An inkling of the scale of this problem can be gained from the United Nations Conference on Trade and DevelopmentÆs (UNCTAD) most recent World Investment Report. Foreign direct investment (FDI) inflows to developing countries rose by 40% to $223 billion in 2004; while at the same time FDI outflows from OECD countries (see Figure 1) topped $640 billion.
According to the UNCTAD report, two important drivers for this overseas expansion were the desire to boost sales by expanding operations into the fast-growing markets of emerging economies and the need to lower production costs. Both these activities inevitably create a need for additional overseas banking services that domestic banking partners cannot directly supply.
Choose your partner
While such banks can collaborate with a global bank to provide such overseas services, this of course also risks exposing their domestic client relationships to competitive threat. Cooperative bodies such as IBOS are another alternative, but their geographical coverage is not always complete û particularly in regions such as Asia or the Middle East where OECD corporates have been expanding strongly.
The ideal partner for OECD domestic banks looking to support clientsÆ overseas expansion is therefore an international bank with local capabilities, but most importantly one that does not compete on OECD territory. Standard Chartered Bank fits this definition precisely with more than 1,200 offices across 56 countries (including nine hundred offices in seventeen Asian countries). Since corporates expanding overseas often do so in multiple countries, the scale of this network allows domestic banks the efficiencies and cost savings of dealing with one partner, rather than having to pick and mix.
Standard Chartered also has the scalability to support partner bank clients that range in size from the comparatively modest to major multinationals. While the services the Bank offers include comprehensive cash management, they are by no means restricted to this. Other services include credit facilities, guarantees, treasury and trade finance which can be introduced when appropriate as the corporate clientÆs overseas activities grow. The business approach is similarly scalable; while smaller corporates can be serviced via Standard CharteredÆs Asian and Middle Eastern Gateway, MNCs can be approached upon a joint RFP and bid basis with the partner bank.
|Figure 2 - Standard Chartered Bank across the globe|
Standard CharteredÆs technology adapts to the client as well. To avoid the desktop systems proliferation corporate treasuries dislike, Gateway clients can continue to use their domestic bankÆs existing electronic banking platform, which communicate with Standard Chartered via SWIFT reporting or Request for Transfer messages. In the case of higher volume requirements, such as bulk ACH, communication via file transfer solutions such as SWIFTNet FileAct can be implemented.
Easing the burden
In a global environment of increasing financial regulation, opening bank accounts has become an irksome and time consuming task for corporate treasuries. To reduce this burden for the clients of partner banks, Standard Chartered is in the process of rolling out standardised documentation and terms and conditions across some forty countries in its network. Clients can also complete and check this electronically with Standard Chartered (a further time saving), before submitting final hard copies.
Providing services and support to the end client is only part of the picture; the partner bank requires similar standards of care. To this end, Standard Chartered has put in place an operating framework that includes dedicated coordinators, relationship managers, and customer service teams in each country but with a ôone bankö overview. This is provided by a Standard Chartered liaison desk in the partner bankÆs country or region, which acts as a single dedicated point of entry to Standard Chartered and the BankÆs product offerings in Asia and the Middle East.
No overlap equals no conflict
In a competitive global environment, retaining and adding value to corporate client relationships is an increasingly demanding task for domestic banks. Being able to support those client relationships even when they move beyond your physical network is therefore a critical component in this process. However, picking a partner to provide that virtual network extension who turns out to be a backdoor domestic competitor can have disastrous consequences. No amount of assurances about Chinese walls and internal procedures can alleviate the nagging anxiety that a valued domestic client may be vulnerable. In the unique case of Standard Chartered, this concern does not arise as there is no overlap between its network and that of its OECD partners.