Societe Generale is set to introduce a worldwide core banking platform in mid-2016. Should Citi be worried?
The pursuit of a common banking platform is central to this era of transaction banking.
Banks as diverse in their customer base and strategies as Sweden’s Nordea and France’s Societe Generale have initiatives underway to provide a common platform that allows multinationals to enjoy a consistent and flexible transaction banking service in all locations.
While it may seem strange that this isn’t available already, the phenomenon of incompatible platforms in different regions is easy to explain.
Business in growth regions in Asia and Africa has grown quickly; a decision for a costly global systems upgrade necessarily takes years, while implementation can be disruptive and time consuming.
But the advantages of a common global transaction platform are palpable. Citibank invested heavily in launching a global banking platform under the rubric “Project Rainbow.”
Under the project it is retiring local applications and putting a new central core banking system in place. Citi’s sweep on Wednesday at the Global Finance Transaction Processing Awards during Sibos in Singapore, suggests that the initiative is gaining traction.
Christian Behaghel, SocGen’s director of global transaction banking, sees significant growth prospects opening for the French bank when its common platform launches at the middle of next year.
A French multinational client, in one example, looking to expand its Asean operations over the next few years into, say Thailand, Malaysia and possibly Myanmar will be able to access basic banking services such as trade finance and cash management without being forced into a different approach for each new market.
“It is always easier to innovate starting from a simple approach than a complex one,” says Behaghel. He means that the common technical base will provide flexibility to build individual products for customers that can be transferred across borders.
Improvements in one market can be more readily transferred to another.
Another avenue of growth under a worldwide core banking system will be the ability to offer cross-border services in Africa to Chinese companies expanding on that continent.
SocGen is the third largest foreign pan-African bank. Many Chinese corporates now have operations in more than one African country. “A treasurer sitting in Shanghai will be able to transfer funds to subsidiaries in Africa directly across the integrated platform,” Behaghel explains.
He notes that SocGen, which has a substantial presence in China, has ensured the availability of Mandarin-speakers on transaction services teams in Africa to facilitate its growing business there.