Transaction Banking Awards 2020
This year’s Transaction Banking Awards have demonstrated how important the industry is to global business, economy and health.
While the industry has modernised its systems to help treasurers monitor cash positions, reduce friction in cross-border payments, and utilise application programming interfaces (APIs) to simplify the on-boarding of new processes, the importance of trade itself has come to the fore as banks have helped their clients in the fight against coronavirus.
Businesses have become ever more globalised and the importance of being able to pull together their cash pools has significantly increased. This was evident in the cash
management category, which received entries from banks across the world.
The use of virtual accounts has increased as a method of tracking which payments have been made, ultimately allowing treasurers to quickly identify which ones are incomplete or outstanding by seeing which virtual account is connected to which invoice.
The pace of innovation shows no signs of slowing, as the use of artificial intelligence and open APIs are now becoming the norm in helping corporates to execute complex transactions or cash management processes, but with the minimum amount of friction.
This has been a huge help to treasurers in their ability to gain oversight of their funds, as new systems can be easily plugged into their existing platforms to access their account positions in real time, and improve payment tracking and reconciliation.
Trade finance has also seen a boost from the use of blockchain technology to transfer documentation. By putting the documents on the blockchain, all parties involved in the transaction are able to see any changes or updates and receive information in real time.
As consumer payments become increasingly diversified and complex, banks have been on hand to help customers implement the different methods and also to keep the back office processing manageable.
With smaller clients offering multiple mobile payments and QR codes, as well as the more traditional payment methods, banks have worked to ensure payments can be easily reconciled and companies can get a clear overview of their cash positions.
Supply chain finance has also become more sophisticated, with the use of solutions such as dynamic discounting. This enables the large corporate to offer favourable terms for providing payments ahead of time. This can considerably help in liquidity management, and support smaller companies down the chain who can be assisted without the need for onerous on-boarding processes.
However, banks were put under new pressure this year with the arrival of the Covid-19 pandemic. As supply chains were brought to a standstill, and the demand for personal protective equipment and medical supplies became a life or death situation, the importance of banking partners offering good, solid services to their clients has never been more apparent.
Banks had to put their claims of agility to the test by devising new trade instruments, mapping out supply chains to ensure the provision of needed parts, and working in partnership with development banks to get funds to essential manufacturers to continue production.
The situation was further compounded by entire bank workforces being forced to work remotely, putting their own technology to the test. In many cases the banks rose admirably to these challenges, demonstrating how important the role transaction banking plays in modern business.
Winners
Winner: Citi
Citi’s international presence, combined with its focus on continuing development of its transaction banking processes across all markets, helped the bank to win the overall award.
Citi’s strength lies in its ability to create solid, workable solutions that can be adapted and rolled out internationally, giving some clients the familiarity of working with the same offerings across continents, and in other cases introducing a significant improvement on the solutions that may be available from alternative institutions regionally.
For those companies with operations around the world, the ‘CitiDirect BE Cash Concentration’ tool gives the ability to track their cash positions online, and move funds where necessary. The tool further allows them to make modifications to their pool structures, such as adding accounts, modifying sweep pairs, and setting inter-account lending limits themselves in minutes, without the long process of doing this via the bank.
Supply chain financing has received a boost with the introduction of dynamic discounting capabilities within the ‘Citi Supplier Finance’ platform, allowing buyers to extend automated discounts on early repayments to their downstream supply chain. The process has also been simplified with the introduction of the DocuSign supplier onboarding portal, which allows documents to be signed electronically and stored digitally, removing the need for physical signatures and speeding up the document exchange process considerably.
Trade finance also received a shot in the arm with the creation of the ‘Next Generation Trade’ solution in 2019. This pulls together cutting edge technology to bring trade up to date. It uses artificial intelligence, machine learning, natural language processing and intelligent automation to dramatically simplify the time it takes to manually process trade documents. It also aids the detection of possible compliance breaches with the real-time analysis of large data sets. The system has also been primed to look out for the intersection of high-risk goods, high-risk countries and possibly high-risk clients, with the information fed back into the transaction monitoring model.
At a regional level, Citi has taken some extraordinary steps to help its clients to make the most of local opportunities, and to connect to its extensive global network.
