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2016 Expert views

How can banks help corporates grow their business?

By Benoit Desserre, Global Head of Payment and Cash Management, SG GTB - 2016

“Many corporates are unaware of the risks they face, despite their banks having information on such risks. Banks are talking to corporates about risk and explaining how they can be mitigated. In many ways, the lack of action on the part of corporates regarding risk is a hangover from the days when they believed banks bore all the risk.”

 

Corporates are continuously seeking greater speed, transparency and predictability of cash and trade services as well as looking to increase their working capital and secure funding. As supply chains and liquidity management priorities evolve, how can banks help their corporate clients grow their business?

  • The Single Euro Payments Area (SEPA) paved the way for the XML format to become a global standard. By continuing with the work of SEPA, the banking community can provide the impetus for XML to expand beyond Europe. Already the US financial community is adopting XML, turning the standard from a ‘local’ one into an international one.
  • Standardisation represents the best way for banks to help their corporate clients grow their business, particularly across regions. XML will enable corporates to receive information that is easier to understand, to adapt and to manage. 3SKey, the personal digital identity solution developed by SWIFT and key players across the banking and corporate community, is a good example of how a standardised approach can help corporates. It enables corporates to sign financial messages and files sent to different banks with a single device. By removing the need for multiple security tokens, 3SKey greatly simplifies signing procedures.
  • By being able to offer the same products and services in any country, banks can take a great deal of pressure off corporates as they expand into new territories. Web banking tools are available that – with adjustments for local languages etc – will show a corporate treasurer the same information in the same way wherever in the world he is. This is particularly useful for large corporates running extensive subsidiary networks.
  • One of the biggest trends in corporate treasury is the demand for any time, anywhere, any device treasury services. It is early days and functionality is not yet fully developed but the industry is moving towards this model. Put simply, corporate treasurers want to be able to access information on any device – such as a mobile – from anywhere in the world at any time. Banks are responding to this trend and standardisation provides the backbone of services.
  • As corporates expand their businesses they increasingly expect their banks to accompany them. A country may be new territory to a corporate but it will not necessarily be so for its banking partner and banks are expected to shield corporate customers from the impact of entering new markets. Offering standards-based products with the same look and feel is one way of shielding corporates from change.
  • Security is likely to be a major theme at this year’s Sibos, particularly given the recent hacks on the SWIFT network. In the past, security was considered to be 100% a bank’s responsibility, but in the new SEPA environment this responsibility is shared between the banks and the corporates. Many corporates are aware of this but they are not prepared for it. Some corporates leave themselves open to fraud by continuing to have only one person capable of executing transactions, for example. A more recent trend is to adopt a double signature approach, which is more difficult for fraudsters to break down. This is complex because large corporates with many subsidiaries will have to ensure each one adopts this approach.
  • Any major bank will have the tools to fight fraud and to limit any risk in that respect. But corporates need to realise there is a risk and to take action. Sometimes corporates are not aware of the risks they face, for example by using paper-based processes. Banks will measure the risk of their corporate customers depending on those customers’ security levels.