client retention through integration

7/31/2019 Client Retention Through Integration

1/4

N ovember 2003 49

AT T E N D E E S

Lum Yin Fong, managing director,

global transaction services, DBS Bank

Arpavadee Meekun-iam, execut ive

vice-president, Bank of Ayudhya

Linda Goh, head, financial institu tions

product & services, OCBC Bank

C J Tan , assistant general manager,

Mizuho C orporate Bank, Singapore

Budi Sanjaya, head of int ernational

business solution, PT Bank Cen tral Asia

Ketut T riasa, head of operations,

Bank N iaga

Satrio Kusnanto,IT off icer,

Bank N iaga

Kosuke N ishi, senior manager,

payment strategies and solut ions,

UFJ Bank

Donald F Schule, senior vice-president,

global client access, JPMorgan Chase

David A Potterton, vice-president,

Chase Access Services

Lee Chung Keet, vice-president,

head of payments-receivables & financial

systems integration, JPMorgan C hase

Michael Whitehead, head of financial

institution sales, JPMorgan Chase

Client retention

through integrationAs more companies implement

ERP systems at various levels,

they have also started to reach

out to their own financial

institutions to begin the

integration process. Financial

institutions unable to provide

for these services can be at

a competitive disadvantage.

Banks in Asia are therefore

considering a number of

approaches including entering

into partnerships to meet

the needs of clients

The Asset: In terms of integrating back-office

systems what sort of demands have you seen

from your corporate clients?

Yin Fong Lum: Whether they are large

multinationals or the larger SMEs, the need

to link their ERP systems to the bank is very

important. Corporate clients are also very

cost conscious. To streamline the back office,

they also want to have cost-saving tools that

they can use. Th e only way for that to happen

is that instead of just having to send transac-

tions either manually or electronically, they

want some integration to the back office so

that they can download from t heir system and

transfer the transaction files to us. As far as

the banks are concerned, many have started

to look into how to integrate to the clients

back office system such that they can provide

F O RUMIn association with


2/4

50 N ovember 2003

information to them as well as receive transaction files.

C J T an: At the end of the day, all customers expect their banks

to serve them and expect the operations department to be part of

their team doing all the administration work. But in order for usto be competitive, it is important for full automation and that the

operation is seamless. The only way is through some standard

formats. Today, we still do not have one

standard format. Somebody should take

the lead in setting some standards.

Fong: Other than standards, corporates

are also concerned with security. At the

back of their minds, they are wondering:

how secure is it? Because you are talking

about their transactions being sent over.

I think cost, full integration and security

are all very critical.

Budi Sanjaya: Most of our customers

are retail but we also have corporate

customers. They are also quite tradi-

tional. But some are beginning to

change and are starting to look at

In ternet-based solutions among the

SMEs as well as the corporates.

H owever, in general, we still use tradi-

tional ways to service our customers.

Linda Goh: W hen you look at the cor-

porate environment, it is also important

to find out how you define corporate.

Big international banks look at corpo-

rates in terms of the Fortune 500 com-

panies. H ere in Singapore, we look at

the large listed companies. We also look

at the SMEs, but their needs are actually quite different.

Arpavadee Meekun-iam: Our corporate customers require

straight-through processing and also would like to integrate

their systems with the bank in t he area of cash management

not just payments but

also collection.

Kosuke Nishi: It is very

important to service our

clients through a variety

of sophisticated services.

TA: Given the requirements of your corporate customers, how

are you tackling some of these needs?

Fong: If you look at the SMEs, they have their own require-

ments even though they might be different. For multinationals,

the needs are different and much more complex. If not in termsof a single file, they prefer to send a file that can take most of the

transactions that is sent to us.

The issues we have always been faced with are d ifferent stan-

dards. There are also different versions for the ERP p latforms. It

does not mean that the next version is necessarily compatible.

Some work needs to be done on the part of corporates when they

do integration. A lot of times these corporates do not want to

pay. T hey would like you to do it free of charge.

So on the one hand you want to provide those services but

there is the cost to the bank. We need to find a cost effective way

to provide such integration services to the customers.

The other question is timing. How quickly can we imple-

ment the integration? Again, for the platform that we have, a

simple version, can be applicable for SMEs. But for the large cor-

porates in which the volumes are high, then a simple e-banking

channel may not be the solution.

