What are the specific challenges of the transaction banking landscape for global companies doing business in China? What are the major risk and regulatory issues that clients need to be aware of, for example?
Before giving you my views on the challenges of doing business in China, let me first point out that the opportunities in China are still outstanding and the momentum unique in the world. Compared to many other markets, China offers plenty of chances to do business and help clients to realize their plans and ambitions.
However, China is currently at a crossroads when it comes to a number of structural reforms. While directionally, the goal is to continue liberalizing, the steps and milestones may sometimes zigzag. One will need to be patient and learn to cope with the volatility that accompanies the policies shifts, which is understandable if you imagine the size and complexity of these developments. RMB internationalization and FX administrative controls is a good example whereby guidance may vary often.
Further to that, how is the threat of a ‘looming trade war’ between the US and China affecting transaction banking in the region? Is there a sense of concern?
The trade war has created large volatility in the FX and capital markets, which affects profitability and makes business planning more difficult given the uncertainties. There is also a perceived increased level of risk aversion, which reduces economic activities and trade.
All these factors impact transaction banking revenues in the region. That said, I am confident that something that hurts the interests of all market participants will not last a long time.
How is Deutsche Bank China harnessing new technology – robotic process automation (RPA), or distributed ledger technology (DLT), for example?
We are looking into robotics to automate internal processes, thereby improving our efficiency and turnaround time. Having an automated and scalable platform is one of the critical success factors in a highly competitive market environment and will separate the market leaders of the future from the rest of the competition.
DLT might be still a little further away for our adoption in China, but we have successful applications of data analytics overseas that we are looking to replicate in this market; e.g. analyzing intraday liquidity and client payment patterns to optimize funding.
China is one of Deutsche Bank’s oldest markets. How important is the region today to Deutsche Bank’s wider business and future strategy?
“We are number four in CIB in Asia Pacific in the areas where we compete. This is a market position we want to defend,” said Christian Sewing, our CEO. Clients always tell us how much they value how we are set up in Asia and there is no question on the region’s growth prospects and the importance of the Asia franchise and its clients to Deutsche Bank.
The vast majority of our global clients chose Deutsche Bank because of its network in Asia Pacific, so our strength in Asia is a competitive advantage. China features very prominently in APAC and we are definitely going to increase our investment here.