Cash & Liquidity Management

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Innovation in Cash Management - Foreword A successful cash management business is not only based on past achievements, however, but on ability to invest in innovation that will allow customers to tackle the challenges that lie ahead.

Foreword - Innovation in Cash Management

by Alain Papiasse, Group Deputy Chief Operating Officer and Pierre Fersztand, Global Head of Cash Management, BNP Paribas

It is now nine years since BNP Paribas launched its flagship Cash Management University, most recently in Paris in June 2016. This year, however, marks a step change. On one hand, the range and complexity of challenges with which treasurers are faced, are on a scale that have not been seen since the global financial crisis. On the other hand, there is an unprecedented range of tools and opportunities to overcome challenges and create value in new ways. In this environment of challenge and change, treasurers need their banks to demonstrate resilience and stability, and support them across the markets in which they operate with solutions and services that meet their current needs and future aspirations.

Stability and certainty

Economic growth over the past year has not reached levels that were hoped for or expected, with the IMF constantly reviewing predictions downwards. While the United States is probably now over the worst, emerging markets face a more difficult situation. Volatility in commodity prices and structural changes in China, the world’s largest buyer of commodities, is key to this, as it transitions towards becoming a services and consumer-oriented economy. In Europe, while there have been some positive signs in GDP growth, it is difficult to see how the cycle of low rates, low growth, low inflation will be broken. Furthermore, the recent result of the Brexit referendum in the UK further exacerbates uncertainty across the continent and beyond, which is likely to have far-reaching ramifications across the medium term.

Reinforcing our commitment

Supporting customers’ cash and treasury management objectives during times of growth and times of uncertainty is a vital strategic objective for BNP Paribas. Banks need significant investment capability to deliver effective transaction banking services, including a sustainable capex programme and robust infrastructure, rather than relying on a correspondent banking that involves different service levels and systems. Not all banks are in a position to make or maintain this investment, particularly given the growing costs of regulatory compliance, which has resulted in a series of market exits.

In contrast, we recognise that offering robust, scalable cash management services across our customers’ geographic footprint that allows them to manage cash on a pan-regional basis, including more challenging countries, is key to building and deepening long-term relationships. As a result, we have continued to invest in a worldwide network designed to offer our customers the depth and breadth of solutions, presence and expertise that they require. This has included reinforcing our cash management presence in Asia, the Gulf States, where BNP Paribas has the largest presence of any international bank, and Africa, particularly French-speaking countries, in addition to a branch in South Africa. We have also invested in, and integrated our CIB platform in the United States with Bank of the West, our regional corporate and retail bank.

A characteristic of our cash management offering is to deliver services as a ‘local’ bank in the markets in which we operate, therefore supporting local formats and instruments, and providing expertise in the regulatory, market and cultural environment. For example, in the Netherlands, BNP Paribas is the only bank to offer same-day value on cash collections from retailers. In Germany, our global EBICs and card acquiring solutions are proving key differentiators and highly attractive to customers. We also introduced harmonised account documentation and know your customer (KYC) processes wherever we are able to do so.

We have been very proud of the achievements of our cash management business over the past year, reflected in high levels of customer satisfaction and wider industry recognition. These include Greenwich awards for best client onboarding bank, marking the smooth transfer of Royal Bank of Scotland’s international customer business, and best bank in Europe for large corporates. In addition, it was a privilege to be recognised for innovation and excellence once again by TMI for cash and liquidity management, payments and collections.

Innovation and co-creation

A successful cash management business is not only based on past achievements, however, but on our ability to invest in innovation that will allow our customers to tackle the challenges that lie ahead. Digitisation is already changing our world, with considerable potential not only to increase convenience and cut costs, but also to solve key challenges, such as reducing operational risk for both banks and corporations, managing changing regulatory requirements and tackling growing cybersecurity risks, areas in which we are already investing heavily. Bank account management, including mandates and KYC (know your customer) is already an area in which we have taken great strides: this summer, for example, we have introduced digital tools for pan-European account documentation. We have also launched new mobile banking capabilities through Connexis Mobile and introduced sophisticated developments in fraud detection. Similarly, we are investing in tools to facilitate customer analytics and decision-making, such as leveraging big data to provide customers with benchmark information and promote best practices.

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