(2 September 2019 – Global) East & Partners global analyst team based across Sydney, Hong Kong, Singapore and London maintain regular dialogue on what is moving business banking markets, the following analyst meeting summary for Q3 2019 provides a unique insight into emerging research and client thought leadership opportunities and Q4 2019 outlook.
The discussions are based on valuable supply side feedback from East’s bank clients linked with demand side ‘voice of the customer’ analytics generated from continuous direct interviews with CFOs and corporate treasurers for the group’s long running research programs.
– The Onboarding process – Global Insights Report
– Losses to business of not hedging currency risk
– Supply chain financing and risk
– Value for money in B2B banking services
– Digitisation in B2B banking
The Onboarding process – Global Insights Report
East & Partners upcoming Global Insights Report follows deep dive analysis into Regional Treasury Centres, Spot FX, Global Supply Chain, Financial Technology and the Risks and Returns of Hedging. The following qualitative exerts extracted from recently completed fieldwork provide an ‘early bird’ insight into the critical importance of achieving best practice client onboarding processes.
– “Onboarding, even of new accounts within our existing relationships, has become a very painful process. Some banks are definitely more helpful than others; some simply blame regulation and the regulators.” – Corporate Treasurer, US$30Bn UK Logistics Group
– “Our banks all seem to be behind the curve and playing catch up with AML and KYC regulatory processing – kind of end up making it all our problem with crazy amounts of documentation and due diligence demands.” – Group Treasurer, US$10Bn USA Light Manufacturer
– “It took us four months to get simple current accounts opened in Vietnam – our home bank really wasn’t on top of things at all and struggled with the different jurisdictions.” – CFO, US$5.0Bn German Wholesale/Distributor
Contact Sian Dowling, Global Insights Analyst, for more early bird findings or the soon to be released report – sian.d@eastandpartners.com
Losses to business of not hedging currency risk
East & Partners forward dated market wide hedging loss concept is generated by the combination of East & Partners proprietary currency forecast analysis and global Business FX program demographic data. The calculation provides an excellent application of E&P’s global currency forecast research for the creation of branded thought leadership designed to generate greater brand awareness and address key concerns raised by FX customers.
The insights expand upon arbitrary hedging loss calculations and provides direct appeal to growing small businesses ‘sitting on the fence’ implementing appropriate FX risk management solutions.
“When we speak with Corporates across Australia, New Zealand, Asia, Europe and North America for our global FX reporting they repeatedly tell us they are seeking greater FX risk management support and are constantly on the lookout for the true voice of authority in what is a noisy FX ‘mind share’ space. This conceptual approach places a dollar value on what is at stake for the high number of small businesses who do not hedge or carry low hedge ratios stated East & Partners Australia Head of Markets Analysis, Martin Smith.
“The research provides a valuable approach to connecting more closely with importers and exporters given generic examples of hedging loss amounts have broadly failed to compel small businesses into engaging with FX risk management products. The currency forecast data and hedging loss calculation provides a unique and informed outlook of where importers and exporters expect FX markets to trade and how they are preparing themselves against volatility, revealing a new and complementary perspective from businesses operating at the ‘coal face’ of FX execution.”
Supply chain financing and risk
Are banks and customers always speaking the 'same language' when it comes to supply chain finance (SCF)? The definitional challenge of what in fact constitutes SCF remains a key industry wide challenge.
“Despite efforts from multiple industry associations to develop a common set of definitions for Supply Chain Financing, SCF remains a fuzzy term for many. Large corporates in Asia, for example, still primarily associate SCF with receivables financing as opposed to other forms of funding including distributor financing and inventory financing. More often than not, businesses are using these products in silo, rather than taking an integrate view and deploying a holistic bundled solution” said Sangiita Yoong, East & Partners Asia Business Head Analyst.
“This is in part driven by a lack of understanding about what SCF actually encompasses and the challenge of finding a financier that can meet all their SCF needs. We see an increasing number of corporates are looking for knowledgeable and experienced banks to guide them through this process, especially since the US-China trade war began.”
Value for money in B2B banking services
Improved bank and non-bank product and service offerings continue to lift customer expectations yet value for money perceptions continue to fall across multiple business banking product lines towards monitored closely by East & Partners long-running research programs. What is driving this trend?
“With the ongoing turbulence and uncertainty in the European economy as a result of unsettled trade negotiations with the UK, the concept of ‘value for money’ has never been more important for corporates within this region. Many providers have been substantially misaligned with their corporate client’s wants and needs, with many still offering a ‘one-size fits all’ banking solution to their clients. As a result, many businesses have been dissatisfied with the service offerings from these providers, particularly in the FX market where risk management support and forecasting on currency rates serve as key pain points. However, what corporate’s view as ‘good value for money’ can be boiled down into two factors; what they see as key defining features and their willingness to pay for these features.” stated East & Partners Europe Markets Analyst, Pierre Sokoya.
Digitisation in B2B banking
Who is pushing the agenda for corporate digital strategy in Asia? DBS commissioned East & Partners to conduct research into corporates digital readiness, speed of change and key challenges. The findings provide a fascinating insight into where responsibility lies for driving digital transformation and confirmed CFOs are increasingly seeking out banks’ advice on the suitability and safety of new technologies for business use:
The increasing adoption of APIs for integration with banks and third parties was a particular highlight in the Index, with 32.3 percent of CFOs and Treasurers now using APIs to connect with banks and other third parties,
“It’s all about APIs for us; they are quick to deploy and tend not to require major rework around our ERP platforms. We are finding the approach especially useful as well across our supply chain partners,” says a large Hong Kong based exporter.