Evolving client roles push for integrated banking platforms

Banks are rolling out digital cash management tools to adapt to changes.

Asian banks are now required to think beyond the traditional job tasks of treasurers and the market scope of sector-focused companies when it comes to their clients’ cash management needs. Banking executives and industry consultants recognise the rapidly expanding requirements of their client base and are responding with more integrated platforms and solutions.

Developing integrated propositions has become one of the key investment priorities for banks, said Jason Ekberg, partner, head of corporate institutional banking at Oliver Wyman. “So I would be able to log into my portal, I want to look at my cash position, my credit position, my FX position, and I want to be able to use this dashboard as a single portal to help manage my business, with cash management at  the center of it,” he added.

"They want to position cash management as part of a broader proposition," Ekberg. "So I would be able to log into my portal, I want to look my cash position, my credit position, my FX position, and I want to be able to use this dashboard as a single portal to help manage my business with cash management at the center of it."

Ekberg also noted how banks are building online architecture platforms such as DBS Treasury Prism, an online treasury and cash management simulation tool launch in 2017 for chief financial officers and corporate treasures to test out various bank and corporate solutions at no cost. DBS has said the platform provides 30 liquidity and transactional flow management tools that span interest optimisation, notional pooling, instant payments, and payments and receivables management,

"Anybody can use it. You can go in and kind of play with it. You would optimise your liquidity and use it to optimise your treasury set-up," said Ekberg. "And DBS is doing that because they want to start to position themselves as the leader in the industry.”

Westpac plans to implement a flexible cash management platform that will be integrated to the bank ecosystem and enable Westpac to create new offerings without the need for custom build, said Di Challenor, general manager, global transaction services at Westpac. A key feature in this platform will be a single visualisation tool that provides the user a view of all account balances across many different departments.

"Beyond just being a visual dashboard, the end goal of the platform is for aggregated account balances to be pooled so they can be treated as a whole rather than a series of disconnected accounts," said Challenor. "The total balance of cash can then be put to work to either pay down debt or used for investment without overdrawing other working capital accounts."

New Development Bank (NDB) said introducing full-fledged cash management systems with automated collections, supply chain management and liquidity management creates a competitive advantage to the bank when offering a bundle product to customers. "This way the customer gets one platform for all their needs," said an NDB spokesperson, adding that another benefit to this approach is that it reduces the need for customisation, which can be costly.

Bank Mandiri has started offering Mandiri Cash Management, a cashless service for any transaction related with the administration's official budget of the local government.

"One of the features provided to support APBD management is the multifaceted financial dashboard that empowers each local government office to control earnings and expenses," said Adinata Widia, senior vice president of transaction banking wholesale product group at Bank Mandiri. "The service helps local governments to streamline their reconciliation process for collection, payment, and improve their liquidity risk management."

At Bank SinoPac, integration has led to a reduced process time for clients. It combined both offline machine and online solutions—such as virtual account and e-banking collection report management—and which nearly halved client cash processing time, said Irene Huang, head of cash management department, electronic banking division at Bank SinoPac.

Huang reckoned that in Asia, many industries still deal with high-volume cash in daily business operations, such as shopping malls, department stores, charity institutions and traditional produce market. The online-offline integration project reduces the manual process cost and turnaround time, she said, is part of the bank's new-model cash management perspective of providing "more secure, efficient, and straight through solutions."

Evolving roles and needs
Increasingly, the role of treasurers is evolving from basic cash management to strategic mobilisation of liquidity and working capital, and the fragmented cash management landscape in Asia has led to more centralisation of treasury functions in the region, said Suman Chaki, APAC head of corporate cash management sales at Deutsche Bank.

"Treasurers are now looking to optimise account structures and consolidate payments within their centralised treasury functions, decreasing finance costs through reduced fees. Treasurers are also looking to obtain greater visibility and better control of FX and hedging activities," added Chaki.

Chaki said cash Management is a key strategic growth business for Deutsche Bank in Asia Pacific, citing "significant" uptake in electronic transactions, especially in the area of instant payments. The bank increased the functionality of its FX4Cash platform in 2017 to cover over 140 payment currencies.

UOB, for its part, has been moving towards improving its suite of global liquidity management solutions to become more "modular and configurable" in response to shifting client needs, said Linus Ng, head of cash product management, Group Transaction Banking, UOB.

