ANZ pursues dominance in transactional banking

As international activity expands, banks put more focus on payments and trade finance

Targeting the Greater Mekong region and the ASEAN bloc at large, the Melbourne-based lender has been preparing to respond to a changing market, with due focus on transaction banking – offering solutions in trade finance and cash management to institutional clients.

According to Aseem Goyal, head of Transaction Banking at ANZ Vietnam and Greater Mekong, the business has been a critical component of the lender’s institutional banking strategy for years.

“If you look at the trade and capital flows in Vietnam and across the region, more and more investment is intra-Asian. ANZ has a presence across all the major markets in Asia, which means we are able to engage clients in each market and present multi-country solutions,” Goyal said.

ANZ is not the only bank that has focused on payments and trade finance. Competition in the field has been heating up among both foreign and local banks throughout Southeast Asia.

“Transaction banking supports and facilitates the core day to day activities for our institutional customers. This link to the customer’s core business can provide the banks with a relatively stable source of business and revenue,” Goyal said.

“Having said that, it does not mean that all bank propositions are similar. There is plenty of room for differentiation,” he added.

While the products across all banks can be similar, the difference is primarily based on how well a bank proposes and delivers solutions to meet their clients’ objectives. “This is primarily done through our client teams bundling different products and electronic delivery channels to create a solution, at a competitive price, wrapped around our knowledge of the local business and regulatory environment.”

Some years back, a few foreign banks emerged as main players in transaction banking In Vietnam. They, according to Goyal, had the right expertise to support clients and understand product development. A number of Asian banks subsequently followed suit, targeting their home country’s customers in Vietnam.

Nevertheless, the “most serious competitive threat” comes from local banks, which often have the technology and certain advantages in terms of branch networks and local market knowledge, but not necessarily the internal focus or expertise in this area.

“This has started to change and these banks are now coming up with strategic plans to build their businesses, make internal organisational changes, and most importantly, take talent and experience from foreign banks. So, we can expect the competition to continue and to increase.

“Transaction banking requires significant initial and continuing investment in capability, technology, and delivery. It uses less capital than a normal lending business but requires scale to achieve the desired profitability,” Goyal said. “These are some of the considerations the banks have to think about before they enter the business in any specific market.”

Regardless of the competition, Goyal told VIR that transaction banking will be an area where foreign banks like ANZ will continue to do well. The reasons for his confidence come down to the prospect for transaction banking to grow in line with the budding trade and investment flows throughout the region, as local corporates start paying more attention to automation and efficiency issues.

International lenders like ANZ have advantages in terms of experience and expertise which cannot be replicated or changed overnight. They can support foreign direct investment clients through multi-country solutions by virtue of their presence in multiple markets, and not just with a single country solution.

“This is an important consideration for multinational companies, and for local corporates as they invest overseas, expecting as much consistency as possible in solutions and pricing across various markets.”

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