Recognising companies in western Europe were experiencing issues in the opening and accessing of accounts in new markets, the ‘CitiDirect BE Digital Onboarding’ tool was rolled out in 30 countries in the region. The new process means that more than 97% of documentation clauses that were previously needed have been removed, along with 65% of signature requirements. The intuitive interface guides the users through the onboarding process, with a digital dashboard feature to check progress. In all, the changes now make it possible for companies in the region to open a new account in as little as 48 hours.
In the central and eastern Europe region, the focus was on helping businesses to work on the go. The bank rolled out its CitiDirectBE mobile app in 2019, which gives clients access to user management and transaction approvals wherever they are. As a result, Citi saw mobile logins increase by 11% across the region during the first quarter of 2020.
Meanwhile in North America, the bank helped to allay concerns about cybercrime risks with the introduction of its ‘Citi Verify’ feature in 2019, which offers clients identity and account verification through a proactive fraud prevention tool. Working with third party GIACT Systems – a leader in helping to positively identify and authenticate customers – companies are now able to validate customers’ information before enrolling them and initiating transactions. The process goes beyond account verification, as it can also provide customers’ identity verification. Despite its complexity, the service is available as a single application programming interface, a web or a batch interface, giving customers access to a customer intelligence database comprising more than 4 billion records.
Citi has also used its position to promote greater use of environmentally friendly practices. In Africa, the bank has engaged suppliers in its supply chain finance products, with the aim of working with those that match the environmental, social and governance goals if its corporate clients. It also partnered with a government agency in east Africa to install digital devices in 22,000 schools, and proposed a structure with a prepaid import letter of credit that enabled the schools to raise the $200m needed to acquire the devices and create systems to power these.
In 2020, it also extended support for businesses impacted by coronavirus. In Asia, the bank worked alongside a Chinese fintech to support international donations to Chinese hospitals, while waiving payment and interbank charges. In Hong Kong, it helped with the procurement of personal protective equipment from new suppliers, with the issuance of a letter of credit to mitigate risk – a process that took just one week to finalise.
“We are delighted to be named as the 'Best Global Bank' in this year’s Transaction Banking Awards by The Banker. Our dedication to be the best for our clients and our partnership mindset helped our customers navigate a truly difficult year. Citi’s focus on driving innovation and increasing digitisation across trade and payments is paramount to our success. At Citi, we strive to be the financial platform for global commerce, with our unparalleled network combining with local expertise to bring a wealth of knowledge that helps us create solutions for many of the challenges we face as an industry. We have always – and continue to – put clients first, especially in demanding times, and we thank them for their support and partnership.” says Naveed Sultan, global head of treasury and trade solutions, Citi
Winner: Crown Agents Bank
Crown Agents Bank (CAB) took significant steps forward over the past year in its offerings for its clients as it expanded into the mobile channel for the first time.
The bank acquired US venture-backed technology company Segovia in July 2019. The fintech focuses on frontier and emerging markets payments, making it the ideal fit for the bank and its consumers. The acquisition enabled CAB to offer mobile payments, improving transparency and creating robust financial connections across the region. The move has already proved to be a resounding success for the bank, as it reported mobile payment volumes in 2019 were almost equal to total payment volumes in 2018.
This progress towards innovation was further enhanced with the introduction of EMpowerFX for mobile, with the aim of making currency trading more accessible. While the platform has been in use since 2017, October 2019 saw the introduction of the mobile application.
EMpowerFX gives users full transparency over their workflows in real time, and provides one entry point for overviews of their day-to-day exposures to foreign exchange (FX), covering balances, risk, and market fluctuations. CAB has also expanded the scope of EMpowerFX, with 36 new currency pairs introduced between May 2019 and May 2020, including Liberian dollar, Lesotho loti, and Mauritanian ouguiya.
Providing these services has a huge impact, as it can support remittance and aid flows into vulnerable markets, and reduces the amount lost through fees and FX conversions. As a result, the platform can offer 100 currencies, and trading is supported across more than 400 pairings.
CAB’s Mass Payments Solution has allowed clients to simplify their process of uploading a single instruction and automatically pay out multiple recipients within the integrated markets, allowing for funds to be easily transferred to local banks and mobile wallets.
Albert Maasland, CEO of CAB, said: “We thank The Banker for recognising the results of our ongoing technology innovation and digital transformation. We are dedicated to being the leading aggregator of FX payment flows for Africa and frontier markets, building our offering in line with dynamically changing market needs. We marry our expertise in frontier market FX with efficient digital payment rails supporting bank accounts and mobile wallet payments in rapidly developing markets. Our team is proud to be able to solve real payment challenges on behalf of our wholesale clients, ‘moving money where it’s needed’ reliably, quickly and cost-effectively.”
