries always have the optimal banking channels for their current requirements.
While corporate treasuries have always had to contend with a shifting environment, recent years have seen considerably greater turbulence. Two obvious examples are the financial crisis and the exceptional rise of many Asian economies (e.g., China and India), which have radically altered the range of risks and flows that treasury has to manage.
These factors affect the way in which corporate treasuries do business and require supportive responses from banks. However, in order to accomplish this in the context of banking products and services, there are three critical trends affecting corporates to which banks must respond.
The first important trend is treasuries’ increased awareness of the importance of liquidity. The challenges of the financial crisis remain fresh in many treasurers’ minds and inform their approach to liquidity risks today. In a recent treasury survey[1], improving global liquidity management and control/visibility were cited as the two greatest challenges for treasurers. Moreover, there is growing recognition that liquidity constraints during the financial crisis highlighted weak liquidity management practices previously concealed by inexpensive external liquidity.
As a result, many companies have embarked on improvements to their treasury and liquidity management that have focused on centralisation and automation, with the goal of improving visibility of working capital. They therefore require solutions that enable them to have near real-time visibility and control over their global liquidity positions. However, many bank delivery solutions are constrained by the bank’s own internal infrastructure. As a result, the solutions they offer clients are not actually optimised for their clients’ business models and requirements, but their own.
In the current environment, the overwhelming need is for a solution set adapted to client needs that can provide a complete view of the client’s cash, trade and security services in every market in a single window. Furthermore, it should be able to do this across multiple banking relationships globally and in a manner that is tightly integrated with clients’ technology (such as ERP and TM systems) and internal processes.
The second major trend affecting clients’ expectations is the increased usability of technology. Not only is technology cheaper than ever, it is also extremely easy to use: for example, no one needs a manual to work an iPad. Bank clients are therefore now looking to use workplace technology in the same way as they use it personally. This trend is especially prevalent among younger members of the treasury team who are comfortable with technology and whose technological opinions will have greater importance as they become more senior. Furthermore, many treasury professionals already have mobile access to their corporation’s ERP systems, with major vendors providing a range of mobile services and applications.
In response, banks need to make their platform user interfaces as attractive and intuitive for the user as mainstream consumer technology. In doing so, they need to use development tools that maximise ergonomic efficiency/simplicity and reduce the staff training burden on treasuries. The key is for clients to be able to organise, display and manipulate data in a way that maximises their own efficiency - rather than the bank’s convenience.
The third trend is how mobility is changing personal interaction with all institutions, not just banks. Over the past decade, people have switched from interacting in person to the internet. There is also a move towards mobile interaction using smartphones and tablets. Research by Monetate[2] shows that between Q1 2012 and Q1 2013 the percentage of visitors to major ecommerce sites using tablets and smartphones almost doubled and that these devices now accounted for more than 20% of all site activity. In some of the world’s most vibrant economies, the move to mobile is already established in retail finance. For example, in Kenya 65% of the country’s 29 million mobile device users subscribe to mobile money services[3].
It goes without saying that banks simply cannot afford to ignore these demographic shifts and must therefore bring services closer to the client, as well as optimising the information and services they make available to reflect client technology and need. Mobile has a huge range of applications. For example, paying farmers for a graded crop by mobile wallet is far more efficient and less risky than using physical cash. Farmers benefit from faster payment and the absence of physical cash security risks, while crop purchasing companies save the costs and risks of cash transportation and gain improved reconciliation.
Mobile also brings major benefits to CFOs and treasurers who are frequently travelling. For example, it enables them to authorise payments, or to cite detailed cash flow figures in a meeting.
Whatever the situation or need, the consequences are the same: mobile technology can shrink distance and risk, while enhancing efficiency - but only if the bank implements it in the right manner. That means covering all popular devices both in terms of their form factor (mobile phone/phablet/tablet) and operating platform (Android/iOS/Blackberry/Windows Phone).
While innovative technology is critical to meeting clients’ banking expectations, physical distribution of products and services also remain important. Realistically no one bank can deliver 100% coverage via its own network, which makes it essential that any bank provider can extend its geographic and product coverage as required via third party bank and other non-traditional partners. The crucial point is that from the client perspective the service experience is both consistent and of high quality.
A combination of third party banks and other partners such as 7/11 stores (which are well-positioned for cash collections), makes it possible to offer clients an end-to-end service wherever they operate. In fact this approach has enabled Standard Chartered to deliver a network across 109 countries and 120,000 physical touch points, which comprises the second largest banking network in the world. This service model means that clients can work with a single bank and have visibility and control of the entire banking relationship through a single interface.[[[PAGE]]]
This simplicity and ease of use is especially important when it comes to achieving optimal connectivity from the client’s perspective. The fundamental point here is that banks should be able to deliver connectivity in a manner that adapts to meet clients’ needs; the bank’s own internal structure and processes should never be the primary driver.
One obvious example relates to ERP technology. Some bank systems might oblige the client to rekey payment instructions already present in their ERP system. An infinitely better alternative is for the bank to handle these payment files transmitted by the client automatically.
Quality of service and responsiveness to change are key tools in achieving this intimacy, but technology also has a major role to play. For instance, Standard Chartered’s Straight2Bank Universal Adaptor works with any ERP system to send transaction messages to the bank through host-to-host and web channels. It delivers rapid integration for payments, collections and reconciliation, without any time-consuming or costly development.
Whether through the latest developments in mobile technology, third party bank partnerships that deliver global reach, electronic channels that offer value-added content, or connectivity that assists working capital optimisation, connective intimacy - on the client’s terms - should always remain the priority.
The utopia for corporate treasury is for bank connectivity and delivery channels to meld naturally with their corporation’s business model and processes. Understandably, they do not wish to have to expend their own energy and funds to achieve this. At Standard Chartered, we welcome this mindset because it tallies with our own outlook of providing any channel the client desires, be it physical or electronic. In fact it is the efficient and consistent combination of these two delivery methods that we believe offers the added-value that we term Client Access.
This is not a static concept. As clients’ businesses grow and evolve, their specific needs obviously change, but the general requirement for access in a consolidated way across geographies and business does not. This is why we define Client Access as ‘from bricks to clicks and everything in between’, unlike the majority of other banks where the electronic and physical channels (such as branches) are operated as separate propositions. Therefore we will always strive to provide integrated distribution by offering end-to-end access facilities for clients - irrespective of geography or product.
Notes
[1] PwC Treasury Survey 2012
[2] Monetate Ecommerce Quarterly Q1 2013. Results based upon a sample of 500 million visitors to ecommerce sites including Best Buy, Frontier Airlines, Aeropostale, The Sports Authority, and PETCO.
[3] Communications Commission of Kenya (CCK), July 2012
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