Helping Banks Compete
Is it all about credit? Or can a bank using technology build closer relationships with its corporate clients and increase its market share?
HVB is the third largest private bank in Germany with 5 per cent of the market share, over 26,000 employees, 680 branches, and more than 4 million customers. As a member of UniCredit Group it holds a leading position in the economic hubs of Italy, Germany, Austria, and Central and Eastern Europe with over 140,000 employees, 7,000 branches, and more than 28 million customers.
EADS, a global leader in the aerospace and defence industry mandated HVB in September 2005 to implement the @GlobalTrade Guarantee Platform in connection with its EUR 2.9 billion Letter of Guarantee (L/G) Umbrella Facility which was closed at beginning of May 2006. HVB acts as agent for the thirty-six EADS subsidiaries, and as service provider for the twenty-two banks participating in this transaction.
The Initial Situation within EADS
Prior to implementation of @GlobalTrade Guarantee Platform within EADS, L/G management was handled autonomously by each subsidiary. L/G exposure was spread over forty-seven banks. Fifty-two subsidiaries applied independently for the issuance of L/Gs. Reconciliation of L/G data by the treasury department within the head office was time consuming and not efficient. Treasury monitored the terms and the availability of L/G facilities and the allocation of business to the banks.
EADS’ Key Objectives Were:
- Lock-in competitive terms & conditions for L/Gs for several years
- Harmonization of documentation and saving of L/G commission
- Improvement of transparency and avoidance of discrepancies between banks' and EADS' records
- Sustainment of flexibility for subsidiaries but strong improvement of efficiency and control
- Achievement of a better diversification of business allocation between the banks
- To obtain high acceptance of the new solution by subsidiaries and banks
‘Our main task was to fully satisfy EADS' needs. We wanted to create a truly multi-bank and multi-entity solution taking into account our customer's organizational set up and it’s prevailing internal processes. We even managed to set up additional features, making the processes easier, more transparent, and secure.’
Markus Wohlgeschaffen
Managing Director and Head of Trade and Payment Products at HVB
Bank Benefits from Offering a Multi-bank Platform
Offering a technology solution to clients’ problems presents the following benefits:
- Closer long-term relationships with clients by becoming an integral part of clients’ supply chain
- Additional revenue through increasing the number of transactions as a result of the closer relationship and service that the bank is providing
- Additional transactional or license revenue as system provider and facilitator
- Ability to offer value-added trade services
- Capability to easily offer outsourcing services making use of the system’s integration with clients’ supply chains
GTC’s market research has shown that corporates would prefer to purchase ASP trade service solutions from banks rather than from software vendors for reasons of business continuity and compliance. The risk of business failure or of the customer’s data falling into the wrong hands is considerably less when dealing with a financial institution. Considering that a bank could offer its services as well as the technology makes the entire value proposition very compelling. The main advantage is the true multi-bank functionality and the positioning of the platform from the client’s perspective. The client is at the centre of the platform and can improve communication not only with all its banks but also internally within its organization.
For more information of this subject read GTC’s White Paper: Multi-banking Trend: How innovative banks are using web-based technology to deliver trade services with connectivity to all banks in their clients’ supply chain.
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