Winner: DBS
DBS saw a strong year of growth thanks to operations that saw the bank strengthening its services outside its home market of Singapore.
These changes helped the bank secure a 12% year-on-year increase in its global transaction services revenue. Cash management in particular saw impressive growth, increasing more than 14%.
The bank focused its attention on providing cutting-edge services for its clients as it launched 66 new application programming interfaces (APIs) for its cash and trade services business. Among these were new FX APIs for China, Hong Kong and Singapore. The use of corporate APIs increased significantly, from 658,000 in 2018 to 7.4 million in 2019.
Changes were implemented at the country level. In Singapore, DBS worked with three healthcare providers on payment infrastructure to transfer all of the 27 hospitals to Singapore’s standard QR code by the end of 2020, which will remove the need to make payments by cheque or cash.
Meanwhile in Hong Kong, the bank partnered Sun Life Insurance to integrate its DBS Rapid solution, which enables real-time payment of insurance claims where the user is connected to the faster payments system. Similarly, Allianz Taiwan Life adopted the bank’s eACH API.
In 2019, DBS also launched its Multi-tier Supplier Payment Service, which utilises blockchain to provide the option of making early payments to the suppliers of an anchor buyer, enabling financing opportunities within a supply chain. The system works especially well for the smaller companies that are facing limited trade financing options, and provides stability to large companies with a long tail supply chain.
John Laurens, group head of global transaction services at DBS, says: “With the advent of the Covid-19 crisis, digital adoption across the markets we operate in has been accelerated by at least two to three years – this has been visible across all segments of the business. Against this backdrop, we’ve continued to drive the enhancement and implementation of our digital workflow capabilities for our customers, providing prompt relief to businesses in a safe, contactless manner.
“As global economies look towards recovery, we will continue to advance our digital capabilities so that our customers across the globe can bank virtually and continue to drive transformational change to fully realise the potential in their businesses, while also enhancing business processes and controls as a post-pandemic world emerges.”
Winner: VTB Bank
Over the past year, VTB has been working to introduce modern technologies to its transaction banking clients across central and eastern Europe, implementing a range of new systems that helped it to win this year’s award for transaction banking in the region.
The Russian bank has introduced open banking systems, and its popular host-to-host service, which enables users to make payments in various currencies and receive updates on the progress of the transaction. The host-to-host service has been taken up by 1070 of VTB’s clients, representing 19,170 individual bank accounts.
Users of the host-to-host service include atomic energy corporation Rosatom, which can now carry out all settlements in roubles and foreign currencies through the company’s own internal accounting system. By reducing the number of systems used, it reduces the risk of error and is a more effective use of resources.
VTB was particularly innovative in modernising the Moscow transport system through its Transport Processing system. Launched in November 2019, the new system allows commuters to use contactless payments on all public transport systems. The process gives users a wide range of payment options, including contactless cards from any bank, and mobile payments including ApplePay and Samsung Pay. It can also be used for complex transactions, such as a single tariff when passengers are making a multi-stage trip using the networks of multiple carriers. Each of the trips are aggregated, and the passenger’s account is debited the following day.
Further, VTB signed an agreement with Moscow Metro in September 2019 to implement virtual tickets, in a joint project with Mastercard. The virtual Troika transport card is currently being trialled at a limited number of stations, and is scheduled to be rolled out across over 280 metro stations in the second half of 2020. The card is saved in the mobile wallet of users and when tapped against a contactless reader at the station, the system will prioritise debiting the card over any other debit cards the user also has saved within the wallet.
During February 2020, VTB began work on biometric payments for public transport in Moscow, and by May the system was in the process of being implemented. The system was first implemented in two stations, then rolled out to 10, before finally being introduced across the metro network.
“VTB Bank aims to provide the best services to our clients, leveraging VTB Group's international presence to ensure constant banking support for leading Russian and international companies in Russia and beyond,” says Yuri Soloviev, first deputy president and chairman of VTB Bank management board. “To address our clients business needs and stay ahead of the competition we have designed and introduced numerous solutions using open banking, blockchain, big data. Additionally, VTB has partnered with the city of Moscow to provide cutting edge solutions like biometry or virtual transport cards for one of the biggest public transport systems in the world.”
