Paul Imm, head of financial institution solutions and high value payments at JP Morgan, EMEA, outlines what he thinks will be some of the hot topics at this year’s Sibos 2012 trade show, which runs all this week from 29 Oct-1 November, with particular reference to his payments speciality.
I expect globalisation to be one of the hot topics at Sibos 2012, especially with the Asian location of this year’s show in Osaka, Japan, being so close to the fast growing Chinese and Asian markets, which have benefitted so much from globalisation. Other topics will be the increasing regulatory burden on banks and the search for growth, each outlined in turn below.
Customers are going global, the payment business is global itself and so too are the payment providers. Everyone has to think global, no matter what the size of their business and I think this point will be forcefully made at Sibos 2012.
The drivers of globalisation are familiar to us all – greater connectivity, real-time communication, and the development of new and emerging markets. Markets like China continue to offer new opportunities, with the evident rapid growth in renminbi (RMB) a particular growth area for banks. Corporates are optimising their distribution channels and supply channels to take advantage of globalisation and modifying their payment infrastructures accordingly as RMB’s status as a trade currency continues to grow.
At the same time, expansion presents new challenges – keeping track of evolving payment regulations and market practices, managing currency positions, funding accounts, and mitigating risk are all important activities and each can be explored at Sibos 2012. Banks can provide advice and solutions to corporate clients who are looking to expand overseas and JP Morgan will certainly be looking to do so in Osaka this week.
For financial institutions (FIs) there are opportunities to deepen relationships with clients at Sibos by offering a broader range of payment services. From executing cross-currency payments through to connecting to local clearing systems – providing seamless end-to-end payment solutions, combined with liquidity and foreign exchange services – FIs can help aid corporate clients’ success.
These opportunities exist no matter what size the bank; from global banks with international networks and scalability to regional or local banks with in-country expertise in their local markets. Sibos is a good place for visitors to the show to explore the options. Through collaboration banks can all find cost effective ways to respond to and support corporate clients’ globalisation strategies and at the same time enhance the bottom line.
The ever-increasing regulatory burden will be an important topic at Sibos 2012. There’s no doubt that we are operating in a changing market, from an operational and a currency perspective, and that there is significant intellectual capital having to be deployed at FIs to address regulation. Key regulation topics in the payment and cash management space at Osaka, as well as impacting other banking areas, include:
• the supranational US FATCA tax evasion rules.
• the Basel III capital adequacy rules.
Banks with extensive global reach and relationships will need to engage and collaborate with other banks across the globe to gather the required disclosure information on an on-going basis to meet these regulatory demands, as well as provide solutions to their clients as part of a broader payment solution.
JP Morgan expects further consolidation in the corporate banking industry, which the bank will be targeting for growth at Sibos 2012. Treasury will remain a competitive environment for the foreseeable future, thinks the bank, citing a recent survey it helped conduct where 76% of the corporate treasury respondents said that the number of bank relationships they maintain was staying flat or reducing. Nevertheless JP Morgan thinks it can win business in this field out in Osaka, this week at Sibos.
At the same time banks themselves are seeking the right balance. The banks' all want to cut the number of correspondent accounts maintained on the one hand, introducing more efficiency, and seek alternative providers in major currencies, on the other hand in order to expand reach.
JP Morgan continues to expand its reach and footprint to support target clients in the markets where it wants to grow, and this may sometimes involve partners too, although bigger-sized international banks naturally have more reach anyway. JP Morgan non-US international business now accounts for over 50% of the bank’s revenue and in 2011 the treasury services business grew 22% across the 66 countries in which the bank operates. Non-US business will be the driver for more growth.