Even with the Middle East’s lifeblood, crude oil, stuck in prolonged doldrums, bankers remain optimistic about the future of the trade finance and supply chain business in the region
February 04, 2016 | ResearchCore to the optimism is the favorable growth in trade, especially with Asia, which according to Monetary Authority of Singapore, expanded five-fold in the past decade. The situation is made more favourable by the retreat of the global banks from the region as they continue to refocus on their home markets and to cut exposures to money laundering risks that have set them back billions in fines. Sparked by this combination, sands of change swept the region’s transaction banking as glaring gaps were left in the wake of global players’ retreat and intense local competition forces banks to break out of their geographical comfort zones.
Competition, credit reliance and dated technology are inhibiting future growth
The opportunity left by the global banks did not go unnoticed and many domestic/regional banks grew their transaction banking business aggressively in the recent years to grab a piece of the lucrative pie. As a result, the intense competition led to an erosion of lending margins as the traditional credit trade business borders on a price war. Moreover, the dependence on large corporations has handed the bargaining power over to the borrowers, further compressing the margins.
While banks are aware of this, the transition away from this credit dependence remains slow and due to their relatively dated technology infrastructure, efficiency and products capabilities remain below global standards. This greatly held them back in terms of providing more sophisticated services, serving the needs of large global supply chains as well as their global expansion.
At the same time, global banks that remain, like HSBC, have consolidated and grown stronger. Increasingly, new entrants, the Chinese banks, are also flexing their deep balance sheet as they ride on China’s “One Belt, One Road” initiative and the new Silk Road policies into the region. Together, they have largely cornered the market for large international co...
Categories:
Corporate Supply Chain Management, Risk & Compliance, Risk and Regulation, Trade Finance, Transaction BankingKeywords:Middle East, MAS, Credit, SME, AML, Noor Bank, Mashreq Bank, National Bank Of Fujairah, IT, Technology, Standardisation, Digitisation, Risk And Compliance, Regional Trade
Even with the Middle East’s lifeblood, crude oil, stuck in prolonged doldrums, bankers remain optimistic about the future of the trade finance and supply chain business in the region
February 04, 2016 | ResearchCore to the optimism is the favorable growth in trade, especially with Asia, which according to Monetary Authority of Singapore, expanded five-fold in the past decade. The situation is made more favourable by the retreat of the global banks from the region as they continue to refocus on their home markets and to cut exposures to money laundering risks that have set them back billions in fines. Sparked by this combination, sands of change swept the region’s transaction banking as glaring gaps were left in the wake of global players’ retreat and intense local competition forces banks to break out of their geographical comfort zones.
Competition, credit reliance and dated technology are inhibiting future growth
The opportunity left by the global banks did not go unnoticed and many domestic/regional banks grew their transaction banking business aggressively in the recent years to grab a piece of the lucrative pie. As a result, the intense competition led to an erosion of lending margins as the traditional credit trade business borders on a price war. Moreover, the dependence on large corporations has handed the bargaining power over to the borrowers, further compressing the margins.
While banks are aware of this, the transition away from this credit dependence remains slow and due to their relatively dated technology infrastructure, efficiency and products capabilities remain below global standards. This greatly held them back in terms of providing more sophisticated services, serving the needs of large global supply chains as well as their global expansion.
At the same time, global banks that remain, like HSBC, have consolidated and grown stronger. Increasingly, new entrants, the Chinese banks, are also flexing their deep balance sheet as they ride on China’s “One Belt, One Road” initiative and the new Silk Road policies into the region. Together, they have largely cornered the market for large international co...
Categories:
Corporate Supply Chain Management, Risk & Compliance, Risk and Regulation, Trade Finance, Transaction BankingKeywords:Middle East, MAS, Credit, SME, AML, Noor Bank, Mashreq Bank, National Bank Of Fujairah, IT, Technology, Standardisation, Digitisation, Risk And Compliance, Regional Trade
