Changing the Game in Asian Transaction Banking: Part 2

Part 1

Regional Depth

Besides taking a wider view of risk, the type of services treasurers are looking for has changed. In addition to comprehensive transaction banking solutions and efficient customer services, corporates increasingly value the expertise that their partner banks offer based on their knowledge of industry best practices. Consequently, dedicated advisory services are now an essential element of the value added services DBS delivers to our customers.

Secondly, treasurers have never valued regional expertise and depth of presence more than they do today. Global banking is typically characterised by broad geographic reach and high level liquidity solutions. Conversely, treasurers are seeking depth of presence and expertise at a regional level, and increasingly prefer banks that offer local insights and solutions in addition to regional liquidity and risk capabilities. By doing so, treasurers can access best-in-class banking services in each of the regions in which they operate, whilst maintaining operational efficiency and cash visibility and control through connectivity solutions such as SWIFT.

In regions such as Asia, the ability to access specific expertise and solutions is particularly important given the speed and degree of change. For example, we are seeing enormous changes in payments infrastructure across the region, such as FAST (Fast and Secure Transfers) in Singapore and the unified payment interface in India, which is designed to simplify and provide interoperability with a single interface across all payment channels, including C2C, B2C and C2B mobile payments. Important infrastructure developments are also taking place in Australia, Hong Kong and China, such as CIPS (China International Payments System) for cross-border RMB flows, which will be more consistent with SWIFT codes and messaging standards.

Top down, bottom up

In addition to infrastructure changes, there is a huge wave of innovation taking place in the payments space driven by emerging financial technology (‘fintech’) companies. While many of these innovations will have limited or transitory appeal, there is also the potential to revolutionise the way that both consumers and businesses do business. For example, a great deal of work is going on to embrace blockchain technology, the technology that underpins cryptocurrencies, to create new business models such as dematerialising letter of credit processes. DBS is playing a lead role in facilitating and recognising innovation, such as through hackathon events, mentorship of fintech pioneers, and establishing strategic partnerships with entrepreneurial fintech companies on solutions that leverage the financial infrastructure such as FAST in Singapore, with applicability for both retail and corporate clients.

Innovation and convergence

One of the outcomes that we expect to see over the next two or three years, is that evolving customer demand combined with emerging technology will result in convergence between high and low value payments. Same-day or real-time payments are fast-becoming a consumer and corporate expectation, and increasingly, existing thresholds are no longer technology-driven. At the same time, a related trend is the convergence between domestic and cross-border payments, with payment users demanding faster, more standardised, lower cost payments. The first step to achieving this has already happened in Europe with SEPA (Single Euro Payments Area) but we expect the concept of universal payments to apply more widely in the future.

DBS is at the forefront of these developments, not only through our own investment and partnerships with innovative fintech companies, but by embracing and promoting the use of standard, bank-agnostic formats and connectivity wherever possible. We see this is an essential principle of efficient payments processing and information exchange, which will underpin future innovation.

A second trend that we expect is that more banking and technology innovation will originate in Asia. There are a variety of reasons for this, not least as banks in other regions are often still dealing with remediation issues following the global financial crisis including compliance, which restricts not only their investment abilities but also their focus and priorities.

Conversely, banks in Asia such as DBS have been deepening relationships with customers and progressing product innovation as the ramifications of the financial crisis have been less significant and not distracted focus from doing business with customers.

A stable partner to manage change

Treasurers and CFOs need to keep up to date with market and regulatory changes, and emerging innovations, and understand the implications for their business. In addition, they need to be confident that their cash management solutions will be developed in line with new market infrastructure and business requirements. Banks with specific understanding of the local and regional payments environment play an essential role in promoting awareness, offering advice and delivering solutions.

At DBS, we are therefore proactive in engaging with clients, regulators and infrastructure providers to anticipate and respond to changing demands. In addition, we are committed to investing in, and prioritising innovations in transaction banking that directly benefit customers and contribute to the transformation of the industry.

Being headquartered in Singapore, a pre-eminent global trade hub with an international focus at its core is clearly a major advantage. Furthermore, our unique contribution to Singapore, past, present and future, has shaped a bank with deep local roots and a pioneering regional and global perspective.

(This article was first published in Treasury Management International: Changing the Game in Asian Transaction Banking.)