If your organisation was being served by one of the major European and US banks that have recently withdrawn from certain geographies, this may then call for a review of your banking providers for treasury and transaction banking services.
Tedious as that process may be, there is reassurance that even as (what were previously) international behemoths reassess and redefine their Asia operations, regional and local institutions are scrambling to fill the void left behind and reposition their corporate relationships. For instance, while UK institutions withdrew from South Korea, Asian counterparts including China Everbright Bank, State Bank of India and Bank Negara Indonesia made forays into the same market, focusing predominantly on corporate and trade finance.
Meanwhile, the inevitability of a more integrated and increasingly barrier-less region with the ASEAN economic integration has already witnessed the creation of pan-regional strategies by DBS, Maybank and CIMB (positioning themselves as pre-eminent Asia/Southeast Asia-based banks). Australian banks ANZ and Commonwealth Bank of Australia, as well as the Japanese megabanks have also expanded across the region. Many of these institutions actually have ambitious plans to eventually generate over half of revenues outside their domestic markets.
Unfortunately, although these banks typically have strong and localised corporate banking relationships, not all possess the size or holistic product and service suite to serve the complete requirements of large corporate customers with far reaching regional operations. What many Asian banks have done, rather than try to be all things to all corporate customers, is to focus on developing their strengths and expertise to deliver best-in-class services in niche areas.
Therefore, rather than consolidate engagements for economies of scale and scope, corporate treasurers might now have to extend relationships beyond their historical one or two primary corporate banks and appoint a broader pool of financial providers. Such a tiered-relationship hierarchy would see top banks that possess broader capabilities perform the majority of services, while smaller peers provide local support or specialised services in territories where the bigger institutions have either withdrawn operations or have never developed strong enough scale and reach.
The other challenge we foresee corporates facing arises from the competitive advantage enjoyed by global banks (vis-à-vis their Asian counterparts) in having standardised data for their risk management and reporting activities. These data infrastructures are already optimised (possibly partly forced, or driven by regulations such as Basel III, Sarbanes Oxley, Dodd Frank) and in turn yield higher data efficiencies which allow for more credibility in pricing, what-if analysis, and other predictive analytics capabilities that are increasingly crucial in transaction banking. And since not all treasury services at regional banks are up to par just yet, corporate treasurers reviewing their financial providers should be prepared to accept some inconsistencies in data quality and fit, services, and pricing across geographies and deal with temporary teething issues before the dust settles.
One of the additional outcomes of re-evaluating banking relationships is that corporate treasurers may now be more open to alternative service offerings from fintechs. While it will take time for these players to go mainstream, many corporates are increasingly open to alternative service providers, are willing to hear them and try them out, for instance within the increasingly competitive domain of foreign exchange.
While Asia corporate banking is going through a phase of transition, corporate treasurers should ultimately be beneficiaries. For every institution that is exiting, several others are keen to step in to fill the potential gaps.