Providing information at each stage in the transaction process has become essential to enhance the customer experience and build confidence and trust.
Increasingly, treasury and finance professionals are expecting a comparable degree of integration, transparency and transformation in their banking transactions, whether they are buying or selling domestically or cross-border.
The next step in payment efficiency
The quest for payment and collection efficiency is nothing new. Many companies have already achieved a high degree of visibility, control and efficiency in their payments and collection processes. Not only is the use of electronic payment instruments and processes now prevalent, but treasurers and finance managers are successfully introducing automatic reconciliation and account posting, centralised flows through payments/collection factories, and efficient techniques such as payments-on-behalf-of (POBO) and collections-on-behalf-of (COBO). These solutions are allowing companies of all sizes and located in all jurisdictions to streamline and automate their payments and collections regionally or globally, and reduce the number of accounts that they operate.
For many companies operating internationally, however, the final missing element of the transaction process is the foreign exchange (FX) component.
Depending on the industry and business model, most companies will need to pay and/or receive cash in multiple currencies. As a result, they need to maintain accounts in different currencies, and are subject to FX risk. Treasurers can choose to manage FX risk separately in the FX market, but this option is typically only open to treasuries with the necessary systems and resources in place, and/or for currencies in which exposures are sizeable. In some cases, currency specific regulations will make it more difficult to hold centralised current accounts. For smaller currency exposures, and for smaller treasury functions, it is not cost- or risk-effective to manage these exposures separately. Consequently, treasurers are seeking integrated solutions that extend the payment and collection efficiencies they achieve for domestic transactions to cross-border and cross-currency transactions while managing FX risk.
Combining market leading capabilities
For BNP Paribas, as a market leader in both wholesale FX and transaction banking, combining these two capabilities was an obvious step by integrating the Global Markets transactional FX solution, FX+, into the payment and cash management solutions.
According to Wim Grosemans, BNP Paribas Cash Management Competence Centre: “We can now support clients’ international cross-currency payment and collection requirements by converting foreign currency flows automatically. Our cross-currency payment solution is already available to clients in 12 countries in Asia, 6 commercial centres in the Middle East and 14 countries in Europe, covering 132 currencies, with the rest of Europe and North America to follow during the course of the next two years.
By integrating the FX risk management into an outgoing or incoming payment, cross- currency payments reduce the administrative burden and cost of maintaining multiple foreign currency accounts and reduce the FX risks to which the company would otherwise be subject. Clients benefit from transparent, auditable, automated end-to-end transaction processing, from execution through to FX conversion and reconciliation.”
Cross-currency payments in practice
There is considerable demand for BNP Paribas’ cross-currency payments solutions from clients. These have ranged from large multinational companies (MNCs) building regional or global payment factories, which may include POBO, through to small and medium-sized companies.
Wim Grosemans:“When we first launched the BNPP cross-currency payments solution, we expected that the largest MNCs would have less need for integrated cross-currency payment and collection solutions than small or mid-sized companies or those lacking a sophisticated treasury function. We have found, however, that, as treasurers of MNCs are expert in quantifying risk, the cost of managing this in- house, and the value of integration and automation, they have shown considerable interest in the benefits of cross-currency payments. These clients have spanned sectors as diverse as shipping, manufacturing, travel and retail.
While the solution is equally applicable to collections, companies that have significant numbers of both payments and collections in a particular currency are likely to prefer a dedicated currency account to manage that currency. Cross-currency collections are ideally suited to companies that receive payments in a particular currency but have no offsetting liabilities in that currency, receive a small number or value of payments in a particular currency, or receive payments at unpredictable intervals or unexpectedly.”
BNP Paribas Group, first quarter 2020 results
Excellent business drive in the quarter impacted by an unprecedented health crisis
The health crisis has had major repercussions on macroeconomic outlook and produced extreme shocks on the financial markets. After a quarter in line with the 2020 objectives of BNP Paribas, health crisis related developments had several major negative impacts on the first quarter 2020.
Commenting on these results, Chief Executive Officer Jean-Laurent Bonnafé stated:
“In response to the health crisis, the Group’s teams have mobilised around the world to contribute to the functioning of the economy and its financing. Our concerns have been to protect our employees who are fully mobilised to ensure banking services, to quickly implement solutions to support the financing of our corporate, institutional and individual clients, and to launch in all regions where we are present a plan for emergency donations to the hospital sector and organisations committed to assist vulnerable people.
At the end of a quarter supported by an excellent business drive, in line with its 2020 objectives, the results of BNP Paribas for the 1st quarter 2020 were impacted by the harshness of the health crisis. The good resilience of revenues and results despite this shock demonstrates the robustness of the Group’s diversified and integrated model. With all teams at BNP Paribas, whose I want to thank tireless commitment to serving customers and providing support to society, we will continue our efforts to mitigate the impact of the crisis on the economy and prepare for the future.”
Press Release: https://invest.bnpparibas.com/documents/1q20-pr-23455
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BNP Paribas Group, second quarter 2019 results
The business of BNP Paribas was up this quarter in a context where economic growth remained positive in Europe but slowed down, implying expectations of a continued low interest rate environment.
Director and Chief Executive Officer of BNP Paribas, Jean-Laurent Bonnafé:
“BNP Paribas delivered in the first half an increase in net income at 4.4 billion euros. Revenues were up thanks to business growth in the operating divisions. Operating expenses were well contained and benefitted from the transformation plan, generating a positive jaws effect. The common equity Tier 1 ratio rose to 11.9%, illustrating the Group’s solid balance sheet. New digital experiences rolled out for customers are a success and the Group is actively executing its ambitious policy of engagement in society. I would like to thank all the employees of the Group for their dedicated efforts to achieve these good results. ”
BNP Paribas Group, first quarter 2019 results
The business of BNP Paribas was up this quarter for the three operating divisions with in particular a gradual upturn in the business of CIB. Economic growth slowed down in Europe but remained positive. After the crisis in the markets at the end of 2018, the market context remained lackluster at the beginning of the quarter, but improved towards the end of the period.
Director and Chief Executive Officer of BNP Paribas, Jean-Laurent Bonnafé:
“BNP Paribas delivered a good level of result this quarter, at 1.9 billion euros. Revenues were up thanks to business growth in the operating divisions with in particular an upturn in client business at CIB. Operating expenses were well contained and benefitted from cost saving measures, generating a positive jaws effect.”