It has been a little more than half a decade, and the dust of the 2008 financial crisis is yet to settle down. Regarded as the worst crisis by the pundits since the Great Depression of the 1930s, it is considered to have triggered a tectonic shift in the world of corporate treasury by transforming the financial landscape. Despite a resilient US economy, the overall global recovery has remained tepid, marred by high unemployment rates and sluggish business environment, especially in the Euro-zone. Managing cash through uncertain economic times has become very challenging for global banks and corporate treasuries. Seems like this is not the best time to be a corporate treasurer!
However, the picture is a striking contrast in emerging markets, which includes the BRICS (Brazil, Russia, India, China, and South Africa). While global growth almost came to a standstill, rising trade and commerce in emerging markets led to a surge in non-cash payment volumes. As per market estimates, global non-cash payment transactions grew by a healthy 18.7 per cent in 2011 compared to 6.2 per cent in developed markets. Thus it has provided opportunities for global banks and corporate treasuries to enter these fast-growing markets and increase their revenues to mitigate slower growth back home.
By developing an integrated solution around the 5Ms (Multi-currency, Multi-geo, Multi-bank, Multi-time zone, and Multi-language) and resorting to ‘follow-the-sun’, today banks and corporate treasuries are in a position to provide a holistic view about the client’s cash position and exposure levels. Market realities have also forced global banks and corporate treasuries to partner with their local counterparts to understand the local economy and deliver cost-effective service wherever their clients are located.
Today banks are exposed to a new set of competitors, alliances and partnerships that didn’t exist a few years ago and the opportunities in emerging markets are many. But banks are also facing many challenges. Customers in emerging markets have become demanding and look for relationships that can provide more facility with real time visibility and higher efficiency. Increasing competition in emerging markets is making global banks revamp their business model in order to effectively respond to the challenges. While regulatory requirements call for customized policies to suit local conditions, it has become extremely challenging for banks and service providers to integrate key markets forcing them to reassess the needs and requirements of customers, adjust their business model and implement structures and processes aligned to meet new customer needs
With these challenges, will emerging markets continue to have growing transactions? What do you think? Feel free to write in.
Lance NR Robinson- Senior Industry Advisor In Banking And Financial Services, Wipro Limited
Lance NR Robinson focuses on Corporate Banking and Payments. He comes with 30+ years of leadership in the financial services industry. He holds an MBA from Columbia University and an AB from Harvard University. His areas of expertise include International Banking, Global Cash Management, Trade and Supply Chain Finance, Sales and Product Management, Business Process Re-engineering, and Project/Program Management Change. Prior to Wipro he worked in the banking industry as an independent consultant and for Bangkok Bank PCL and Bankers Trust (Deutsche Bank).