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StanChart bet on cash management paying off
AMID the shift towards cashlessness in this part of the world, Standard Chartered's move to digitalise payments through supply chains has driven growth in its regional cash management business, a senior executive from the bank told The Business Times (BT).
The bank's underlying operating income from cash management in Asean and South Asia registered double-digit year-on-year growth in the last three years, said Ankur Kanwar, StanChart head of cash products for Singapore and Asean.
Globally, StanChart's underlying operating income from cash management rose 6 per cent to US$2.4 billion for the financial year ended Dec 31, 2019 (FY19), accounting for about 16 per cent of the group's total underlying operating income.
While digital payments at the retail level have surged, the relative lag on the business-to-business (B2B) front presents untapped opportunities for digital cash management services, said Mr Kanwar.
With that, StanChart has over the last four years engaged in an increasing number of "co-creations" with corporates seeking to adopt digital payments and collections.
These companies range from micro enterprises to large multi-national corporations from various Asian industries - in sectors such as aviation, logistics and insurance.
"There has been so much innovation in the B2C (business-to-consumer) space that our corporate clients are expecting the same standard on the B2B front. We're already seeing a spillover effect from B2C to B2B," said Mr Kanwar.
StanChart recently worked with the International Air Transport Association (Iata) to launch EasyPay, an e-wallet for more efficient flows between travel agents and airlines.
With EasyPay, travel agents are able to make instant fund transfers into their e-wallet. These funds, sitting in a StanChart account, can be used immediately to purchase tickets on Iata's online booking platform.
Consequently, airlines can now receive payments in 48 to 96 hours to better manage their cash flow, compared with two to four weeks previously - the norm in the aviation industry, said Mr Kanwar.
"The entire flow of travel agents (placing) their funds with StanChart, and StanChart's links to Iata's ticket booking system, requires a mix of instant payments and APIs (application programming interfaces) to work," he told BT. EasyPay is currently available in Pakistan, Bangladesh, Nepal and Taiwan.
The bank also tied up with regional budget airline AirAsia to auto-reconcile payments received from its customers - namely travel agents, corporates and cargo companies - and to update the airline's ticket booking system in real time.
"The big benefit is that the whole ecosystem can now get instant and more secure access to funds, compared to writing cheques," said Mr Kanwar.
Over in Singapore, the launch of digital payment initiatives such as PayNow Corporate (the instant fund transfer rails for corporate payments) has also paved the way for more collaborations.
Logistics giant DHL, digital bank hopeful iFast Corporation and used-car dealer Presto Expat Motoring are among some of StanChart's PayNow Corporate partners. Mr Kanwar told BT the bank is logging a 20 per cent month-on-month growth in payment volumes on the PayNow rails.
To deepen its regional presence, the bank has joined hands with a couple of tech firms to tap their network.
StanChart is the core partner bank for Ant Financial's blockchain-based e-wallet remittance service offered in Hong Kong and the Philippines. The bank also tied up with software and information technology firm SAP Ariba in August 2019 to offer its supply chain financing solutions on the Ariba Network - a digital marketplace connecting over 4.2 million companies in 190 countries.
Mr Kanwar said the bank has seen a radical shift in the transaction banking landscape amid rapid digitalisation in the region.
"In the past, our advisory used to be more focused on things like account structuring. Increasingly, we are seeing corporates ask for digital advisory solutions, which is really hand-holding them in their digital journey," he said.
"Financial institutions have to redefine their roles for their corporate clients to remain relevant."