Special Sibos 2014 Edition

24
Featured story
by Chris Principe,
Vice President Transaction Banking, Trade Solutions Group
As the world of payments is changing at
amazing speeds, I can’t help think of one
of my favorite movies as a kid, “The Wizard
of OZ”. The image of Dorothy’s house
landing on top of the wicked witch of the
east, would be a fitting way for the end for
the wire systems within the banks today.
The world is moving ahead and yet banks
still cling to a near obsolete approach to
payments. Yes, I understand that there is
a natural or instinctive reaction to protect
both produce and of course revenues. The
question is does this serve the market
and corporates or does it serve the banks.
From a quick look at the wire business the
traditional fee structure is far more costly
than the many newer forms of payment
now available both from the bank, such
as ACH or SEPA, and more importantly
the non-financial payment providers. It
would seem that this area of the bank
might be the Wicked Witch of the East in
trying to hold on to this business, but let’s
investigate this a bit further.
Lions, and tigers, and
bears! Oh, my!
If Dorothy was here running here own
corporation today, she might have this
reaction to the prospect of making
payments by wire as advised by her bank
versus the market alternatives. There
seems to be in the market an approach
of if our corporates are using wires for
payments it makes little business sense
to actively consul those clients to any less
costly alternatives. The pressures in the
banks for fee generation business, and
Wire Transfers are good fees especially
in the payment space, has caused some
approaches similar to the entering of the
dark forest. This I believe must change,
for the betterment of both the banks and
corporates and wires must take a back
place in the realm of payment offerings.
There is still an important need in the
market just not the need that it has been
in the past.
Courage and Brains
To be able to speak out on this facet of
the payments industry takes courage
and brains both as a change agent to the
industry, but also establishing the place
and value in the market for a payment
by wire transfer. Courage is for those
payments that absolutely have to be there
where the client is in danger of suffering
damage. Example; the clients container
is at dock side of the ship and the sailing
time is due, but without immediate, nonrevocable,
secure payment of the cost of
ship the container, it does not make it on
to the vessel for the impending sailing.
This takes courage on the clients’ part
to trust in his banker and his banker by
recommending a wire transfer even at the
fee incurred has served his client well.
Brains comes in on the part of the client
who has for his own comfort a large sum
of funds to transfer and it is just smarter,
more comforting to send this as a wire
transfer and in this case the fee itself is
not the issue, but the security and comfort
that the bank supplies via a wire transfer.
Keep in mind that a large amount of funds
can mean $1m to one company and maybe
$100m to another.
The Lollipop Guild
There is the need for a different kind of
conversation with the corporate clients
about the right way and timeliness for
payment types. The strength of this
discussion must be based on a solution
approach covering the clients whole
business needs rather than the traditional
product centric selling approach. The
bank needs payment specialist and needs
to expand the wire specialist view and
knowledge to cover all payments, ACH,
SEPA, Mobile, etc. Then armed properly the
conversations can begin to do discovery
of the clients’ needs, business flows
and payment patterns. With this deeper
understand of the clients’ mix of payment
possibilities, solutions can be crafted that
provides the client with the least expensive
payment product based on criteria such as