COMPETITION INTENSIFIES IN GLOBAL MARKET FOR CORPORATE BANKING

Global Finance, Jan 2005

Bank CEOs and senior executives from among the winners of Global Finance's Best and Safest Banks awards offer their advice to corporate finance directors on selecting the ideal banking partner.

Top bank executives around the globe say 2005 will remain another tough year for trying to win new corporate customers and to hold on to the ones they already have. The bankers will have to offer new services faster and for less money than ever before because the corporate finance directors remain in the driver's seat.

Customer service is the name of the game, according to leading bankers among the financial institutions named by Global Finance as Best Banks and Safest Banks in 2004. "Corporate customers no longer accept that the service level in an emerging market can be lower, and they demand the same service as in the more-mature markets," says Steven van Groningen, president and CEO of Raiffeisen Bank Romania.

Finance directors should look for a single bank that can handle all of their financial needs, he says. In an emerging market, there are so many opportunities and changes occurring that it's best to keep tight control over your money, he says. The fewer banks you use, the better, he says. "In a still largely cashbased society in Romania, with relatively high interest rates, we provide, via our nationwide real-time network, cash-management solutions that facilitate the transition from cash to cashless instruments over time," van Groningen says.

When selecting a bank, it is essential that finance directors consider the long-term reliability and commitment of the candidate, says Sir John Bond, chairman of HSBC. "It is important that a bank is financially strong and managerially secure-likely to be an acquirer and not a target for acquisition in the ongoing global consolidation game," he says. A strong balsance sheet and a long track record of sound management are also important, but they do not guarantee that a bank has an embedded culture of commitment, Sir John says. "The bank should be able to demonstrate the will to stay the course, both in geographic markets and sector or product lines, and should not have a history of unexpectedly ending relationships or withdrawing from business lines," he adds.

Reducing the number of banks that a company has to deal with can be a major factor in driving down operational costs and increasing efficiency, Sir John believes. It also reduces the number of proprietary links that have to be built to automate financial processes. Increasingly, the bank's larger clients want a single point of contact across multiple functions and geographies.

"Selecting the right bank to work with is a decision of the utmost importance that deserves more attention than it usually receives," says Manuel Medina-Mora, CEO of Banamex. There are significant differences in the products, as well as prices and customer service offered by various banks, he says. Medina-Mora, who was named chairman and CEO of Citigroup Latin America and Mexico in March 2004, while remaining CEO of Banamex, says it is wiser to choose a financial group, rather than a bank, in order to gain access to a comprehensive range of financial services.

"Banamex products and services have evolved in accordance to the changing needs of our customers, sometimes following our clients' demand, and sometimes pulling them by offering innovative solutions to their financial needs," he says.

David Conner, CEO of OCBC Bank, based in Singapore, says two important factors to consider in selecting a financial partner are integrity and quality of products and services. "These two factors will reveal the extent to which a bank is committed to building enduring relationships with its customers," he says. A bank that is consistently trusted by its customers is one that will distinguish itself from the competition, he adds.

"We are always on the look-out for opportunities to improve our customers' experience with us," Conner says. "In 2004, we were the first bank in Singapore to introduce a Chinese-language version of our corporate Internet banking platform." The bank CEO says this initiative was in response to customers' feedback and studies showing that older Chinese-speaking clients were not comfortable with online banking services because of the language barrier.

David Dulal-Whiteway, deputy managing director at Republic Bank, based in Trinidad and Tobago, says corporate customers have become more demanding because of their awareness of the choices available to them and the speed with which business is now conducted. "Banking is all about building long-term, win-win relationships," he says. "Finance directors should build this relationship with a bank that understands their company's vision and is willing to support them in achieving this vision."

Jean Meyer, chairman of Banque Générale du Luxembourg, says, "In order to retain our customers and to attract new ones, we have no choice other than to be better than our competitors." Meyer says his bank has been able to considerably enrich its product line since its integration into the Fortis Group four years ago. "We consider technology and innovation as allies in our striving for superior customer satisfaction," he says. In addition to its focus on quality, Banque Générale du Luxembourg considers competitive prices as a duty to its customers, Meyer says. When selecting a bank, a CFO should first consider the specific needs of his company and, only as a second step, opt for the bank with the best reputation, he says.