Transaction Banking Commodisation is Road to Nirvana, Say Treasurers
The path to a treasurer’s nirvana is through the commodisation of transaction banking, according to two treasurers speaking on a panel entitled ‘What do Corporates Want from Their Transaction Banks?’ at the SWIFT Business Forum in London. Darsh Johal, head of global cash management at Shell, and Guy Ingram, treasury manager at SABMiller, agreed that rather than making money on payments, banks should look to provide value-add through insights into corporate-to-bank data flows.
Gary Wright, director, the SEPA Consultancy, added: “This information, which underpins all cash management flows but sits in disparate systems, is something that the banks can transform and add analysis to – and this is what corporates are willing to pay for because they can see the value in it.” He believes that the true value of SWIFT connectivity for corporates is not just a single pipeline to different banks, but also the ability to have more timely and better oversight of balances and transactions.
The session began with Marcus Treacher, head of e-commerce and client experience, HSBC, asking the panellists the headline question: what do corporates want from their banks? Johal and Ingram said that they evaluate a bank on whether it listens, understands their business and exhibits a strong commitment to the relationship. “Banks need to understand our treasury model,” said Johal. “I don’t want them to push products at me – such as supply chain finance or prepaid cards – that are not of use to my company.”
Both corporates identified pain points in the onboarding process, which remains overly complex and lacking in standards. Expressing frustration that standards are a result of a series of compromises, Ingram made the point that he wanted only one single standard – not 80% standardised with 101 options for the remaining 20%.
This is an area where corporates want their banks to use their expertise and influence in SWIFT to go to bat on their behalf. Johal believes that standardising documentation is the key priority and wants to see more collaboration on the banks’ side to drive this forward. Wright pointed out that events, such as Sibos, are times when the banking community comes together, but what was missing was a forum for bringing corporate and banking communities together in order to give corporates more input.
There was some debate on whether banks should focus on better delivery of basic services or look more at product innovation. Ingram believes that basics are more important, whereas Johal thinks banks should be investing in the next generation of banking, cash management and treasury products, or they will be left behind.
The problem with some innovation, according to Wright, is that the development comes from inside the financial institution and moves outwards, instead of the other way around through customer research and advisory boards.
“It is also important that banks present new ideas early in their gestation period, and not wait until just before launch to engage with the corporate clients. They need to engage through the whole life of the product,” added Ingram.
The SWIFT Business Forum, held on 19 May, was the first such event held in London and attracted over 300 participants, mainly from the banking industry. The forum also ran sessions on how London can retain its position as a leading international financial centre, rapid transformation of the payments world, the concept of ‘long finance’, and cross-border renminbi (RMB) trade settlement.