Latin America and the Caribbean
Winner: BBVA
BBVA has improved its services to give its customers a greater overview of their accounts, a feature that has been invaluable during the coronavirus pandemic. The bank has implemented functions such as real-time global position, traceability of payments files, and a mobile app.
Key among these developments has been the bank’s adoption of application programming interface (API) channels that have given customers a simplified on-boarding process. BBVA Mexico, for example, has launched APIs to provide online services around the clock, as well as account information, and to allow cash to be withdrawn without the need for a card.
BBVA was an early adopter of the Swift gpi and has expanded the use of the service across the region. BBVA has rolled it out in both Mexico and Peru, where the bank was the first to offer the service via e-banking and mobile app.
The operations of its cross-regional clients have been simplified with the introduction of host-to-host and SwiftNet services. The platforms enable the standardisation of payments, account statements and status reports into one file format. Additionally, BBVA has introduced the Electronic Banking Internet Communication Standard, and connects to BBVA USA as part of its global infrastructure.
There are currently 600 corporates on the bank’s global infrastructure, and 180 are implementing the new services. This has seen the bank reach a total of 5.8 million orders processed each month, with around 70% of its clients transacting in Latin American countries for payroll, payments, factoring and account information services.
BBVA has also been involved in green financing activities in the region. In 2019, the wastewater treatment plant of Aguas Claras in Colombia began operation, a project that has increased the treatment of wastewater in the Aburra Valley to 84%. BBVA was instrumental in its development, having provided financing of $10m the previous year.
Jose Luis López-Sors, head of global transaction banking Americas at BBVA, explains how the bank has continued operating during the coronavirus: “Our first challenge has been ensuring that 95% of our team could work from home in a very short period of time, without affecting the day-to-day business we do with our clients. The second challenge we faced was to provide liquidity to our clients in a timely way, as we experienced a dramatic increase in the demand of funds from our corporate clients in the first two months of the Covid-19 pandemic.”
Winner: Samba Financial Group
Samba has brought in a new wave of innovation to banking to modernise transaction banking in the Middle East, which has helped it to secure this year’s regional award.
The Saudi bank introduced new multi-currency services, with collections enhanced to enable customers to reconcile transactions automatically without having to convert them into local currency, an update that has been of considerable benefit to the bank’s multinational clients. The services are now offered in US dollars and euros, with the facility for creating invoices in these currencies and full reconciliation of receipts.
Samba also established multi-currency virtual accounts, which worked around the issue of accounts being assigned a single currency. Now a set of account numbers are assigned to customers and linked to their accounts in each of the supported currencies. The IBANs for these accounts are then provided to the customers, who can make the payments in their chosen currency.
The bank also improved services for customers travelling in the region via a joint initiative with Mastercard that allows individuals and businesses in the United Arab Emirates to pay for airline tickets and other travel services using credit cards rather than cash. This makes it simpler for travel agents to process payments in store, while enhancing security. The process was introduced as part of Saudi 2030 Vision, which aims to make 70% of all payments digital in the next decade.
Samba has also enhanced its trade finance offering to best support its regional clients. At the end of 2019, the bank introduced the sharia-compliant Letter of Credit Discounting Without Recourse trade solution. The product reduces the credit risk for both the buyer and the issuing bank, and provides liquidity for the exporter or supplier, while still adhering to Islamic banking principles.
The bank also introduced a supply chain finance invoice factoring programme. The off-balance-sheet solution has a cap of SR3.7bn ($987m) for between 90 and 120 days and can help with short-term working capital needs. As the bank also offers conventional banking structures, the programme has meant it can meet the needs of a diverse range of firms.
Winner: Citi
Citi takes the prize for North America this year, after introducing new digital systems to streamline and simplify the transaction banking processes of its customers.
Citi Verify was launched in the US in 2019 with the aim of giving customers more oversight over their digital payments. The system provides an account and identity verification system to provide support against cybercrime and fraud, and can verify up to 98% of the customers the bank runs checks against. Used by corporates, it enables streamlined customer on-boarding, reduces the risk of payments fraud, and provides operational efficiencies. Produced in collaboration with identity and fraud verification specialist GIACT Systems, Citi Verify allows users to validate their US-based customers’ details before transactions are initiated and payments are made.
