I just received the 10-page summary of this year's IPS show. Great document produced by the indomitable Heather McKenzie – good job. Here's a little snippet to wet the appetite of those who missed it:
There was a mood of cautious optimism at this year’s conference as delegates focused on the opportunities that have arisen as a result of the financial crisis and the unprecedented government and regulatory interventions. Many of the themes from last year still held their place – regulation, risk management, corporate concerns – but they were joined by new themes centred on the growing markets in Asia (particularly China), changing liquidity management requirements and innovating for the future.
The conference began with an address from Paul Camp, Global Head of Cash Management Financial Institutions at Deutsche Bank. He said the responses to the question of where growth would come from were heartening: “There is more potential for growth in emerging markets and there is more we can do by getting to know our existing customers better.”
Declaring the recession over, he pointed up some of the issues that still need to be addressed, such as the shifting of risk into the public sector and the fact that global trade is unlikely to reach the peaks of 2008 until at least 2012. The expectations for 2010 of growth and rising interest rates, which should lead to greater revenues in transaction banking, could be tempered by regulatory pressure in the guise of the Payment Services Directive (which will hit top line pricing) and also anti-money laundering measures that will add costs. “It will take more than a year to snap back out of the financial crisis and banks have to invest in transaction banking year in and year out,” he said.
How then to capitalise on the opportunities that are emerging out of the crisis? Camp advised delegates to clarify their cash management business models, prioritise investments and know when to say no. “You should identify what you can do yourselves and how you can leverage partners for what you can’t do yourself.”
While banks may feel they have emerged from the financial crisis, Frederico Papa, Managing Director and Head of Global Transaction Banking Europe at Santander Global Banking and Markets, said many corporates were not yet out of the woods. “We need to listen closely to our clients before we jump into any initiative that is predicated on the thought that there is a recovery.” Fellow strategy roundtable participant, Pierre Fersztand, Global Head of Cash Management, BNP Paribas, agreed with Papa’s assessment: “For corporates the crisis is not yet over – they are looking for liquidity and needs vary from corporate to corporate and from country to country.” Rajesh Mehta, Treasury and Trade Solutions Head, EMEA, GTS at Citi, also warned that the industry was “not yet done with the crisis”. He said the industry had to ask itself what would happen when quantitative easing and other forms of government fiscal support came to an end.
The new financial landscape brings into question the global ambitions of banks – both large and small – which during the boom years had international growth strategies, said Nadine Lagarmitte, Managing Director, Head of Financial Institutions Payments and Cash Management Europe, HSBC. She questioned whether all financial institutions could afford a global footprint. Mehta agreed, saying it did not make sense for all banks to be global. He repeated Camp’s earlier observation that transaction banking required consistent investment, particularly if a global strategy was to be pursued.
Innovation was also discussed during the roundtable – a theme that was to be examined in greater detail during day three of the Summit. Fersztand said many of the interesting developments and innovations in the payments industry were being driven by organisations other than banks. Despite this, banks have an important role to play: “Innovation is coming from different places, but there is always a mix of banks and non-banks involved. These new developments do not have to frighten us as bankers because banks will always have the accounts and will always be part of the relationship.”
An audience poll revealed that 40% of delegates felt that innovation was “all the more important in the challenging market”.
Chris Skinner, Chief Executive of Balatro (who?), provided a comprehensive insight into the new technologies and players in the payments landscape. These included PayPal, Spare Change, various iPhone applications and M-Pesa. All of these involved a radically different approach to payments and banking. The challenge for everyone, said Skinner, was to better leverage customer data in order to deliver real value to more demanding consumers: “Banking is different today, but are we in the payments industry different?”