The Growth of Asian Players in Transaction Banking

Transaction Banking

Corporates in the 10 key markets surveyed in Asia Pacific still use the ‘Big Three’ banks – which Colquhoun identified as Citi, HSBC and Standard Chartered Bank – for about 53% of their transaction banking. The trio’s share has been in steady decline, however, and international banks including JP Morgan, Deutsche Bank and ANZ have taken an increasing percentage of primary relationships, reaching 22%. Asian banks’ share has remained steady at about 25%.

Asian banks are taking a rapidly increasing share of secondary relationships, however, and have grown their share from 20-25% to just under 30%. Colquhoun said that greater competition, more focus on pricing, and increased concern about risk management have led to the shift. While corporates had reduced their number of secondary relationships around the time of the 2008 financial crisis, they are also shifting back to multi-banking as conditions improve.

Additionally, the wallet share of the Big Three declined from 75% to 60% between 2010 and 2013, while international banks increased their share and Asian banks stayed about flat.

Corporates’ customer satisfaction increased in seven of nine categories between 2010 and 2014; the exceptions being in liquidity management and short-term debt. As the balance of power has shifted between the bank and the customer has shifted, however, Colquhoun said “the customer is more in the box seat to call the shots.”

Even so, the likelihood of corporates changing banks for transaction banking has declined from 73% to 50%. Corporates that are contemplating a change are seeking more value for money and looking for added value in the relationship.

Trade Finance

In trade finance, the Big Three have 46% of primary trade relationships while Asian banks have about 27% and international banks about 25%. Shares are similar for secondary relationships, with the Big Three having 41% and Asian banks at just under 30 percent.

However, Colquhoun said there is not a huge level of satisfaction. As a result, about 28% of corporates report that ‘churn’ is highly probable, above the level for transaction banking, and more than half of Asian corporates say that a change is definite or possible. The key reasons for change include desires for more knowledgeable account officers, debt capabilities and a superior electronic platform in trade services.

More than 70% of the corporates say that China is a key export market, followed by the US, India, Europe and Australia. The liberalisation of China’s Renminbi (RMB) is a huge impetus for trade growth, Colquhoun said, and engagement with China is also driving the pick-up in the RMB.

Foreign Exchange

Based on the results of a new biannual survey that tracks foreign exchange (FX) at smaller companies in Hong Kong, Malaysia, the Philippines and Singapore, the wallet share of primary banks for FX transactions is declining in all four markets. Shares have dropped from 35% to 32% in Malaysia, for example, and from 22% to 20% in Singapore. Specialists such as American Express and Western Union are growing, particularly in markets such as Singapore.

Wealth Management

Along with interviewing chief financial officers (CFOs) and corporate treasurers about their companies, East & Partners took advantage of the discussion to ask about these individuals’ personal wealth as well. Their average investible wealth outside of their home increased from about US$4.2m in 2013 to US$5m in 2014, an increase of 17%. Nearly 80% are optimistic or very optimistic about their personal wealth.

While property is still the largest investment of the region’s senior financial professionals, equities are a growing percentage of their assets, while fixed income is less popular. One in three have personal businesses or business investments outside their corporate role.

The Growth of Asian Banks

While large multinational banks still have a large share in transaction banking and trade and trade, the capabilities of Asian banks are growing and they are becoming more competitive. With satisfaction levels not as high as they could be and with multi-banking on the rise in some markets, banks may need to work even harder to maintain or grow their market shares.


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