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Pushing working capital boundaries for mid-sized corporates

Bankers in Asia are preparing for increased intra-regional trade with the proposed creation and integration of the ASEAN Economic Community by 2015. This integration will bring better banking infrastructure for regional trade, especially in the payments area. Asian corporates are looking to grow their offerings and markets beyond local borders, and both regional and domestic transactions are bound to increase significantly. Paperless financial supply chains for corporates, mobile and tablet banking, and supply chain financing by banks have been cited as growth areas in transaction banking for mid-market companies in a roundtable discussion held by Fundtech among domestic and regional banks in Thailand.

Mid-market companies, which form a significant part of an economy’s GDP in emerging markets, are rapidly scaling up to offer pan-regional products and services, and are also becoming increasingly competitive internationally. A recent report from McKinsey concluded that the revenue pool of Asian  corporates would double to $790 billion by 2015, and transaction banking revenue will form 45% of global corporate and investment banking revenue. According to the report, transaction banking and the massive growth of mid-market companies will be among two of the top three drivers for expansion in Asian corporate banking services.

Going forward, mid-market companies will look to sustain their growth by growing their customer base, delivering regionally-focused products, and optimising on IT investments to drive their operations across borders.

Technology Tools to optimise cash flows from regional operations

Working capital tools that capture transaction data, and provide actionable insights from regional cash flows, can be the driver for mid-market corporates operating in regional markets to optimise their cash flows. Apart from structured data such as regional balances and forecasts, real-time capabilities, process standardisation and compliance to corporate internal policies, are essential constituents to a good working capital solution.

Regional banks can seize this opportunity by offering solutions that provide effective controls over transactions, such as workflow support to approve invoices based on their value, or validating payments from vendors and suppliers.

Structured working capital financing through SaaS automation

Using best-in-class cash management solutions at a low upfront cost, regional, correspondent as well as local banks can offer customised ‘byte-sized’ working capital tools through a SaaS platform that targets specific segments of the corporate market. With quick deployment and easy-to-use web-based and mobile channels among many other critical features of the working capital solution, regional banking institutions can engage with their mid-market corporates more collaboratively and provide business solutions that help both the corporate and bank win.

 

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This post is from a series of posts in the group:

Innovation in Financial Services

A discussion of trends in innovation management within financial institutions, and the key processes, technology and cultural shifts driving innovation.


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