Cor­po­rate bank­ing gets a dig­i­tal edge

China Daily (USA) - - BUSINESS - By JIANG XUEQING jiangx­ue­qing@ chi­nadaily.com.cn

Fi­nan­cial Expo.

Tech­no­log­i­cal in­no­va­tion is trans­form­ing the busi­ness mod­els of com­mer­cial banks’ cor­po­rate clients, thus driv­ing changes in their de­mand for more flex­i­ble sup­ply chain fi­nan­cial ser­vices, work­ing cap­i­tal fi­nanc­ing, and con­sult­ing ser­vices re­lat­ing to merg­ers and ac­qui­si­tions, said The Bos­ton Con­sult­ing Group in a lat­est re­port.

More than 70 per­cent of cor­po­rate clients iden­ti­fied dig­i­tal ca­pa­bil­ity as one of the key fac­tors to eval­u­ate the qual­ity of com­mer­cial banks’ cor­po­rate bank­ing ser­vices, ac­cord­ing to a 2015 sur­vey con­ducted by BCG, aUS-based global busi­ness con­sult­ing firm.

“As a re­sult, lead­ing in­sti­tu­tions in the bank­ing in­dus­try are step­ping up the ef­forts to pro­vide cor­po­rate fi­nan­cial ser­vices on­line and on mo­bile de­vices,” said BCG part­ner and manag­ing di­rec­tor DavidHe.

Com­mer­cial lenders are now of­fer­ing dig­i­tal trans­ac­tion bank­ing ser­vices through the in­te­gra­tion of cor­po­rate pay­ment, trade fi­nanc­ing and cus­tody busi­ness.

They are also de­sign­ing on­line sup­ply chain fi­nanc­ing prod­ucts by con­nect­ing the in­for­ma­tion on up­stream and down­stream pro­por­tion of banks’ cor­po­rate clients iden­ti­fied dig­i­tal ca­pa­bil­ity as one of the key fac­tors to eval­u­ate the qual­ity of com­mer­cial banks’ cor­po­rate bank­ing ser­vices trade, lo­gis­tics, pur­chases and pay­ments through co­op­er­a­tion with e-com­merce com­pa­nies.

That’s not all. They are also pro­vid­ing in­no­va­tive so­lu­tions for for­eign ex­change trans­ac­tions and cross-bor­der pay­ments by adopt­ing the blockchain tech­nol­ogy.

“Com­mer­cial banks are mak­ing a dig­i­tal tran­si­tion of their own busi­nesses. In the mean time, they could also ac­tively ex­plore co­op­er­a­tion op­por­tu­ni­ties with fin­techs (fi­nan­cial tech­nol­ogy com­pa­nies) to strengthen the col­lab­o­ra­tion in the ar­eas like as­set cus­tody, joint loans, credit in­ves­ti­ga­tion and risk con­trol, or even turn fin­techs into their clients,” He said.

Over the last cou­ple of years, many new fin­techs have en­tered the trans­ac­tion bank­ing mar­ket, seek­ing to po­si­tion them­selves as al­ter­na­tives to tra­di­tional banks. They of­fered so­lu­tions that op­ti­mize spe­cific el­e­ments of the trans­ac­tion bank­ing value chain, said a global sur­vey. The sur­vey covered 750 trea­sur­ers and chief fi­nan­cial of­fi­cers at multi­na­tional cor­po­ra­tions with con­sol­i­dated an­nual rev­enue of more than $500 mil­lion.

While trea­sur­ers like the spe­cial­ized value propo­si­tions and the of­ten-cheaper price points that fin­techs pro­vide, 90 per­cent in­di­cated that fin­techs are not yet ca­pa­ble of meet­ing the full ar­ray of cor­po­rate trea­sury needs. They cite the small scale and rel­a­tively young busi­nesses and per­ceive the fin­tech en­vi­ron­ment to be less se­cure.

“One trend that we ex­pect to gather mo­men­tum is for fin­techs and large trans­ac­tion banks to part­ner with each other for their mu­tual ad­van­tage,” said the 2016 sur­vey con­ducted by Ex­pand Re­search, a wholly owned sub­sidiary of BCG.

Banks can ad­vise and help trea­sur­ers to un­der­stand and mit­i­gate their risks and im­prove for­eign ex­change hedg­ing strate­gies. They can also help trea­sur­ers bet­ter as­sess coun­ter­party credit risks and nav­i­gate the com­plex­i­ties of the lo­cal reg­u­la­tory en­vi­ron­ment.

Roughly 30 per­cent of trea­sur­ers are will­ing to pay for such ad­vi­sory ser­vices, ac­cord­ing to the sur­vey. BCG fore­casts that cor­po­rate bank­ing rev­enues will in­crease to 3.5 tril­lion yuan ($508 bil­lion) in 2020.

LEI KESI / FOR CHINA DAILY

In­ter­na­tional vis­i­tors ex­change ideas with Chi­nese rep­re­sen­ta­tives about the mo­bile bank­ing of China Mer­chants Bank at the 2016 China

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