Cash, trade and securities innovations are connecting Africa to the world
The 2008 global financial crisis not only marked the end of a benign credit environment, it also changed the way corporate clients and their bankers view transactional banking.
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Overnight, sound transactional banking practices like managing payments, receivables, reconciliation and trade risk instruments moved back to the centre of corporate clients’ business agenda, increasing competition for better product offerings.
Visibility of information became critical as clients sought real time access to their global cash positions in order to manage their working capital requirements and liquidity. Equally, international trade products became more important in managing risk. At the same time, banks sought more annuity-based revenue with lower capital costs and less capital consumption, while regulators drafted a raft of regulation in a bid to prevent another collapse.
In Africa, both corporate clients and banks have had to invest in technology and operations supporting the centralisation of treasury functions, while delivering integrated transaction management solutions.
Non-bank “Fin Tech” companies are also disrupting the industry with major technological innovations. Despite physical cash still being king in most parts of Africa, technology solutions such as mobile money, along with regulation encouraging electronic forms of cash are forcing banks to choose very carefully between competing head on, partnering or simply monitoring developments. At the same time, industry forums are further adapting client-bank relations by standardising real time cross-border payment systems, for example.
African banks are adapting to this new world, especially as low commodity prices and continued suppressed interest rates in the West combine with a high risk view of emerging markets, placing pressure on transactional flows in Africa.
In this environment, intra-African trade offers an alternate route to boosting economic growth and addressing continental challenges.
Africa is expected to be the second fastest growing continent within 10 years, behind emerging Asia but ahead of the Middle East, with more than 50 per cent of countries growing in excess of five per cent annually until 2025.
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In realising this opportunity, clients will increasingly look to their bank to deliver specialist solutions to manage African risk through the right products and capability across cash, trade, custody and securities.
Winning client relationships in Africa earns a bank business that only increases as the client grows. As an international bank present in Africa for over 150 years, we have the ability and relationships to assist clients negotiate the continents complex financial and regulatory cross border environments.
In addition to a strong footprint spanning 20 countries, the Industrial and Commercial Bank of China’s (ICBC) 20 per cent shareholding in the Standard Bank Group serves to connect the Standard Bank to the world’s fastest growing economy.
As the largest lender by assets in Africa,the Standard Bank remains resolute on its Africa strategy and will continue to play a leading role in facilitating trade and capital flows in multiple currencies among African countries, as well as between Africa and prominent international trade corridors.
The writer is the Head of Transactional Products & Services, Standard Bank