A winning Transaction Banking Strategy vision

The Abu Dhabi Commercial Bank (ADCB) aims to retain its lead in transaction banking through looking into the future. Here, Murali Subramanian, Executive Vice President and Head of the Transaction Banking Group, explains its outlook to Cash&Trade

Question What are the particular priorities for ADCB and your own development plans?

Answer We aim to retain market leadership in the transaction banking space and be the most respected provider in the MENA region, act as a talent magnet and retain the best, and provide clients with a view of what the market will offer several years later, ie, through thought leadership. We have done well thus far, and are proud to acknowledge as many as 11 awards from respected global and regional bodies in 2013 alone for our cash management, trade, corporate banking and SME businesses.

Question What are the big challenges that the industry faces that you think should be discussed at Sibos?

Answer Across the globe, the common challenges faced by the industry happen to be in governance, risk management, KYC and screening growing and more complex business models for compliance with constantly changing regulations.

The Gulf and Middle East banks, being recent comers to the scene, have a different set of priorities currently as these regulations, with the exception of sanctions, don’t impact on the region quite so much.

Sibos provides one of the best platforms worldwide to discuss standards, and other matters of interest and concern to the industry. Along with these concerns though, there is also a welcome focus on how sustainable development can be brought to economies in the wider region driven by transaction banking technologies and practices.

Question Are there particular problems, challenges or opportunities that the industry should discuss at Sibos in relation to the needs of banks and businesses in the Gulf?

Answer Particularly for the Gulf region, perhaps one area to focus on is the emergence and empowerment of the SME and mid-market segments as a result of value-added transaction banking. Almost every economy that has become developed today has been powered by SME and mid-market names. The UAE is furthest along this path in the region and is an example for others to emulate. And, as banks in the region evolve their transaction banking business models further, there will need to be a focus on sharing infrastructure rather than building it individually.

Another area of focus could be the emergence of additional purpose-built value transfer networks supplementing what the central banks offer banks in the region. This is similar to the evolution of CHIPS and ACH, and Faster Payments in the UK.

Question What is the likely impact of tougher prudential standards under Basel III ?

Answer Basel III guidelines are now well understood in MENA though compliance is between one and three years away in many cases. The main impact concerns the manner liquidity and assets are regarded, and the value given to operationally dependent parts of the balance sheet in terms of long-term treatment, resulting in implications for capital adequacy.

At ADCB, adequate advance steps have been taken, and our transaction banking business has demonstrated a proven track record of delivering.

Question How do you see the outlook for the Gulf economies, and for the region’s financing and investment market over the next year?

Answer Strong sustained growth supported by investment and economic diversification. Trade and supply chain financing are supported by the region’s first in class logistics and service infrastructure and forward-looking regulations, and that has helped the evolution of an SME and mid-market industrial base that has anchored a growing share of economic development.

With the development of capital markets and opening up to overseas investment, there are many interesting opportunities for the Gulf economies to grow significantly over time. n