Rahul O’Verma, Asia Pacific Head of Innovation for Treasury and Trade Solutions, Citi, comments on the other items that belong on the list of treasury innovations. These include the rise of digital assets; embedded finance and how it is driving direct-to-consumer growth; the coming age of healthtech; and using fintech to make better decisions around environmental, social and governance (ESG).
Citi has set up a new digital assets unit and is ramping up hiring to boost expertise in blockchain, digital assets and digital currencies. Those hired will be based in Singapore, as well as other cities, explains Deven Somaya, Singapore Product Head, Treasury and Trade Solutions, Citi. The bank has also boosted its capabilities for instant payments, and been involved in hackathons and accelerator programmes. It has also partnered with API Exchange to tap into the ecosystem of fintech firms and be able to deliver a range of solutions – via APIs [application programming interfaces] – more quickly, he adds.
Such initiatives reflect how transaction banks in Singapore are exploring a number of areas of innovation to support their treasury clients. Deutsche Bank’s Shah comments on how other fintech trends in Singapore have a bearing on what treasury innovation looks like. “Buy Now Pay Later is a trend that is particularly hot right now in Singapore,” says Shah, and is relevant to corporates that sell directly to consumers. Companies that do not have this firmly embedded into their payments and collections may face challenges in getting it off the ground, he says.
Also, embedded finance – a trend that O’Verma at Citi also identified – is becoming more relevant and enables non-financial companies to offer financial products. Shah gives the example of a ride-hailing app making it possible to book a journey and an insurance policy at the same time. The insurance lasts for the duration of the journey and could cost as little as 30 cents, for example.
Deutsche Bank has a number of large digitally-native companies among its clients. In developing solutions that support the needs of these innovative companies, the bank is able to feed the latest trends back into the product development for its clients in more traditional industries, such as manufacturing. This is a way of “bringing the new economy back to the old economy”, says Shah.
Linking new innovations and bringing it into traditional institutions is always a challenge, and Standard Chartered has developed a way to experiment with the latest technologies in a way that is unencumbered by the legacy processes, systems – and thinking – of the traditional bank.
SC Ventures, as the innovation unit of Standard Chartered, is run independently from the main bank and this means that it can innovate more efficiently, explains Harald Eltvedt, SC Ventures’ incubation lead. It develops solutions on its own and has also collaborated with corporate clients.
In a sense, SC Ventures is able to prototype some elements of what the transaction bank of the future might look like. Eltvedt comments that at SC Ventures they are experimenting with business models – sometimes by themselves, sometimes with partners – and the main bank benefits because they are able to innovate in a more agile way.
As it innovates, Standard Chartered has an eye on the potential future needs of its clients in both the physical and the virtual worlds: “We see ourselves as the bank of the metaverse,” he says. He explains that the bank is preparing itself so that it can be relevant in this future. Although no one knows what the metaverse will actually look like, SC Ventures has six principles – or high conviction themes – to guide it through its innovation. These are focused on being a digital bank; e-commerce; supporting SMEs; digital assets and tokenisation services; capability as a service; and sustainability and inclusion.
Eltvedt comments that the digital bank is about providing a digital banking platform – that enables others to plug in via APIs – that can support the “online, mobile-first, instant-gratification world that we’re now in”.
With the online commerce and payment solutions, Eltvedt says, “It might seem late in the game, but it is really needed. We actually saw during the pandemic the migration to online commerce accelerated – particularly in emerging markets where there was a transition to online banking and online payments at a much greater pace than other economies,” says Eltvedt.
One successful venture to come out of SC Ventures is Zodia Custody, which provides custody for crypto assets and enables institutional investors to securely invest in this new asset class. And on the trade side, SC Ventures invested in Linklogis, a Chinese supply chain finance technology company, which launched an initial public offering (IPO) in January 2020. They also formed a joint venture to create Olea, a digital trade finance origination and distribution platform. Eltvedt explains this platform puts suppliers, who are mostly in China and Southeast Asia, in touch with institutional investors anywhere in the world. “Blockchain can track the securities that are being created and where the investment is going,” he says. “It tracks everything in a visible and authenticated way, and creates more transparency between suppliers and potential investors.”
And when it comes to capability-as-a-service, SC Ventures has developed Standard Chartered nexus, a white label solution that allows other organisations – including corporates – to use its infrastructure. “We have an institution that has been around for a long time – there are certain things we know how to do well,” he says. Through open banking, and a ‘plug and play’ model, “We provide our capabilities to other players so they can manage their own system, their own lifecycle and they do not have to do the governance and all the security themselves,” he says.
SC Ventures is currently testing a use case for this in Indonesia, Eltvedt explains. When asked what kind of company would want to use Standard Chartered’s software-as-a-service in this way, he says that it could be a company that wants to transition to online commerce and manage the transactions itself and run its own loyalty programmes, for example.
With such a hotbed of innovation on its doorstep, treasurers in Singapore have a wealth of options to explore and apply, as well as the opportunity to explore what the treasury of the future will look like. And, if they are lucky, they might also have a nice view of the ships from their window.