Bringing in these additional layers of account verification affords greater protection to both clients and the bank itself. This reduces costs and streamlines the processes by reducing manual processes and improving productivity. It also deals with processing problems, such as misdirected payments and reduces the risk of rejections of wire, cheque and instant payments.
The CitiDirect BE Cash Concentration system gives users greater oversight of their cash flows in accounts both in the US and around the world, allowing treasury teams to respond to any issues and challenges as they arose. Since it was developed internally in Citi’s innovation labs, the system is available to all of the bank’s customers.
Similarly, over the past year the bank has rolled out its Citibank Online Investments portal for money market funds, which was developed in collaboration with fintech Cachematrix and builds on a previous application. The platform, which gives treasurers greater automation and simplicity when making their investment decisions, was designed to focus on utilising automation to simplify and improve workflows and cash management strategies. The portal has been crucial during the pandemic as it has enabled companies to continue the same standard of operations with fewer resources and a remote workforce.
“Clients, especially in an environment where Covid-19 has upended long-standing business models, are increasingly depending on Citi’s robust balance sheet, global network, working capital and liquidity solutions, digital innovations, and advisory services,” says Michael Fossaceca, North America head, treasury and trade solutions, at Citi. “They are looking for Citi to partner to co-create solutions that meet their specific needs. Citi TTS in North America has worked directly with clients to help ensure their success through improved digital onboarding and access, expanded digital channels, greater digital integration, and improved security and controls.”
Winner: HSBC
HSBC pledged to greatly expand its use of application programming interfaces (APIs), and the result has been innovations that have significantly improved operational oversight for its clients, and helped it to win the western Europe award.
The beginning of 2020 saw HSBC launch its Treasury API, rolling it out to 13 countries in Europe. This allows users real-time and seamless connectivity to transfer funds and access account information. The system has been developed to easily link into the existing platforms used by treasurers. With it they can boost cashflow management with on-demand bank account balances and transfer information; improve payment tracking and reconciliation; and diversify payment methods, including using real-time, single and bulk payments.
HSBC also introduced a trade finance APIs – a first for the sector. Financial institutions can use this to build applications for clients. Meanwhile, the bank guarantee API can allow financial institutions to give their customers oversight of their guarantees in real time, and a copy of the guarantee can be downloaded as a PDF.
Nuno Matos, group general manager and CEO at HSBC Bank and CEO of HSBC Europe, says: “Our clients want digital tools that are fast, simple and secure. They want real-time visibility and control over their cashflow. And they want access to their data on demand. Our innovation in areas such as APIs and blockchain meets these needs by enabling clients to transform themselves so they can better serve their customers and manage their supply chains.”
As indicated, the bank has embraced the use of blockchain and distributed ledger technology with the launch of its ‘Digital Vault’. Used primarily in the securities services part of the business, it allows for the digitalisation of transaction records of private placements. This allows clients to access records of their private assets, which includes debt, equity and real estate, without the need to request a search of paper documents. Instead, the information is available to them in real time. The parties that have access to the vault are agreed with the client, and have their own node through which to access the vault.
Winner: CIMB
CIMB’s innovation in its cash management offering helped it take the prize in this year’s Transaction Banking Awards.
In the bank’s electronic channels, CIMB has recently rolled out the BizChannel@CIMB mobile banking app with an integrated mobile token solution. This provides clients with the convenience to perform transactions on the go, and the use of a mobile token replaces the need for the current security device token. Clients that have CIMB accounts within Malaysia, Indonesia, Singapore, Thailand and Cambodia will be able to view their accounts via a single login.
Foreign exchange (FX) facilities have also been launched for the BizChannel@CIMB internet banking platform, which enables users to track changing rates in real time. When they find a favourable rate, they can book it prior to conducting any foreign currency remittances. This can all be carried out seamlessly, and removes the need to call the bank’s treasury department.
CIMB has also combined virtual accounts with application programming interface (API) technology to develop a solution for a food delivery service. The virtual accounts aspect allows the source of the payment to be identified, while the API part means the client can be alerted to a payment being made in real time. With automated remittances, this enables faster processing and removes the risk of human error in accounting.
