What Can Banks Expect at Sibos This Year?
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SIBOS 2018 What can banks expect at Sibos this year? We look at some of the critical issues and developments confronting financial institutions (FIs) that will be discussed at SWIFT’s annual conference in Sydney, Australia, this year By Foo Boon Ping The ratcheting up of trade tension between China and the US from the imposition of increasingly severe unilateral and retaliatory tariffs is a major concern. How will it impact the flow of trade and commerce globally and what collateral impact will it have on businesses and companies, including financial services and banks? We invited Faisal Ameen, Head of Asia Pacific Global Transaction Services, Bank of America Merrill Lynch; Arnon Goldstein, Regional Head, Relationship Management – APAC, BNY Mellon Treasury Services; and Nancy So, Head of Institutional Cash Sales and Client Management, Asia Pacific, Deutsche Bank, to share their views on how recent developments are expected to impact FIs in Asia Pacific. 1. How are Asian FIs faring overall this year? How big of an impact has the growing trade row between the US and China had on your customers and you in region? Certainly the current trade negotiations are a top Trade disputes, are disruptive by nature, especially Globally, trade has continued to slow. Emerging concern for our clients, since many of them have to the targeted markets – so any sustained dispute markets have come under recent pressure amid operations spanning different geographies and any and the accompanying disruption to either the US a combination of tighter US monetary policy, changes in the markets could have a large impact and Chinese economies will have knock-on impact in idiosyncratic risks, and the continuing US-China trade on their businesses. As a result, clients are keenly the region given our interconnected world and trade row. Asia’s growth and profitability are no longer watching this space. relationships. However, large exporting markets to the a given, so corporates are increasingly looking at US in Asia such as Vietnam could actually benefit from efficiency and costs. FIs are thus focusing on how they The volatile market conditions and the ever-changing the trade row by becoming relatively more competitive can serve their (corporate) clients better, how they can treasury landscape also provide us with opportunities as tariffs kick in. Taking a longer term view, however, help them be more efficient – and placing an emphasis to get closer to our clients. In such dynamic times, the broadest interests would be well-served if trade on digitisation to do this. Further they are encouraged they look to banks to keep them informed of the differences between the US and China are resolved. by a number of government-led initiatives for faster latest developments and support them through their payments in-country such as in Australia and Hong business cycles. Kong, and are investing for the (digitalised) future. Arnon Goldstein BNY Mellon Treasury Services Faisal Ameen Nancy So Bank of America Merrill Lynch Deutsche Bank 90 The Asian Banker ISSU E 157 2. What are some of the challenges faced by FIs in this regard and how are you supporting them? The economies in emerging markets such as Argentina One theme that we see consistently in Asia among FIs and corporates are facing three main challenges. One and Turkey are driving additional uncertainty in the financial institutions is the changing expectations is geopolitical risk, with the US-China trade war and risk macro landscape. Other factors on our clients’ minds of their clients – and the challenges that these of tariff increases posing a notable threat to profitability. include the regulations on GDPR (Global Data Protection expectations bring to financial institutions in the Regulation) and Brexit in Europe. On the treasury front, region. Specifically, expectations around speed, use of Second, while digitalisation offers opportunities, the topics such as FX volatility, regulatory changes, and technology, innovation and transparency. These changes transformational change required by organisations is, fraud prevention continue to dominate conversations. are being driven to a large extent by new entrants to the for many, a challenge. Both corporates and FIs need transaction banking space and consumers accustomed to invest in the new open platform business model – The industry has also seen the entry of non-banking to similar and often standards in other areas of the strategically, financially, technologically, and culturally. players providing platforms for payments processing, economy. SWIFT gpi (global payments innovation) is just increasing their penetration into the SME and business one example of how the industry has responded to some Last, for some Asian markets, cybersecurity is also banking segments, causing disintermediation in banks of these challenges – and where we are a pilot bank. a challenge. We have a three pronged approach and corporates. Value added services provided by these to combating cyber-criminal activity comprising