Evolution of Cross-border Flows

Transcription

1 Evolution of Cross-border Flows Ebru Pakcan Global Head of Payments, Treasury and Trade Solutions, Citi Jodi Schenk Global Head of Global Corporate FX esolutions Group, Citi Morgan McKenney Global Head of Cross-border Payments, Treasury and Trade Solutions, Citi

2 Cross-border Payments Considerations

3 Treasury and Cash Management Models Decentralized Partially Centralized Highly Centralized RTC IHB Bank Operating Cash Flow s, Parent Eliminate/Minimize s FX exposure by moving to hubs such as Regional Treasury Center Exposures managed at Global Treasury Center (Inhouse Bank), Re-Invoicing Center, Procurement Center Financial Assets & Liabilities s, Parent Regional Treasury Center (RTC) Global Treasury Center (GTC) or In-house Bank (IHB) Manual Partial Automation Automation to decrease reliance on s FX Risk Identification Sources: s Sources: s, ERP systems, RTC Sources: s, ERP systems, GTC Types: Booked Types: Booked and Anticipated up to 1 year Types: Booked & Anticipated up to 1yr FX Risk Management Mostly decentralized to s. Sometimes trades done by Parent on behalf of s Each RTC executes on behalf of s in region. FX position managed on a portfolio basis s execute FX trades with GTC (or IHB), which executes the net exposure with banks Cash Management Liquidity Mostly decentralized to s. Sometimes pools set up locally in main operating region(s) Each Regional Treasury Center manages liquidity structure for s in region IHB used to centralize s fungible liquidity on a global basis Cash Management Payments & Receivables Mostly decentralized to s. Sometimes Shared Service Center (SSC) aggregates processes in main operating region(s) Each SSC centralizes payment processing for s in region; funding for primary non-functional ccy payments provided via RTC liquidity structure IHB used to centrally execute s non-functional currency payments with solutions such as Payments on Behalf Of (POBO)

4 Challenges Cost management and process efficiency Local country regulations and payment requirements Local currency account management Visibility and control FX exposure management International beneficiary management

5 Standardization and Convergence Drive for standards, harmonization and convergence of payment rules Examples include: SEPA in Europe Transactions processed in SEPA format Corporate SWIFT/XML adaption National Clearing Infrastructure adopting SWIFT/XML ASEAN Payment Systems Integration Source: European Central Bank

6 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 International Currencies and New Markets Expansion and accessibility of international currencies for growth and diversification 60,000 50,000 40,000 30,000 20,000 10,000 RMB Off-shore Payments (Incl. FX and Commercial) RMB Billions Sent + Received on SWIFT (MT103, 202 Ex Cover) Use of RMB Internationally and Off-shore RMB FX Market RMB has the world s No.7 biggest payment value, even excluding China s domestic payments SWIFT. RMB has the world s No.9 FX turnover survey by Bank of International Settlements. 0 From/To HK+CN From/To UK+SG+TW From/To Others Source: SWIFT Value Analyzer.

7 Billions of Dollars Digitization, Virtual Currencies and Payment Channels Technology innovation in payments, alternate and virtual currencies Industry Trends Technology Driving Innovation $800 Forecast: US E-Commerce, M-Commerce and Mobile In-Store Payments Miniaturization Universal Payments Age of Information $700 $600 $500 We are here $189 Evolving Regulatory Framework $400 $222 Success Requires $300 Client-centric Innovation $200 $333 Core Infrastructure and Processes $100 Network Impact Aggregator of Data Regulatory Dialogue $ E 2015E 2016E 2017E 2018E Desktop M-Commerce Mobile In-Store Payments Source: BI Intelligence.

8 Modernization of Payment Infrastructure Technology and behavioral changes impacting structure and processes Innovation in domestic clearing structures: Real-time payment systems supporting fast payments, direct debits and tax payments via ACH/RTGS Some RTGS moving into 24x7 operation to support mobile payments Check conversion to electronic

9 Big Data and Analytics Decision making processes increasingly supported by data analysis

10 Regulations, Taxes and Risk Focus Ensured compliance with regulatory reform, high level of risk awareness Increased level of AML/Compliance/KYC Basel III Operational and Balance sheet Taxes on financial transactions Monitoring/reporting on invoicing, withholding tax certificates Security: Multi-factor authentication and beneficiaries pre-registration Frequent local market changes 60+ in 2013 & 2014

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