6 3 HOW SHOULD GLOBAL TRANSACTION BANKS ADAPT USING DIGITALIZATION AS AN OPPORTUNITY TO MAXIMISE KEY STRENGTHS Of course banks must respond by developing and establishing an adapted role for a changing market One key decider for corporates will be trust As Internet start ups are launched with little or no regulatory oversight banks must work to communicate their reliability and trustworthiness to corporates Operating in currently perhaps the most heavily regulated industry on the planet banks are under constant scrutiny As a result they are increasingly robust and can provide unmatched levels of transparency which is a positive they can leverage This factor will increase in importance for corporates choosing between a new market entrant and an established well regulated bank for similar services in coming years What is more the same forces behind disintermediation can be turned to banks advantage Today s multinational corporates look to an ever greater number of countries for expansion while it is no longer feasible for modern global banks to establish a physical presence in each location that is relevant to their client roster The increased efficiencies in building global connections offered by digitalization can however help banks retain a global presence allowing them to follow their clients without maintaining representative offices in every jurisdiction Not only does this create a level of proximity with far flung clients despite the physical distance involved mobile and internet banking services also allow banks to increase the frequency of contact with clients by drastically simplifying the processes involved Regular notifications e mails and instant messages will drastically reduce the need for paper and phone based communication with clients And even if these global connections grow outside of banks control they will surely retain the last mile of financial services the bit that actually touches the customer through customers accounts This will inevitably lead to banks developing new account management services for their customers Given this the more enlightened approach is to leverage digitalization in order to create convenient and open channels for customers to access their services across the world in a straightforward and standardised manner Indeed UniCredit s eBanking App was an early adopter in this respect going live for corporates over four years ago granting them access to their account information from any device anywhere in the world More holistic account management With UniCredit s Virtual Accounts a newer more holistic account management offering has arrived Virtual Accounts take advantage of ISO 20022 a uniform digital XML format for payment initiation status messages and reporting This standardised format enables corporates to rationalise their account structures through the creation of virtual IBANs from which to pay and collect For instance payroll payments in different countries can be managed from a central location Here salaries are paid as normal by HR departments using unique virtual account numbers although in reality each payment is sent out from a single physical account These accounts can be opened and closed immediately through web portals without bank interference which reduces the administrative burden on corporates Such a solution puts corporates in control allowing the standardisation of treasury and cash management structures for all subsidiaries and across borders Reducing cost inefficiency and risk In fact centralising treasury functions in this way brings with it a number of add on benefits Alongside greater transparency and control come simpler reporting and compliance procedures thanks to the automated nature of reconciliations Workflows can then be significantly accelerated indeed one of the most attractive benefits is the reduction in cost inefficiency and risk Automation leads to fewer demands on individual treasury staff members and less chance of human error Furthermore Virtual Accounts allow corporates to make the most of interest returns from each account leaving more room for the strategic decisions of treasurers

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