Potterton: Do you have plans to move in that direction or are

you still studying and actively engaging your corporate clients on

their needs?

Fong: Definitely there is a plan in place. For us to stay in this

business, we have to provide that. But as a local bank, we cover

both the small and large corporates. We need different delivery

channels. We need to have strategies for the small companies as

well as the large companies.

Potterton: W hile everyone agrees that is the way to go, the

question is how to bridge that because that is going to take some

time. Certainly when you look at how you can meet the needs of

corporate clients today, it has to be flexible enough that you can,

as standards evolve, move to that more effectively.

Sanjaya: Every customer talks about cost. W hen we plan to

adopt a new system moving to use more techn ology, the cus-

tomers do not want to use it because they want us to serv ice

Fong: I think cost,

full int egration

and security are all

very critical

Tan:In order for us to

be competitive, it is

important for full

automation and that the

operation is seamless

F O RUM

In association with

Goh: We also

look at the SM Es,

but their needs

are actually quite

different


3/4

them. T hey want to talk

to us. T he challenge for a

bank like us is how to

s e rvice th em. Because

when you start to talk

about cost, they still insist

that the bank should pro-

vide the service. It is

often difficult to change the mind-set of the customers.

Tan: I think when a bank goes into automation and integration

with a customer, the objective is to make the process cost-

effective. However, relationship is ever changing because ofthe competition. When I talked about standards, it is impor-

tant if there is one global standard in the market for all the

ERPs. Banks often pamper their customers and they some-

times compete with other banks by offering customizations

free of charge. At the end of the day, when we do customiza-

tions for these customers, the question is how long is this serv-

ice going to last? Before, when we talk about trying to lock up

customers from their system to our system, that was forever.

T hese days, that is no longer the case. Relationship is always

dynamic and always changing. At the same time, there is no

one standard in the market and there is always a cost to us. So

when we automate, we want to reduce our bank processing

steps while at the same time the customer is telling us your

process is more efficient. T he dollars and cents should be r ight

down to kamikaze levels! (laughter)

From my experience, I find that the small companies are the

ones generating better revenues. H ere, their credit risk is not

deemed as healthy and therefore the spreads are much better.

Chung Keet Lee: I want to share some insights on issues

such as standard formats. We all know today that we are all

t rying to look for that nirvana of global standard, but there

is no such thing. Even if it is SWIFT, you h ave pseudo-

S W I F T. W hen you look t o integrate with your corporate

clients you need to have a solution that is robust enough and

that is flexible to at least address some of the common stan-

d a rds. At least it shou ld be standard dr iven an d configurable

no t just existing standard s but also a solution pro v i d e r

and allow us to future - p roof some of the newer standard s

such as XMLs.

Also, in terms of standards, there are ways to overcome

that where you can actually go for certification. A lot of the

ERP solution providers have programmes where they actually

certify their own standards with certain banks. Use your criteria

or checklist t o look for your solution providers. If those solu-

tions come with certifications, it means that they would com-

mit to f ut ure -p roo f

their standards with

whichever bank or

solution provider that

partners with them.

In terms of costs,

when you look at your

own checklist you

should look for solutions that you can replicate to many cor-

porate clients.

In terms of relationship, although it has been mentioned

that it is a thing of the past because you can build converters

in a matter of weeks, while that is true, besides building astraight file converter , you have to basically put in value-added

services, something like reporting functions, funding report,

currency exposure repor t and some of the M IS analytics that

allows your customer to really derive value.

If you talk to CFOs and treasurers and look at the article in

T he Asset magazine, you can see that they are always grappling

with trying to get timely information from a variety of systems

from their own internal organization. H ow can they get a con-

solidated view of all the information? If you package your inte-

grated solution that allow the CFO or treasurer to get a consol-

idated viewpoint of information flow, you can get your customers

to continue to view you as a value added solution pro vider.

TA:How are you as banks planning to execute your int egration

strategy with your corporate customers and what is the likely

timing?

Fong: In terms of the lower volume of transactions, we have the

capability for both the SMEs and the larger corporates. When it

comes to the high volumes, we have just built a new delivery

channel where customers can send files to us for their transac-

tions. We still have to contend with some issues on how best to

provide some of the features to the customers. At the same time,

we need to also work out how to implement it less painfully.

What is clear is that we should be able to provide solutions for

both the small customers as well as the bigger ones.