Rafe Haneef, chief executive officer, group transaction banking at CIMB Group, says: “With superior customer experience in mind, CIMB’s cash management business continues to focus on the digitalisation of our offerings to enable customers to benefit from convenience, speed and cost savings. We have been investing, and continue to invest, in technology and innovation to create new solutions to enhance existing offerings. This includes facilitating increased scalability, and leveraging to enable automatic straight-through processing.”
The bank has adapted to the unique market pressures felt during 2020 to provide the best service to its customers. “With the ongoing Covid-19 pandemic, our digital strategy has become an essential component of our customers’ ability to continue operating effectively, whilst addressing the constraints of the movement control and the need for physical distancing,” Mr Haneef says. “In the new normal, we will continue to evolve our systems by adopting a micro-services approach with short turnaround times. We are also looking towards seamless, end-to-end digital online account openings with an electronic know your customer procedure.”
Winner: Citi
As the environment for payments becomes more complex, with multiple providers entering the space both domestically and internationally, it is up to banks to step up and help their customers to make sense of the changes. Citi has done this successfully with the implementation of several new services over the past year.
Citi Payment Insights gives customers greater control of their funds by providing visibility of their payments as they move through the processing, clearing and settlement networks. However, it takes things a step further for clients, as they can also act on their payments. It leverages existing banking systems such as Swift gpi, application programming interfaces (APIs) and cloud computing to provide real-time visibility across Citi’s full global network and its correspondent banking ecosystem.
The system also makes transaction tracking much faster, as processes that would previously have taken a few days can now be completed in minutes. Additional improvements include processing times, foreign exchange rates and correspondent bank charges, giving full transparency on all the charges taken as a payment moves through the system.
On the customer-facing side, ‘Spring by Citi’ has overhauled the digital consumer payments business. As the bank saw its customers struggle with the task of piecing together the solutions that enable payments processing globally, the idea emerged of finding a way to provide a simple and seamless way to accept consumer payments. The result was Spring by Citi, a full-stack payment processing solution that integrates customer-facing payment methods with the company’s chosen back office treasury management systems and processes.
In all, it provides a simple and flexible integration that gives a centralised and secure access to various payment methods – ensuring transactions are routed through the appropriate payment schemes – and provides automated reconciliation and reporting.
As the use of instant payments continues apace, the bank has also moved to ensure that the transactions can be made as seamlessly as possible across borders. With so many different processes and standards in place for instant payments, the bank had to develop a platform that could remove these frictions, in order to create an easy experience for its customers.
The outcome was that Citi built its ‘Global Instant Payments’ solution to provide institutional clients with uniform connectivity to all domestic instant payment systems. Built with a single-entry API, it means the system can also be used to connect to a number of value-added services.
“As commerce is becoming more global, payments are becoming more local,” claims Manish Kohli, global head of payments and receivables, treasury and trade solutions at Citi. “Clients are looking for ways to access local payment methods on a global scale so they can reach more customers. This is the foundational strength of our business. With investments in global payment schemes, digital payment capabilities and self-service solutions, we are helping our clients enhance core operations, expand to new markets and deliver a better end-user experience to their customers.”
Winner: HSBC
HSBC took impressive steps to make its securities services a central feature of its transaction banking products suite, which saw the bank move ahead of its rivals in this year’s awards.
The bank significantly extended its UK transfer agency capabilities, boosting its services to a 80-strong workforce operating out of Edinburgh. The bank provides services to eight clients, representing more than 200 UK domiciled funds and £80bn ($105bn) in assets under management.
Allegra Berman, co-head of securities services and global head of institutional sales at HSBC, says: “A key pillar of our strategy is continuous technology-led transformation and our clients can expect to see a stream of exciting new developments covering areas, such as private assets, data management services, investor portal and integrated desktop solutions offering real-time and event-based notifications. We are also working on key initiatives to support the increasing trend towards digital assets and tokenisation.”
Further innovation came in November 2019, when the bank introduced its custody blockchain platform, ‘Digital Vault’, to digitise the records of private placements. Due to the tailor-made nature of these transactions they are heavily paper-based, and are not digitised due to the lack of standardisation. Though using the Digital Vault, the bank is exploring how it can bring even more of the process onto the blockchain ledger in the future.
Meanwhile, the business in Asia has undergone a sizeable expansion of its middle office capabilities, a process that has taken the bank 18 months to overhaul through joint collaboration between the IT, business and change teams based in Asia. Driven by the bank’s growing number of Asia-based clients and its Asia first strategy, the middle office will now see upgraded levels of trade management and settlement control, increased instrument coverage of over-the-counter derivatives, and an enhanced Investment Book of Record reporting capability.
