This article was originally published in Treasury Today and can be accessed here.
Open all hours: how IBOS aims to keep corporate cash moving
The truly global bank does not exist. So what keeps international corporate cash management working, and how will it improve? Treasury Today met the new head of global banking and cash management alliance, IBOS, to find out.
With a number of international banks choosing in recent years to retrench into home or closer regional markets, the broad sweep of the international cash management needs of some corporate treasurers may have felt somewhat challenged.
But there is a body that, since 1994, has been helping the banking sector, and its corporate clients, to maintain reach through the collaborative concept that is correspondent banking. As an alliance of global banking and cash management service providers, IBOS (or the ‘International Banking One Solution’ Banking Association) tasks itself with enabling its members to share services and provide international corporates with the local banking support they need to keep trading.
After nearly 25 years of keeping these relationships on an even keel, new IBOS Managing Director, Manoj Mistry, is keen to encourage growth into new markets. Having arrived in the role just a few months ago, Mistry is already pursuing the development of local expertise in potential new member banks in India, Asia and Australasia.
In working to build on new ground, his aim is to ensure all IBOS participants meet certain criteria in terms of the types of business they wish to do, the types of products looking to be offered, and that the receiving bank can actually provide those services.
IBOS itself is a service provider. It offers a web-based back-office platform that bank members acting in a host capacity use to upload information for the onward processing by receiving bank members. It also helps steer new members through the documentation process that enables each to take part in the correspondent banking network in either host or receiver role (some do both).
IBOS also organises, on behalf of its members, a number of meetings in different jurisdictions throughout the year. This includes an annual event, and biannual business development and implementation meetings used to ensure all members are meeting the needs of corporate clients.
Of course, corporate clients are central to every members’ activities in this space and Mistry is keen to acknowledge this by bringing corporate clients into the consultation process as part of the next phase of development at IBOS.
The association is also working to build corporate case studies that demonstrate best practice, helping members to better understand client responses to the correspondent system, revealing why, for example, delays occur and how these can be remedied. “We’re trying to build a better protocol around our host and receiving banks as a community,” explains Mistry.
Filling the gaps
Serving the cross-border needs of MNCs is core to each member’s success. In looking to undertake a deeper dive into the segmentation of these companies, and the jurisdictions in which they do business where IBOS is not represented, its approach will highlight existing gaps in the global correspondent network.
Its members currently provide geographic coverage to clients across 70% of the globe. Its host members are predominantly based in Europe but a number of institutions in North America are also represented. The goal is to increase membership in other jurisdictions.
With experience drawn from having worked extensively in Asia prior to taking up the role at IBOS, (he was formerly Managing Director and Head of Financial Institutions in Asia at Scotiabank), Mistry aims to fix the “missing links” to the region, meeting the demands of increasing outflows into the Asian markets.
Discussions with one global institution with a large Asian footprint and an established infrastructure are ongoing (a formal announcement is expected soon). If successful, this could enable markets such as Singapore, China, Hong Kong, Taiwan and Malaysia to leverage the network for both inbound and outbound flows, says Mistry.
But first, it is essential to ensure every aspect of onboarding has been settled before opening up membership to the wider Asian community. This will require IBOS bank-led board approval, achievable only once it has ascertained to what extent these new relationships will benefit corporate clients.
As far as corporates are concerned, IBOS has no intention of disintermediating its member banks by offering direct services to corporates. However, Mistry explains that one key benefit to corporates is that it ensures the correspondent banking network remains “open for business”.
Should a problem arise with the delivery of that service, corporates should know that IBOS’ remit does not extend to remediation or arbitration. Each referral bank is responsible for managing the bridge between itself and its bi-lateral relationships with receiving banks in the correspondent network, explains Mistry.
However, although a referral bank can form bi-lateral relationships with any other banks it chooses, doing so within the IBOS network can give corporates greater comfort that their transactions are being executed locally by appropriately evaluated and well-directed institutions.
Mistry also argues that where participant banks included in a corporate RFP are better able to validate their international reach, IBOS membership “solidifies a corporate’s understanding of the value proposition of each member bank”. Furthermore, IBOS is evolving into a more inclusive alliance, he adds. “Over time, what I intend to do is compile more case studies where corporates have seen improvements through the network, but then also suggest that they participate in roundtable discussions on what works best for them.”
This inclusivity currently extends to working with high profile regulatory authorities. Where in Asia, for example, diverse rule books abound, IBOS is able to engage with bodies such as the Monetary Authority of Singapore and the Hong Kong Monetary Authority. Here the aim is to work towards greater cohesion around business flows. The plan is to extend these conversations into other local and regional stakeholder bodies, especially where these have direct dialogue with, and influence over, how institutions enhance their underlying systems and their onboarding due diligence and KYC processes.
Of course, KYC processes are a major pain-point for most corporates. IBOS is fully attuned to the corporate experience of onboarding with banks. As a result of discussions with its bank members, the aim is for IBOS to work with a suitably qualified global RegTech provider to enable bank members to automatically access all existing ‘golden source’ corporate documentation through the IBOS platform. This will serve to fast-track the client onboarding process, says Mistry.
With the emergence of a range of other new technologies capable of lowering times to market, IBOS aims to provide the right infrastructure to support its banking members as they respond to the needs of corporate clients.
“It’s a shift in mindset for many, but I see it as developing IBOS so we are offering something different in our service delivery,” says Mistry. “Over the next year or so it’s my challenge to create that difference.” For corporate treasurers, if that difference means ‘open all hours’ correspondent banking is more efficient and sustainable, then IBOS is one body on which to keep a close eye.