A Cohesive Customer Strategy to Meet Diverse Transaction Banking Needs

by Isaac Thomas, Head of Transaction Banking, Abu Dhabi Commercial Bank

It has been my distinct privilege to be part of the transaction banking journey so far in Abu Dhabi Commercial Bank (ADCB). We started off as a small team six or seven years ago but we are now one of the largest product based businesses (over 100 staff representing 20 nationalities) in the bank, contributing about 30% of the wholesale banking business. Our comprehensive transaction banking services support all client segments including small and medium-sized enterprises, large corporate and institutional clients, government entities and multinational clients. I strongly believe that our continuing success in this regard has been due to our sophisticated product suite, a unique customer service proposition, a strong in-house talent pool, and a very loyal client base.

A one country bank

ADCB pursues a largely domestic strategy, based on the principle of a ‘one country bank’. The UAE has a dense network of international connections, however, and our customers include both UAE and international organisations doing business here. We support our UAE customers’ international aspirations by leveraging the branch network of our strategic alliance partners such as Bank of America Merrill Lynch, Banco Santander and others, and by providing introductions with other customers through our representative offices in London and Singapore.

Solutions, services and advisory

A detailed need-based strategy is used to provide customised solutions for our client’s needs. However, our focus is on providing the solutions, customer services and advisory capabilities that will be a win-win across the entire value chain of our clients We are doing this in a variety of ways. One is to ensure that our capabilities are more integrated with our client’s infrastructure in a seamless manner. Another is to work more closely with our customers to understand their current and future needs, and establish deeper relationships that reflect and support these ambitions.

Amongst our small and medium-sized customers, the priority during these uncertain times is business survival, so techniques to support a sustainable supply chain and provide liquidity are crucial, such as trade facilities and effective receivables management. While many companies operate on an open account basis, there is also a growing interest in trade finance and supply chain solutions.

We are also driving value in new ways amongst larger corporations, working with CFOs and group treasurers to identify new sources of liquidity and optimise the use of finance. While transaction banking is often considered to be a ‘reward’ for providing financing services to these corporations, the reality is that companies have plenty of choices in their transaction banking partner, so maintaining relationships, and providing the depth and quality of solutions and advisory services that they require is essential. In addition, these corporations rely on their banks to support their internal processes, such as providing data to identify incoming flows and therefore enable automated reconciliation.

Government entities are also an important client sector for the bank, as we support them through a key transitional period. Previously, the government provided payment budgets that allowed these entities reasonable latitude in the way that they operated. Today, these budgets are now far tighter and government departments and agencies receive ‘just in time’ financing from the Department of Finance on approved expenditure. Cash planning and forecasting has become increasingly important, therefore, as well as transparency and acceleration of receivables to optimise working capital.

Looking at our financial institution business, there is global pressure on correspondent banking, and banks worldwide are seeking to replace transactional relationships with deeper, reciprocal arrangements with key partners to create a cohesive network for the cross-border flow of transactions. In this environment, we are continuing to build strategic alliances to provide customers with smooth, consistent transaction banking services.

Real estate escrow services is an area in which ADCB has a unique value proposition with a range of specialist solutions and depth of expertise. This sector is facing a challenging period of regulatory change, but we are able to provide proactive support given our relationship with regulators and co-agents to provide services.

Financial and operational efficiency

In an environment in which customers across all segments face challenges and complexity, liquidity management is a key objective. We offer a range of solutions to meet each customer’s unique requirements; for example, cash sweeping based on budget-based limits is a growing demand across a wide range of organisations, not just government entities. Similarly, our escrow business also continues to be attractive and a key differentiator.

A major priority for many of our customers is to increase operational efficiency and control in order to reduce costs, and increase transparency and confidence. To support these objectives, we focus on connecting our systems with customers’ internal ERP and finance systems for the straight-through processing of transactional and informational flows, and sharing best practices in cash and treasury management. Historically, there has been a perception that local and regional banks have not focused on customer service, but the opposite is now true. In addition to our advisory and integration services, for example, we help customers to streamline processes by minimising errors and enhancing the quality and richness of data to facilitate automation and improved decision-making. These services are having a marked impact on customer behaviour and efficiency: for example, while Abu Dhabi has historically lagged behind Dubai in electronic payments, this is no longer the case, with more than 70% of payments now made electronically.

Technology plays a key role in enabling us to support customer efficiency, automation and control. We have based our technology proposition on a combination of in-house development and third party partnerships to create a balanced strategy that reflects the strengths of ADCB and our partners. As part of this partnership approach, we continue to watch developments in the fintech space with interest to identify the solutions that most resonate with our customers.[[[PAGE]]]

Strategy and delivery

ADCB has a strong, demonstrable commitment to transaction banking as a key pillar of a sustainable wholesale banking offering. As our business has evolved and matured, we have developed the depth of solutions, expertise and services that customers across all segments require to support their business objectives, and these services are being received enthusiastically by our customers. Rather than pursuing a hit and miss strategy in building our transaction banking infrastructure and solutions, which has characterised some banks’ emerging offerings in recent years, ADCB has successfully pursued a disciplined, structured and well-financed strategy to become the transaction banking partner of choice for both customers headquartered in the UAE and foreign corporations and institutions doing business in the region.