Richard Godfrey, co-head of securities services and global head of securities financing at HSBC, adds: “Our clients are looking for help to support both their growth ambition and their growing change agenda. Beyond what we have always done well, they now need great connectivity, fast access to comprehensive data sets, and more choice over how they experience and consume information.
“Our investments in digital and data have targeted these areas specifically, with solutions such as API Gateway, Digital Vault, Data Mesh, and Digital Hub all coming to market this past year.”
Winner: UniCredit
UniCredit this year demonstrated how important it is to understand a supply chain and react quickly to market pressures, to ensure clients can continue to operate and provide essential products and services. The bank has begun helping clients to understand the risks that may be inherent within their supply chains, and is introducing several solutions to work through this.
Among these was a dynamic discounting service for the bank’s more liquid clients, which offered a scaled discount for early payments. By using this service, clients can gain strong returns on excess liquidity, which may have otherwise gone unutilised. It also benefits the smaller of the company’s suppliers down the chain, by speeding up the previously lengthly know your customer and onboarding processes that have been particularly cumbersome for smaller companies to manage. Working in conjunction with traditional financing methods, dynamic discounting can provide timely support in the difficult economic environment.
Further, the bank demonstrated that it could respond quickly to unexpected challenges, as it took steps to mitigate the impact of coronavirus on its clients. UniCredit’s previous steps to update its technology paid dividends as it was able to react as soon as the pandemic hit.
It meant the bank could quickly offer supply chain financing and reverse factoring programmes to suppliers in need – for example, it helped Italian retailer Esselunga to expand its existing reverse factoring facility to €530m. This programme accelerates payments to the company’s suppliers, offering them liquidity in advance of invoice due dates. This helped them to cover their costs while their revenues were reduced by lockdown.
The bank’s adoption of fintech continued with a partnership with Taulia, which provides digital supply chain finance solutions. Through this collaboration, UniCredit provided a solution that included cash forecasting, electronic invoicing and dynamic discounting. It can link directly into corporates’ enterprise resource planning systems and gives them the choice of opting for bank-funded supply chain finance or using their own funds through dynamic discounting.
Winner: Standard Chartered
Standard Chartered has leveraged its international presence with market innovation during the past year to create a formidable set-up in its trade finance department.
The bank enjoyed a significant first when it conducted the first renminbi-denominated international letter of credit over blockchain in May 2020. The letter of credit was prepared and negotiated over the Contour blockchain platform, allowing the digital document set to be easily checked and forwarded to the applicant, thereby saving considerable time compared with a paper documentation. The letter of credit’s status could be updated in real time, and was accessible to all parties involved in the transaction. Communication with the applicant was conducted within the platform through peer-to-peer messages, which significantly shortened an otherwise time-consuming process.
Standard Chartered also became the first bank to partner with TradeLens, a joint venture between IBM and Maersk shipping lines aimed at digitising global supply chains. With a special focus on freight container logistics, the bank could step in and immediately verify the authenticity of shipments using TradeLens’s extensive real-time data and document exchanges with the shipping industry, enabled through application programming interface processing.
Michael Spiegel, global head of trade at Standard Chartered, says: “Our clients operate in a constantly evolving environment and expect us to deliver future-proof solutions. For instance, Covid-19 has accelerated the requirement to move away from physical documentation and signatures. We have been a driving force behind Contour, which digitalises letters of credit using blockchain technology. In addition, we partner with leading platform providers, such as SAP Ariba, to provide innovative solutions in the area of supply chain financing.”
Standard Chartered’s trade finance business was quick to respond to the complex environment created by coronavirus as the bank worked with Asian Development Bank to ensure a $25m trade loan was approved for State Pharmaceuticals Corporation of Sri Lanka. Working with People’s Bank Sri Lanka, the funds were used to purchase necessary personal protective equipment.
“We strive to further improve the availability, delivery and timeliness of trade finance for those that require it most,” Mr Spiegel says. “Our aim is to facilitate sustainable supply chains by connecting our clients’ ecosystems, integrating financial and physical flows and optimising working capital and cash management. We continue investing in streamlined and automated solutions, augmenting existing connectivity with innovative solution providers.”
Top 1000 2023
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