17 April 2014

Elizabeth Lumley

Elizabeth Lumley - Finextra

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Future Finance

Finextra and Oracle have gathered together some of the industry's top thought leaders to discuss, debate and analyse the key trends and issues within transaction banking, regulations and retail banking. This group will focus on upcoming regulations, new service offerings and industry debate shaping the new financial services landscape with regular blog posts, video interviews, webcasts debates and surveys.

GTB in 2014 - The Big Predictions!

16 December 2013  |  2451 views  |  0

Many of you signed up to watch and take part in our live webcast looking at global transaction banking in 2014. We asked our esteemed panel to close off our discussion with their top predictions for next year. It is not surprising that the ‘three Cs’ – consolidation, collaboration and competition—all featured heavily in our panel's crystal ball gazing.

Please feel free to add your own GTB predictions in the comments section below:

Senthil Kumar, Vice President, Oracle Financial Services Global Business Unit

“We see that North American banks are really emerging and working on creating an infrastructure for the next generation in B2B business….But Asia is an interesting proposition – many of them are linking up into China and the Chinese banks. The superregional concept is becoming visible in the Asian market.

The area for trade definitely seems more active and we see some of the Latin American and Asian banks crossing over and setting up that infrastructure.”

Paul Taylor, Head of GTS Sales, EMEA, Bank of America Merrill Lynch

“Given rising client expectations, in 2014 we will see two things in transaction banking:

First, a polarity of transaction banking amongst transaction banks: A polarity of focus and a polarity of service. A small number of banks [of which Bank of America Merrill Lynch is one] will continue to be global. But a far greater number, in fact the majority of banks, [will reduce] their focus away from global to a more specialised geographic or even product-based sphere of competitiveness. So they may focus on a specific domestic market, specific region, they may focus on custody, they may focus on being a liquidity bank…

Second, that, in turn, leads to my second prediction which is what I am calling the ‘Evolution of correspondent banking’ , or Correspondent Banking 2.0. That, in essence is a greater cooperation between the banks. Where we see the banks being more willing, and in fact, be more dependent on each other, in terms of their respective market and product specialities.

Think about national airlines and how they use each in alliances to get a transaction from one side of the globe to another. That type of cooperation will become more prevalent where banks are more specialised, in terms of the markets and products where they feel most competitive.

One other aspect of Correspondent Banking 2.0 will be common cooperation on the common regulatory AML and KYC overheads that we all face. Where a lot of the data that we manage, a lot of the costs that we generate is actually common and completely separated…you will see the banks seeking to cooperate more on that common overhead where the benefit to the client is reduced costs.”

Etienne Bernard, Head of Transaction Services, EMEA, International Banking, RBS

“We see a lot of demand for more simplicity and basically more transparency in the management of risk….We bank in 38 countries and we have 38 regulators to deal with and there are changes everywhere. How can you take advantage of those changes, as a customer, and use that as a competitive advantage and be agile and global at the same time?

A theme for 2014 is agility. Is how you provide speed to market in terms of solutions, ad hoc solutions to your customers?  It doesn’t have to be customised, just have to be ad hoc for that customer, [whether it be] the SME segment in Romania [or the] trade finance space in Switzerland and Russia.

The second one is, really, how you manage your risk. How you go beyond the firewall of the company and go to your suppliers and customers and embed [the management of risk] into solutions. You mentioned supply chain, you mentioned the secondary market—How do I get my bank to help myself?

That is really a big theme for us which, around regulation, simplicity and agility that we will see in 2014.”

Sameer Sehgal, EMEA Trade Head, Citi

“There are a couple of them. Right now we see 1,000+ banks offering 1,000+ services to their clients. In this industry I do not think it will continue the same way. In 2014 for various reasons, it may be compliance, it may be regulation…

We will see consolidation in the trade business. There will be five or six banks globally that will provide the white label for the aggregate for most of the other banks….There will be great consolidation and there will be a few banks that will be cleared be away from the rest from a digitisation point of view.

Second we are looking at an interesting balance sheet [scenario] Because of regulatory reasons the balance sheet for banks is going to shrink….We will see liquidity coming from the alternate space to the trade market.

The last one might sound contrarian, but in the next 12 to 19 months, there is no way that pricing is going to decrease, there is no way that pricing is going to remain where it is. That is going to be the other element that is going to change.”

Susan Skerritt, Regional Head Americas for its Global Transaction Banking division, Deutsche Bank

“I’m going to make three big predictions:  

First a dramatic increase in Renminbi (RMB) clearing services.

Second a real focus and growth in non-bank competitors and it is going to be up to us to partner with those non-bank competitors or watch them take over our space.

And third consolidation in payments infrastructures globally – we’ve seen it in equities and commodities, we’ll seen it in payments to an increasing degree.”

 

Have a restful holiday and a Happy New Year everyone. On to 2014! 

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name

Elizabeth Lumley

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Multimedia and Special Projects Editor

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Finextra

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2009

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London

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I am the multimedia and special projects editor at Finextra.

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