players on a technology platform have seen the rapid We have also been very active in helping to address sophisticated system security, industry-wide emergence of several new opportunities in this segment. some of the cross-border payment flow challenges of collaboration via banking networks, and sharing Regional banks have also been investing significantly in our financial institution clients to better service new knowledge and expertise with clients and our own technology, their people and product suite, focusing on requirements and the associated FX liquidity needs employees. We have an unrivalled opportunity to digitalisation and improving user experience. that comes with this in a speedy and reliable way. leverage data mining analytics across our swathes of We recognise in offering FX liquidity solutions that payment information – and thereby help to detect We continue to work closely with our clients to underlying clients have more alternatives both with anomalous transactions. Should any unexplained understand their needs. banks and increasingly non-banks so it is critical to be able to keep pace to evolving client expectations and activity be flagged by the system, we will contact our service standards to be successful in this space. client immediately – demonstrating the necessary Faisal Ameen synergy between the technological and human elements that creates a robust defence strategy. Bank of America Merrill Lynch Arnon Goldstein BNY Mellon Treasury Services Nancy So Deutsche Bank 3. How has digitalisation transformed your customers’ and your business in 2018? Digitalisation has enhanced our client’s reach beyond Leveraging technology and data has been Across many markets in Asia, FIs are busy developing the physical and geographical boundaries. Now transformational for us, our clients and really the Application Programming Interfaces (API) with their anyone with a smart phone and a data plan is able to industry leading into 2018 and beyond. At the core corporate customers. We are also harnessing API to browse, compare and order products from any part of of this trend is the need to be responsive and even serve clients, for instance Deutsche Bank’s EURO and US the world. Our clients need to ensure they have the predictive of underlying client expectations around dollar payments via SWIFT gpi and using logistics, pricing (in various currencies) and product speed and simplicity of our product offerings. API (which we launched at Sibos 2017) is now in full features geared for various markets to be competitive. Adopting digital strategies has also changed the service. And an FX pricing solution via API is to be piloted Digitalisation is also moving from smart phones way in which financial institutions use data to with a few Asian FI clients shortly. The solution will to internal functions of the corporate world, be it more quickly address business issues – whether it provide access to streaming rates for over 125 payment from digitising travel and entertainment claims, to be attrition management or prospecting for new currencies at trade execution thereby extending clients’ digitally matching their receivables. Efficiency and risk business opportunities. We see this across all of Asia currency network and access to foreign markets. mitigation have been two key factors that our clients with very few exceptions. Additionally, as part of the bank’s API strategy, in keep in mind when embracing digitalisation. May 2018 we acquired Quantiguous Solutions, a Every opportunity comes with a threat, clients need Mumbai-based software company, to help accelerate to ensure they have robust processes to monitor Arnon Goldstein the development of our Open Banking platform as the and manage digital access/reach, not only for their BNY Mellon Treasury Services core for developing client applications and connecting businesses but also for themselves. A partnership corporate clients, fintechs and partners to us. And in approach, between a client and various service providers, August we announced an equity stake in US-based is needed to meet their strategic digitalisation goals. ModoPayments to expand our payments business with a focus on mobile wallets and peer-to-peer networks. Faisal Ameen Nancy So Bank of America Merrill Lynch Deutsche Bank ISSU E 157 The Asian Banker 91 SIBOS 2018 4. What is your biggest risk management challenge and priority in 2018? Managing risk in an industry that by definition serves high risk geographies and Global growth has remained robust but we see two main challenges. One is geopolitical product-sets is critical for long-term sustainability. So, first line controls are always the risk, with the ongoing currency crisis in Turkey, idiosyncratic risks in Russia, and trade priority. Perhaps the biggest challenge is to stay attentive and vigilant to all of the risk war remaining a key risk to the global economy. The other is KYC and increasing related imperatives around us – all the time. Falling asleep at the wheel is simply not an regulations where we work with clients, regulators and the industry for greater option in our business.