"With the continued development of the digital economy and as more of our clients expand their operations across borders, we are seeing an increasing demand for financial solutions that are seamless, scalable, intuitive and fast," added Ng, citing how the bank's clients can customise their liquidity management product to suit their sector, business size and location of operations without incurring high costs.

Banks like Kasikornbank are tackling the challenge of customised demands from clients with a firm focus on spotting customer needs. "We are now looking to create the system and model that can respond to primary needs and accommodate extended changes. Need identification is the core success of the model, said Silawat Santivisat, executive vice president, corporate and SME products division at Kasikornbank. "The product manager is required to design with flexibility, extensibility and with an in-depth understanding of the customer's need in each specific industry."

API, blockchain, and beyond
Asian banks that want to differentiate themselves in the market can tap into their information technology capabilities and relationships insights to build digital ecosystems that aggregate multiple offerings, such as cash and liquidity management, cybersecurity and fraud risk, said Ernest Saudjana, partner & managing director at BCG Jakarta. On top of this full treasure ecosystem, users expect a streamlined, intuitive interface with the highest levels of security protection.

"While some treasurers in large corporates may have the IT capabilities in-house to get the data they need, many expect their banking partners to provide a convenient, integrated, and seamless customer journey across providers, systems and products," said Saudjana. "It is important for Asian banks to pay attention to the quality of platform and invest into API to make it easier to integrate with corporate system."

Citi Singapore said it will spend 2018 improving enterprise to enterprise API connectivity in order to provide the agility clients are looking for as well as enhance client experience. said Nishami Dharmaratne, head of product management, treasury and trade solutions at Citi Singapore. "API is taking the digital experience to the next level with tremendous potential benefits built on dynamically exchanged workflow data based on events, patterns and time."

The push for greater client connectivity comes at a critical time, said Dharmaratne, as cash management will be the most influential business in transaction banking in 2018. "This is the space that is being constantly targeted by banks for natural competition reasons, and non-banks or fintech for the obvious opportunities that it presents."

Citi Singapore said it is also eyeing API improvements in its newly launched payment confirmation service for e-commerce firms, a new emerging client segment for the bank as e-commerce takes off across in Singapore and across Asia. "Our next step is to make this API driven to support clients with the scalability they need. With this scalability, we are able to service the largest e-commerce giants in Singapore and in Asia, and support their volume growth," said Dharmaratne.

UnionBank of the Philippines, meanwhile, attributes the versatility in its cash management to its API portal, on which it built a number of payment products such as bill payments and fund transfers. The strategy has resulted in faster and less expensive implementation, the bank said.

"Corporates and fintechs are able to connect to us and avail of services on our developer portal. It allows a standard way of connecting to us – customized according to their needs which can be used over and over again by other corporates," said the bank's spokesperson.

Aside from APIs, AI and blockchain are two of the major technologies that will reshape the world, and these are what we will try to explore in the next few years," said Wang Zhi Yong, head of product development and management department at ICBC (Asia). With this forecast in mind, the bank has been building close relationships with leading technology companies to exchange cutting-edge technology information and share ideas to raise each other's competitiveness.

"Even though the penetration is not very high at the moment yet, there is no doubt that blockchain will have an impact and bring new challenge on cash management in the long run," he said, anticipating the technology to enhance the efficiency for various cash management transaction services and enable higher security and lower costs for payments.

"However, at the moment blockchain technology might have some degree of limitation on tracking the movement of funds, we think this is the problem we and many of our peers need to seek solution to," Wang added.

A range of trends and drivers are compelling corporate bankers to invest in IT improvements or overhaul their legacy systems to create entirely new, integrated corporate banking platforms, said Jan Bellens, Asia-Pacific and global emerging markets banking and capital markets leader at EY.

Aside from corporate customers' demand for enhanced for enhanced services and omni-channel deliveries, the digitalisation of the financial supply chain and emerging technology from AI and machine learning to distributed ledger technology are accelerating banks' platform transformation, Bellens said.

Bellens cited as an example the domestic real-time payment systems that are being developed in Asia-Pacific countries such as Hong Kong and Australia.

"As new payment methods and rails are being introduced, banks need to consider opening up their API access to business accounts and transaction banking services," he said. "To do this, they will also need to address security management, enhance user interfaces, enrich remittance data and tap into the capabilities of leading treasury software solutions to better serve their clients."