Standard Chartered is increasing its focus on European and American corporates despite other regions seeing faster adoption of digital technology, executives told GTNews at last week’s EuroFinance conference.
Digital innovation in Asia and Africa is moving at a much faster rate than in Europe and the US, says Michael Vrontamitis, Europe and Americas head of trade, at Standard Chartered.
“The classic example is mobile payments. People are still talking about it in Europe. In Africa [mobile payments] have come through five to six years ago,” explains Vrontamitis.
“In Kenya, about 75% of all payment volumes are mobile– that is mobile to mobile.
“We are also seeing a huge acceleration in new technologies and new ways of doing business in Asia and the Middle East,” he says.
Standard Chartered has traditionally focused on Asian, African and Middle Eastern clients. “For us that is our natural footprint,” explains Vrontamitis.
“Over the last 12 months, we have increased our strength in Europe and the America. We have increased our client base.
“We see clients in Europe and the Americas as very strong innovators. It is going to be an interesting couple of years as new technologies and ways of doing business play out,” he adds.
Shifting treasury management challenges: the advent of the 24-hour treasury
The array of blossoming new technologies are fundamentally changing the way treasuries operate and are disrupting their underlying businesses.
“We see the advent of the 24-hour treasury. You can see real-time payments coming in. Treasurers no longer have to aggregate information as it now comes in real-time from financial service providers,” says Vrontamitis.
“From a trade finance point of view, we are seeing a greater connection between treasury and the physical supply chain”
“From a trade finance point of view, we are seeing a greater connection between treasury and the physical supply chain,” he adds.
To ensure a business has adequate liquidity, treasurers must focus on working capital, explains Victor Penna, regional head of cash management, at Standard Chartered explains.
“That means they need to understand the supply chain,” says Penna.
“If you are going to work with the supply chain team, you need to understand what happens in the supply chain. What do the payment cycles look like, for example? Treasurers will need data on the underlying business,” Penna adds.
“Treasury will become much more strategic in terms of their ability to influence the strategy of the company,” says Vrontamitis. How treasurers leverage the digital tools being launched to create more value for the business will be a crucial part of treasurers success.
“We could be seeing the death of things like shared services, payment factories and supply chain finance. We are right at the beginning of that. It is pretty exciting and challenging for a treasurer to keep on top of that,” says Vrontamitis.
Think before dipping your toe in the fintech revolution
Before investing in technology, it’s imperative that treasurers have a clear end goal in mind.
“It’s easy to get caught up in the technology and lose sight of what the true value creation is,” says Vrontamitis.
“There are lots of existing tools out there and new ones being developed. Treasurers need to decide whether they go with the existing technology which may not be the newest or wait 18 months to three years and use new technology. It depends on what the problem is that they are trying to solve,” he says.
“We could be seeing the death of things like shared services, payment factories and supply chain finance”
As an example, Vrontamitis explains that Standard Chartered is approached by fintechs all the time. However, the business must allocate time and resources intelligently.
Blockchain supply chain finance
Trade IX and the bank announced they were partnering to provide a client with a blockchain trade finance product last week. This fitted in with the direction Standard Chartered wanted the business to travel in.
“We have formulated our vision. We are now executing against that vision. We give similar advice to our clients,” says Vrontamitis.
The completion of the first blockchain-enabled trade finance transaction for a global logistics company was announced at EuroFinance last week, by AIG and TradeIX with financing provided by Standard Chartered.
Logistics firm, TradeIX has developed a trade finance platform, TIX, powered by permission-based distributed ledger technology.
Using this ledger, companies can have their invoices placed on the TIX platform, giving real-time visibility to manage customer terms and credit risk.
All details of the invoice and the eligible insured amount are recorded on the distributed ledger.
This invoice finance transaction took place at the end of September and enabled TradeIX to offer its customers extended payment periods whilst maintaining the company’s receivables at current terms.
Farooq Siddiqi, global head of trade for transaction banking at Standard Chartered, says: “Digitalisation of trade and trade finance is integral to our strategy and by working together with leading fintechs we can create innovative solutions to better support the financing and information needs of our clients’ and their ecosystem of buyers and sellers.”