New sources of revenue from abroad for Corporate Bank Services can be significant, but be ready to deal with the work force, regulatory, and technology challenges which confront new entrants.
Demand for new revenue sources driven by capital needs, and to some degree mitigation of short to mid-term geographic risk, is causing many banks to look beyond their borders for other sources of capital. When this movement outside familiar boundaries takes place, especially in commercial banking and treasury, cash management challenges take on new meaning and risk.
Managing Bank Risk
The risk is twofold because banks not only have to create customer account, accessibility, and investment capability outside of their home country’s product capability but also create the necessary business units and controls needed to assure the safety and soundness of their organization.
When a bank establishes business and technology functions to support its growing customer base in a multi-currency, multi-settlement, multi-language, multi-time-zone environments, which are foreign to its current banking practices and personnel, the learning and technology challenges tends to go vertical.
This is taxing for all banks, even the largest when they enter a new space or location, but it is especially problematic for the middle tier, regional banking establishments in the United States which because of former market growth opportunities did not look beyond their borders in the past or if they did relied on correspondents to handle their affairs. Others avoided the opportunities or simply sold out and merged with stronger players.
This dependence on outsiders was traditionally due to two reasons: The first being a lack of resources familiar with international banking and the inherent greater risk of foreign counterparty exposure. The second because of a lack of computing technology which runs on an open SOA platform and a service oriented application design component, based on proven best practices, which can be easily configured to deal with the demands of real-time, 7X24 global banking.
A third more recent impediment is the regulatory calamity emerging from the unrestrained CFPB and other yet to be crafted progenies in the US and the ever changing International Banking requirements which have to be met head-on with that same pliable technology needed to manage global business growth and expansion.
Thomas “Tom” McAllister brings a 35+ year Financial Services career to his role as a Senior Principal in the Financial Services group at SAP America, Inc. Tom has held C-level positions on both the client and vendor sides of the financial services, and information technology industries