Being smarter:banks at forefront go digital

In an ever-changing world, corporations are demanding new solutions to enhance the efficiency of their cash management and their bankers are turning to technology to provide them.

In a world of changing regulations, concerns about cybersecurity and pressure to innovate or lose business, corporations are demanding new solutions and their bankers are turning to technology to provide them.

In short, companies want new ways to expedite, document and safeguard cash flows.

One popular method is cash pooling, which is a mix enabling centralized management of the accounts within a corporation.

Companies now face challenges from regulations and from cybersecurity, said Gu Wei, head of treasury services in China for JPMorgan Chase.

To serve its clients better, the bank rolled out its Virtual Branch service in China this May, she said. It turns paper-based documentation work into digital format.

With this new service, clients can upload, check and store their supporting documents electronically and there will be no need for them to be physically present at traditional bank branches, according to the bank.

“The portal’s sophisticated Dashboard offers track-and-trace capabilities, which allows clients to check and monitor the end-to-end workflow progress of all their cross-border merchandize trade transactions, within a cohesive platform,” Gu said.

Deutsche Bank, a traditional market leader in cash management, is also turning to high-tech systems to retain its position.

“We are talking about how to maximize technology and how to help our clients manage data and connect them with different systems,” said Mahesh Kini, managing director and head of global transaction banking for China at Deutsche Bank.

One of those systems, designed by the European Union, is the Revised Payment Service Directive, shorthanded to PSD2. It aims to revolutionize the industry by allowing non-bank businesses like Amazon and Facebook to participate in payments and data management systems, thereby competing with banks.

“Next year is going to be a big year as the new payment infrastructure comes into play in Europe and brings non-banks into the picture,” said Kini. “We are looking at how to help companies navigate through this change.”

Citibank said it plans to “keep ahead of the market” by thinking ahead and responding with anticipated changes. That has worked in the past. Citi was the first bank to introduce cash pooling to China.

Back to 2013, the bank heard from clients that they needed strong solutions for cross-border cash flows. The lender added a yuan function to its system even before the People’s Bank of China unveiled relevant policies late that year, Pei Yigen, executive vice president and country head of China at Citi Treasury, told Shanghai Daily during a recent interview.

“We take great pride in this move because we anticipated the trend and made preparations in advance,” he said. “So when the policy came out, we were ready in terms of product, system and customers.”

Another innovation where Citibank China took the lead was electronic commercial drafts – developed with “Chinese characteristics.” It came in response to problems foreign companies were having with manual processing of drafts.

“We understood the problems and saw that digitalization would be an irreversible trend in this regard,” Pei said. “So we invested heavily ahead of our peers, and when the People’s Bank of China began to push ahead with electronic drafts last year, we were able to capture the trend quickly.”

The bank took it a step further by introducing a host-to-host solution for e-draft this October, enabling its clients to process the features of e-draft entirely through their Enterprise Resource Planning system without manual interface.


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