This article was originally published in Treasury Today and can be accessed here.
Asia correspondent banking network reinforced as new connections ‘open for business’
With the international correspondent banking alliance, IBOS, bringing Standard Chartered on board recently, member banks can now reach into Asia alongside existing networks across Europe and the Americas. Treasury Today spoke to IBOS MD, Manoj Mistry, about what this means for corporate clients.
For IBOS members, the ‘missing link’ has been access to Asian markets. The recent recruitment of Standard Chartered to the global correspondent banking service provider trade organisation, means local servicing capabilities and new currency options are opened up for corporate clients operating in and out of the region.
With the bank initially offering coverage of Singapore, India, mainland China, Hong Kong, Taiwan and Malaysia, Manoj Mistry, Managing Director of IBOS says one of the main benefits for all IBOS members and their underlying clients is increased market access.
Where previously IBOS had not been able to provide a complementary service in the Asian markets, he says bringing its newest member on board enables corporate clients to leverage as entry points “the most opportunistic hubs” in China, India, Singapore and Hong Kong, as they “connect and grow internationally into a vibrant corridor”.
The move to connect Asia to the existing IBOS network is seen by Mistry as a “growth opportunity” for members and clients alike, rather than a just a useful extension of the existing service. He describes the initial six-country approach with Standard Chartered as a purposefully “measured approach” to some of its key hubs in which it operates.
The bank’s much larger footprint in Asia presents an opportunity for IBOS to take “a second-tier approach” to some of the region’s emerging markets, including Cambodia, Sri Lanka, Indonesia, Thailand and South Korea.
Simon Cooper, CEO, Corporate, Commercial & Institutional Banking, Standard Chartered, confirmed to Treasury Today that although initially covering six Asian markets, “we will look to include more markets in time”. He added that with corporate clients seeking to diversify their supply chains, and explore opportunities beyond their traditional reach, the IBOS network “complements our footprint, and will help us better connect internationalising corporate clients to the most vibrant economies, trade corridors, and supply chain ecosystems in the world”.
As part of an extension to IBOS’ services, Mistry explains that “what we’re doing is creating additional optionality for our members and their underlying clients”. The measured approach to the ‘roll-out’ with Standard Chartered allows IBOS to work through the process of partnership with the bank in today’s key markets before developing other territories.
Despite this two-phase approach, there is no restriction on member activities beyond the stated key territories. Ad hoc enquiries that generate a referral in Sri Lanka, for example, will be free to progress outside the IBOS agreement where the member already has a local provider in its coverage market. As Mistry explains, IBOS wants the business to occur, not least because “it may open up the underlying corporate client to think about how it moves into other markets through IBOS member coverage”.
Local knowledge, global reach
By opening up key Asian territories for the network, IBOS’ work with Standard Chartered has helped overcome some notable hurdles for other banks and their clients. The region is subject to complex and non-standardised regulatory frameworks and rules. Working with a bank that has been dealing with domestic regulators on an ongoing basis brings essential on-the-ground market and local knowledge to other IBOS members and their corporate clients.
For Mistry, the latest chapter in IBOS membership is not just an extension of existing services: “it is actually an advancement in enabling market access to Asia”. Expansion by corporates into new markets is aided by IBOS through information and guidance on local criteria being shared by all members on the alliance’s platform. “Accessing this pooled knowledge enables members to coach their underlying clients in how best to move forward.”
With IBOS hoping to bring additional markets to the network, the success of the measured approach taken with Standard Chartered in Asia paves the way for members and their corporate clients to experience far greater correspondent banking optionality across the region, and beyond.
Mistry confirms that plans are afoot for IBOS to begin coverage soon in Australia, New Zealand, PNG, the Middle East and Africa. As it begins connecting members in these markets, its aim is to develop more outbound referrals to assist a range of major trade corridors.
Discussions are already under way between IBOS and a financial institution in South Africa that has an established African market network. Although correspondent banking relationships are often based on reciprocal referrals, it is clear that IBOS is keen to give members the choice as to which local providers they want to work with.
Ultimately, notes Mistry, this not only gives corporate clients greater optionality as they expand into new regions, but also, through their IBOS-member partner banks, it gives them access to the developing pool of shared knowledge and experience across multiple territories. Encouraging their banking partners into membership of this trade body would seem like an appropriate action for most treasurers.