Standard Bank targets working-capital advisory role for multinationals

By David Whitehouse
Posted on Monday, 22 November 2021 17:46

Standard Bank aims to use treasury management as a tool to become an advisor to global corporates on working-capital management, head of transactional products and services, Crosby Mkhwanazi tells The Africa Report.

In February, Africa’s largest bank by assets launched its treasury management service to provide a tool that allows corporates to view their daily liquidity position. Currently, this is difficult for companies with multiple bank accounts in different countries, Mkhwanazi says in Johannesburg.

The bank has been seeking to use fintech to expand the services it can offer to corporate clients. It has used blockchain to facilitate cross-border trade, and in 2019, it partnered with fintech Traydstream to digitise the process of trade document validation. In October, the bank partnered with Nigerian unicorn Flutterwave to improve its digital payments offer.

The bank’s transactional products business concentrates on cash management and payments, trade finance and investor services, such as custody. The treasury-management service targets local clients with federated models, such as government institutions and multinationals. The solution is “sector agnostic”, but so far, interest has come from non-bank financial institutions, such as insurers and telecoms companies who have complex cash-management needs, Mkhwanazi says.

The tool allows more accurate cashflow forecasts and saves administrative time, he says. Mkhwanazi hopes it will allow the bank to become “fundamental advisors” to corporate clients. Multinationals in the US or the UK are able to manage their domestic liquidity, but may find it hard to aggregate information from African branches into a workable format, he says. “They have the most difficult job of all.”

He gives foreign-exchange management as an example.

  • The bank tracks central-bank foreign-exchange interventions in countries, such as Nigeria and Mozambique.
  • Given a full picture of corporate liquidity, it can advise on the optimal way to spread FX purchases across a month.

Search for scale

The bank’s preference is to use the cloud to host the data used, but varying national rules mean that is not always possible, he says. In some cases, the information has to be stored locally. The client remains in control of the use of the information, he adds.

The bank is working to improve the service by making it possible to carry out transactions within the platform. It is also devising a “scenario assessment” service for working capital. Mkhwanazi aims to have those additions running in the first half of 2022.

Standard Bank is discussing further possible partnerships both with specialist fintechs and large tech providers.

  • “Scale is as important as innovation” for Standard Bank, Mkhwanazi says. “Partnerships with big tech and fintech are the way of the future.”

Mkhwanazi is confident that South Africa’s rapid payments program, due to be launched in 2022, will accelerate the pace of change. Instant payments, he says, will make a “massive difference to the industry”, for example accelerating the letters of credit process in trade finance.

  • The fact that it will be possible to send money to a phone number or email address will help to open up the informal sector to financial services, and will give impetus to e-commerce and mobile money, he adds.

Bottom line

South Africa’s muted economic recovery prospects mean that niche international corporate business will be key to achieving growth.

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