Michael Whitehead: Our financial institutions (FIs) are becom-

ing sophisticated and demanding. As their own corporate cus-

tomers evolve and become more sophisticated, then these

requirements are passed on to us. these requirements are also

increasing in their frequency and that is a constant challenge for

all of us. For the financial isntitution, the integration work and

the system development that needs to take place has to be pr ior-

itized with many other systems developments. Work is required

with regulatory issues; with CLS there are lots of things going

on. One of the most noticeable changes in the past few years in

N ovember 2003 51

Arpabadee: Our corpo-

rate customers would like

to integrate their systems

with the bank in the

area of cash m anagem ent

no t just paym ent s but

also collection

Whitehead: T he

customers requirement s

are also increasing in

their frequency and

that is a constant

challenge for all of us


4/4

this part of the world is the willingness of banks to engage their

providers to help them in these areas. Areas that would have

typically taken place as an in-house development are now being

outsourced or subcontracted to third parties, often banks.

For all of us, as the demands whether they are customer orregulatory or other types increase, we will see more and more

of this type of development and integration work performed

outside of typical in-house solutions.

Potterton: Is that something that you see within your organi-

zation that would engage outside parties to implement these

types of solutions?

Fong: For us, we also want to shorten the time to deliver.

T herefore, it is better to look for a good solution, and spend

time integrating whatever that platform offers. We are also see-

ing more platform vendors offering different solutions. T here

are a lot of things out there for us, and we can choose the best.

So pick the one that really meets your requirements and that of

your clients.

Sanjaya: It is much easier to transform an MN C to adopt a sys-

tem because they already have standards from their main office

to adopt a more technology focused approach. It is quite dif-

ferent with the local corporate, which constitute the bulk of our

customers. They also are unable to distinguish between cost

and investment.

Potterton: W hile we certainly agree that large MN Cs who are

the ones that drive the demand for integration services, or

moving towards ERP systems, the other side is that SMEs still

need information and they still need to be efficient and effec-

tive. Even though their needs might be lower and their

requirements much simpler, it is the SMEs that you are prob-

ably getting a significant percentage of your revenues from,

and they are the ones you want to make sure are taken care of.

And that is why you still want to offer them a simpler more effi-

cient solution.

Whitehead: T he skill in all these areas of integration is the

ability to replicate. The one-off process is expensive for all of

us and time-consum-

ing. As we look around

the region and deter-

mine how we can help

our FI customers, we

constantly study how

we can provide some-

thing to them that is

very easily replicable from one of their clients to another.

Goh: U l t i m a t e l y, practicality will prevail and banks will

look for solutions that best suit their needs and that of

their clients, whether it is outsourcing or whether devel-opment is done in-house.

Potterton: It is not necessarily all or none. You can strategi-

cally pick the solutions that make sense for you to outsource.

And outsourcing itself is not necessarily an end game. You can

outsource for a period of time and decide to in-source it back.

It is a very fluid environment. T he key is for organizations to

understand the benefits of that as they strategically decide on

the model that suits their needs.

It is a balancing act between what are the aspects you want

to buy because they are commodities versus what are the value-

added pieces that we should be building. At JPMorgan we want

to build solutions that are the differentiator and what clients are

looking for and extend that out.

Lee: Deep integration with your clients is basically the glue

that puts you into the doorstep of all the products and services

that you want to offer to your clients. At the end of day you

want to enhance your position and create the stickiness.

Don Schule: T here are always multiple solutions. It is about

sometimes building internally; sometimes it is about taking a

package off the shelf. Often there is great value in part nering.

T he value in partnering is because we can bring to the table

solutions that meet multiple client needs with only the

requirement to invest once. It is about focusing on core com-

pentencies. You need to stay in touch with your clients. You

want a direct, ongoing relationship with your clients. That does

not mean you need to process the transaction or build the link.

We know that cash management is becoming very much a

commoditized business. But we know that there is a way to

extend the value chain for the clients.

Clients used to look to us and say reduce your banking

transaction costs; now the corporates are saying help me

reduce my internal costs. We see that as a real opportunity;

we see that as a core competency for banks.

52 N ovember 2003

Lee: At th e end

of day you want

to enhance your

position and create

the stickiness

Don:N ow t he

corporates are saying

help me reduce my

internal costs.

We see that as a

real opportunity

F O RUM

In association with

A

client retention through integration

Documents