Co-operation and collaboration are the watchwords highlighted in two of our principle articles in this issue as businesses and banks act to increase profitability and sidestep market turmoil.
First, as our main article points out, corporate treasurers based in the Middle East’s major commercial and trading centres are collaborating more closely with trade finance managers to exploit opportunities in trade and supply chain finance in attempts to maximise their companies’ working capital.
An increased awareness of the benefits of integrated cash and trade solutions is enabling them to view and manage their cash and trade positions seamlessly via one bank interface.
“In some companies there is growing recognition that their business model is in need of unification,” explained Murali Subramanian, transaction banking head, Abu Dhabi Commercial Bank (ADCB) . He pointed out that changing business needs were driving the integration of separate departments set up to manage bank relationships in trade, treasury and liquidity.
Elsewhere in this issue, we discuss how a more collaborative approach to banking partnerships could end the struggle many local and regional banks have to meet the increasingly sophisticated needs of their corporate clients.
Working capital pressures – combined with economic, market and regulatory forces – are creating a shift towards greater collaboration as an effective way to navigate the post-crisis financial landscape.
The article explains that while collaboration between financial sector service providers – particularly in traditional forms, such as outsourcing – is a tried-and-tested method for local financial institutions to overcome individual hurdles, “dealing with today’s market challenges requires a more comprehensive and strategic partnership approach.
“To say the least, banks – particularly many local and regional ones – are not having an easy time of it. The seemingly never-ending additional costs and work-load of regulatory compliance mean that keeping up with unprecedented corporate demands for local access to global-standard transaction banking solutions, which can deliver end-to-end transactional visibility and real-time data management, is nigh-on impossible. As a result, they run the risk of losing their local corporate business to global players and, thereby, becoming irrelevant in the world of global transaction banking.”
It sets out the premise that the formation of collaborative partnerships between local and global banks could provide a viable way for the former to remain competitive by gaining the ability to provide their corporate clients with the sophisticated solutions they need in a cost-effective and compliant manner.
Is the world in for a better time economically? One bank believes that it is “in a super-cycle of sustained high growth and the scale of change over the next 20 years will be enormous”.
It defines “super-cycle” as “a period of historically high global growth, lasting a generation or more, driven by increasing trade, high rates of investment, urbanisation and technological innovation, characterised by the emergence of large, new economies, first seen in high catch-up growth rates across the emerging world”.
Standard Chartered believes that the “supercycle” will see the global economy reach more than US$300trn in size by 2030, up from US$62trn today. It concludes that the developed economies will do well through the “super-cycle”, but the emerging markets will do much better. As a result, the global balance of economic power will shift decisively from the West to the East.
In our next issue, we will publish a full 2010 KSA Tajara Monitor report. It was not possible to give it coverage in this issue because of the delay in the release of the KSA ’s banks annual financials.