IBS Journal April 2015


Fundtech Insights EMEA: what customers want


Customer demands are growing as are their expectations of innovation, but banks are struggling to meet these. Meanwhile, the competition from nimble and cost-effective newcomers is on the rise. What are the banks to do?


Transaction banking was the topic of the day at the Fundtech conference. There is now the ‘expectation of innovation’ among customers, said Andrew Pearce, executive general manager of NAB, and there lies the rub. The demands are increasing but banks are struggling to meet them. There are new competitors with ‘point solutions’ that are more nimble, focused, ‘cheaper and cleverer’ than banks, he admitted. There is a focus on concentration


risk, said head of global corporate cash management sales at Standard Chartered Bank, Nick Diamond, so gone are the days when corporates sought a single global banking partner. A comment was men- tioned from a recent Association of Cor- porate Treasurers (ACT) conference, that banks now constitute ‘unreliable partners’. Corporates are seeking competition


through interoperability. Reflecting this, Deutsche Bank’s investment management MD, Andrew Reid, said that in the last three to five years, Swift has become far more common in corporates’ RFPs. Where it would previously have featured in one or two out of ten RFPs, it is now in seven, eight or nine out of ten. ‘Non-proprietary, global standards are very attractive,’ he said. As such, banks have to compete on value not on proprietary links. Often, said Diamond, it is now the corporates that dic- tate to banks which standards they need to adhere to, which is a significant change. Also driving corporate demands has


been a move by many into less regulat- ed, emerging markets, with many having ‘done the easy markets’, said Diamond. Barclays’ global treasury products operat- ing officer, James Allan, added that as well as an increasing focus on costs among customers, there is also a lot of concern


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‘Non-proprietary, global standards are very attractive.’ Andrew Reid, Deutsche Bank


about cyber-crime and risk, particularly among mid-sized companies. What can be done? Providing informa-


tion back to the customer is key, accord- ing to NAB’s Pearce. And if banks can offer more services, then they can consolidate more information and thereby add more value. With a 25-27 per cent share of the market in Australia, NAB arguably knows more about the spending behaviour of its corporates’ customers than they do, he added.


Diamond felt there was a demand for


a consistent client experience across the world but that this isn’t always possible, due to the complexities of doing business in some countries, so banks needed to edu- cate their customers. For Deutsche Bank’s Reid, it is also about providing customers with the ability to serve themselves, such as through virtual account platforms. The sentiments are all well and good,


but banks are hampered by their legacy systems and are losing out to the newcom- ers. Along have come the virtual curren- cies (with the ability to make payments and move value, including points and air miles),


© IBS Intelligence 2015 www.ibsintelligence.com


as well as all of the individual would-be challengers. It isn’t a complete wilderness on the


banking side. There are a few innovators among the banks, such as Barclays with Pingit (including the recent announce- ment of twitter payments via the Pingit app). And there is progress on a coun- try-by-county basis with immediate pay- ments to replace T+1, T+2 or worse. How- ever, the threat of large-scale disinter- mediation by flexible, focused specialists hangs over an area that has traditionally provided a large proportion of banks’ rev- enues. Of course, Paypal and others have a current or demand deposit account at either end but is this what banks will be reduced to, just a settlement mechanism, asked Wipro’s global payments practice head, Mary Ann Francis. Francis made the point that banks


tend to ‘layer and layer, we are not very good at transforming’. The world is mov- ing forwards but banks are not. The block- chain technology that underpins Bitcoin is an example of this, representing a now tried, tested and sophisticated solution


conference report: fundtech emea


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