Standard Bank targets working capital advisory role for multinationals

In February, Africa’s largest bank by assets launched its cash management service to provide a tool for businesses to visualize their daily liquidity position. Currently, this is difficult for companies with multiple bank accounts in different countries, explains Mkhwanazi in Johannesburg.

The bank has sought to use fintech to expand the services it can offer to corporate clients. He used blockchain to facilitate cross-border commerce and in 2019 he partnered with fintech Traydstream digitize the validation process of commercial documents. In October, the bank partnered with the Nigerian unicorn Floating wave to improve its digital payment offer.

The bank’s transactional products business focuses on cash management and payments, trade finance, and investor services, such as custody. The cash management service targets local clients with federated models, such as government institutions and multinationals. The solution is ‘industry agnostic’, but so far interest has come from nonbank financial institutions, such as insurers and telecommunications companies who have complex cash management needs, says Mkhwanazi.

The tool enables more accurate cash flow forecasting and saves administrative time, he says. Mkhwanazi hopes this will enable the bank to become “fundamental advisers” to corporate clients. Multinationals in the US or UK are able to manage their domestic liquidity, but may find it difficult to aggregate information from African branches into a usable format, he says. “They have the hardest job of all.”

He gives exchange management for example.

• The bank tracks the central bank’s foreign exchange interventions in countries, such as Nigeria and Mozambique.
• Given a complete picture of corporate liquidity, he can advise on how best to spread currency purchases over a month.

Scale search

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

The bank is working to improve the service by enabling transactions to be carried out within the platform. It is also developing a “scenario assessment” service for working capital. Mkhwanazi aims for these additions to be executed in the first half of 2022.

Standard Bank is discussing other possible partnerships with both specialized fintechs and major technology providers.

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

Mkhwanazi is convinced that South Africa quick payments program, slated for launch in 2022, will accelerate the pace of change. Instant payments, he says, will make a “huge difference to the industry,” for example by speeding up the letter of credit process in trade finance.

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

At the end of the line

South Africa’s weak prospects for economic recovery mean that the international business niche will be the key to growth.