Despite challenging and volatile trading conditions for the financial services sector in 2018, for the transaction banking side of operations, the year was somewhat benign. Several service providers reported robust performance levels, underpinned by strong gains in cash management, though this uplift was moderated by softer trade finance fees weighed down by Sino-US trade tensions and the slowdown in China’s economic growth.
These trends were evident as the board of editors at The Asset concluded their annual review of the best transaction banks across Asia and the MENA region for The Triple A Treasury, Trade, Supply Chain and Risk Awards 2019. Similar to previous years, the recognition afforded to those institutions classed as best service providers stimulated heightened competition, propelling the submission of over 300 different banking solutions for evaluation, which constitutes a record number.
Once again, several client engagements were undertaken as part of the evaluation process to fully comprehend how service providers addressed their pain points and what benefits were gleaned from the implementation of solutions. These conversations - mainly with CFOs, treasurers, and treasury and finance managers - provided insights into the banks’ strongest and weakest attributes as service providers.
Banks continue to allocate large investments into technological development for both the front-end and back-end of their operations to drive innovation in areas such as payments, data and APIs. Towards this end, banks have increased their levels of collaboration with fintech companies to enhance their technological capability – plus their competitiveness – while others consider the options such as buying solutions or building up their capabilities on their own.
This backdrop was evident in South Asia, where foreign banks dominate the competition, except in India. Standard Chartered emerged as the Best in Treasury and Cash Management for the region, while HSBC was judged as the Best in Working Capital and Trade Finance.
In the region’s most competitive market, India, three banks secured the awards in three categories in terms of treasury and working capital, with Deutsche Bank getting the accolade for multinationals (MNCs), Kotak Mahindra Bank for large local corporates (LLCs) and HDFC Bank for SMEs.
In addition to being chosen as the Best Transaction Bank, Deutsche Bank was also selected as the Best Service Providers for Liquidity Management and Risk Management, as well as the Best Fintech Partner Bank. This institution implemented a customized cash management solution for AB InBev-SAB Miller that resulted in faster realization of funds coupled with offering more control and visibility of collections.
The bank also implemented an automated solution for Flywire’s collections in India, which involved seeking approval from the Reserve Bank of India to open a special non-resident rupee account to facilitate remittances by students at foreign universities.
In line with its digitalization drive, Deutsche Bank invested in several specialist technology companies, including Mumbai-based software company Quantiguous Solutions, in May 2018, and the US-based ModoPayments, an industry leader in digital payments innovation, in August 2018.
After securing an important mandate in India in 2018, the bank partnered with a select group of fintechs to develop a series of technologically-advanced solutions for reconciliation, direct debit and customer trading that could be brought to market quickly.
Kotak Mahindra beat the competition for the cash management honours by implementing several solutions to address payment and collection issues faced by different companies. Standard Chartered won as the Best Service Provider for Trade Finance on the back of its package of innovative products and solutions. For instance, this was the only bank to offer pre-shipment finance as part of supply chain finance, and was first up in the market to offer comprehensive factoring solutions for domestic receivables.
Meanwhile, HSBC India, along with ING, Reliance Industries and Tricon Energy, successfully executed a blockchain-enabled live trade finance transaction in 2018. Facilitating shipment between Reliance and Tricon, this was an industry-first integration between an electronic bill of lading (eBL) provider and a blockchain-based trade finance platform enabling a digital transfer of title of goods from the seller to the buyer in the underlying trade. The blockchain platform was integrated with Bolero’s eBL platform to issue and manage an eBL.
Supply chain finance is one theme that continues to resonate across Asia as CFOs and treasurers unlock working capital, either through supplier or distributor financing, to sustain growth and maximize returns, without incurring additional bank debt and further leveraging their balance sheet.
BNP Paribas and IndusInd shared the honours as the Best Service Providers for Supply Chain Finance in India, with the French bank getting the award for the supplier financing side of the business, and the Indian bank for distributor financing. Some of the outstanding supply chain finance solutions implemented by BNP Paribas last year were for Gujarat Cooperative Milk Marketing Federation, which provided the company with immediate liquidity, and for Infosys, which allowed the company immediate realization of funds from the bank, thereby improving its overall liquidity.
IndusInd, on the other hand, addressed many of its clients’ pain points through distributor financing, including Asian Paints, Dabur India, Marico and Novateur Electrical & Digital Systems. The Dabur India financing solution marked the first fintech tie-up for IndusInd under supply chain finance. The bank says the partnership with Vay Network Services offers advantages on multiple fronts to meet the desired expectations and facilitate better dealer onboarding.
In other markets, Standard Chartered scored big in Bangladesh, where it was selected as the Best in Treasury and Working Capital for MNCs and LLCs, as well as for SMEs. It was also chosen as the Best Service Provider for Cash Management and the Best e-solution Partner Bank.
One of the solutions Standard Chartered implemented last year was for a leading FMCG company, Unilever Bangladesh, which required, among other things, end-to-end automated process of updating the information from banking system to SAP for collection, auto reconciliation and faster turnaround time for critical payments.
HSBC, on the other hand, was selected as the Best Service Provider for Trade Finance, Structured Trade Finance and Supply Chain in Bangladesh. The bank, for the first time, introduced a supply chain finance solution for the country’s apparel industry, and the ensuing improvement in working capital optimization as a result helps apparel manufacturers to become more competitive in the global market and increase their sales. It also introduced invoice financing, enabling even the smaller suppliers to be eligible to secure proper financing.
In Sri Lanka, Standard Chartered scooped all four awards given in this market – Best in Treasury and Working Capital for MNCs and LLCs, and Best Service Provider for Cash Management, Trade Finance and Supply Chain. In one of the supply chain finance solutions it implemented last year, the bank offered a buyer finance programme for a pharmaceutical company with a competitive interest rate and limited security of a bank guarantee from each distributor. This produces a number of benefits, including a significant reduction in the company’s days’ sales outstanding, while the non-recourse financing helps take debtors off their balance sheet.
Standard Chartered scooped the lone award in Pakistan as the Best Service Provider for Risk Management, as well as the Best in Treasury and Cash Management, and Best in Working Capital and Trade Finance in the MENA region.
The bank implemented a complete cash management solution for a fast food chain operator in Jordan by deploying cash deposit machines, and it structured a liquidity optimization solution for a digital industrial company to improve visibility and control in the Middle East. It likewise implemented a virtual accounts solution for a client in Dubai to address the challenges faced by the company in terms of collection.
Over in Africa, Standard Chartered structured an escrow solution for their client and joint venture operators for settling cash calls, which also offers flexibility to manage temporary cash flow issues should they arise over time.
For the complete list of winners, please click here.