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Treasury & Capital Markets
April roundup: Continuing to push digital technology
April saw the continuing trends of corporates, banks and institutions experimenting with digital technology, and trade finance banks working with fintechs. However, some recent reports also reveal caution among banks in handing over regulatory and compliance responsibilities to smaller outfits.
The Asset 28 Apr 2017

April saw the continuing trends of corporates, banks and institutions experimenting with digital technology, and trade finance banks working with fintechs. However, some recent reports also reveal caution among banks in handing over regulatory and compliance responsibilities to smaller outfits.

Swift on April 26 announced they were developing a proof of concept application that will test whether distributed ledger technology can be used by banks to improve the reconciliation of their nostro accounts in real time to optimize global liquidity. DBS Bank, BNP Paribas, BNY Mellon and Wells Fargo are among the banks participating in the proof of concept.

Earlier in the month, on April 12 Swift also announced a new real-time payment controls service to strengthen its customers’ existing fraud controls.

Ripple, a blockchain-based payments network, on April 27 announced the addition of 10 new financial institutions to their network. The new members include two of the largest lenders in India, Axis Bank and Yes Bank, and financial services institutions MUFG and SBI remit.

These recent strides forward in digital ledger payments and proof of concept are nothing new, as last month the Monetary Authority of Singapore announced the successful conclusion of a proof-of-concept project to conduct domestic inter-bank payments using distributed ledger technology. Similarly, Deloitte announced it was working with the Hong Kong Monetary Authority to develop a DLT proof of concept for trade finance.

Similarly, on April 25 Citi India launched its own paperless cross-border payment solution for corporates. Citi say the new solution is aligned with India’s national agenda of improving the ‘ease of doing business’.

Indonesian taxi-hailing company Grab signed an agreement to acquire Kudo, an Indonesian e-commerce platform, on April 2. Upon closing, the Kudo team will join Grab and the Kudo platform will be integrated with Grab’s existing payments system.

This month also saw Deutsche Bank on April 4 acquire a 12.5% in fintech TrustBills, an electronic marketplace for national and international trade receivables. Deutsche Bank’s investment follows an earlier investment by DZ Bank AG in 2016.

This continues the trend of trade finance banks turning to fintechs. For instance, last year HSBC invested an undisclosed sum in Tradeshift, a cloud-based business platform that manages procure-to-pay workflows between buyers and suppliers. Santander and American Express have also invested in Tradeshift. Deutsche Bank alongside Citi, RBS and MUFG have backed Swiss fintech Global Supply Chain Finance (GSCF), while Bank of America and ABN AMRO are founding partners of Finacity. Both companies manage securitization programmes of trade receivables.

However, this month also saw research from Simmons & Simmons, which highlighted M&A and regulatory concerns about the adoption of fintech in Hong Kong and Singapore, as banks and asset managers expressed caution in handing over regulatory and compliance functions to fintechs.

On April 19 Hazeltree announced its partnership with Federated Investors to automate cash sweeps for buyside clients. With the addition of Federated Investors’ network to Hazeltree’s platform, Hazeltree say the partnership will provide mutual clients an efficient way to manage and sweep cash to Federated money market funds.

Meituan-Dianping, the provider of popular mainland-Chinese food and restaurant app Dianping, launched its to-be rival of Airbnb, called Hazelnut B&B App.

Deloitte research revealed that tax predictability is key to attracting business in Asia-Pacific in their tax complexity survey report. This is especially the case in China and India, who have the most complicated requirements of all jurisdictions in Asia-Pacific, according to survey respondents.

We also learnt that Swift’s latest RMB Tracker shows that London has retained its position as the preeminent foreign exchange and payment centre globally, and remains the dominant offshore hub for trading renminbi. As of March 2017, SWIFT’s data show that 36.3% of the RMB FX transactions (excluding China) are conducted with the UK. Hong Kong is second (29.3%) and the United States and France third (7.3%) ahead of Singapore (5%).

And finally, although huge leaps in the increase of payments on WeChat and Alipay platforms should be of no surprise, a UN Report revealed that WeChat and Alipay-enabled payments increased twenty-fold in four years.

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Mildred Chua
Mildred Chua
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DBS
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Wei Wei Chum
Wei Wei Chum
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