Navigating Success in Latin America: Cash Management and Trade Finance in a Changing Market

Global Finance, November 2012 | Go to article overview

Navigating Success in Latin America: Cash Management and Trade Finance in a Changing Market


Mounting compliance requirements are having an enormous impact on cash management and trade finance needs in Latin America and globally, putting today's financial institutions (FIs) under even greater pressure. Deutsche Bank's John Estrada, Latin America Head of Cash Management for FIs Sales, Global Transaction Banking, and Rudolf Effing, Americas Head of Trade Finance FIs, Global Transaction Banking at Deutsche Bank, discuss how local and global bank partnerships can help Latin American banks manage transactions in changing times.

Growing regulatory demands are revolutionizing the transaction banking industry, In many cases, compliance requires tremendous investment and continued maintenance costs on the part of the banks, while restricting previously reliable revenue streams from payments processing. As a result, transaction banking is more than ever becoming a scale-based business - profitable for providers with the ability to keep up with regulatory and industry demands.

Regulatory changes remain a key focus in Latin America. Rs are placing greater emphasis on the required compliance systems, client screening processes and activity monitoring tools. Countries like Brazil are already highly regulated while Central America and the Caribbean are starting to pay closer attention to regulatory requirements and a unified anti-money laundering compliance strategy. There is great interest from Latin American FIs in making sure that they have the requisite knowledge on those matters that have a direct impact on their business.

In response to today's challenges, clients in Latin America are looking for solutions rather than just products. While the cash management space was once dominated by standard products - with emphasis on what banks had to sell rather than what clients really needed - many institutions are now looking for customized solutions that will work with their existing infrastructure to increase automation and efficiency. While this certainly demands technical sophistication on the part of the banks, it also necessitates agility, as cash management needs depend largely on the requirements of their local markets.

TECHNOLOGICAL INNOVATION

As growing regulation increases processing costs and depletes revenue earned from payments, banks are increasingly seeking ways to economize and remain competitive. Deutsche Bank, as a forward-looking institution, is looking to the payments aspect of FX in order to create new efficiencies. Deutsche Bank's offering in this area is FX4Cash ~ a global cross-currency payments solution. Developed as a joint venture between Deutsche Bank's Markets and GTB businesses, FX4Cash gives clients access to a broad range of currencies through a single platform, and the ability to manage international, multi-currency payments through a single window using a single account.

FX4Cash complements Deutsche Bank's unique positions in global clearing with dominant market share in EUR clearing and the third largest sender of USD payments on the CHIPS network along with a significant presence in GBP, JPY and also Chinese RMB.

REGIONAL TRENDS

A key trend has been the growth of Asia as a trading partner with Latin American countries. Currency requirements are largely market dependent, but the sharp increase in intra- Asian trade and the rise of China as a major world trade player means there is increasing focus on the RMB as an international reserve currency. As a result, there is a growing corporate requirement for access to RMB clearing and processing services - both in Asia and around the globe.

Trade flows with Asia -Asia-Latin America, Asia-Europe, and InterAsia trade - are certainly a key area of focus for banks and corporates alike. …

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Navigating Success in Latin America: Cash Management and Trade Finance in a Changing Market
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