Transaction Banking

Financial Inclusion in Trade Roadmap Launched

The World Trade Board launched the ‘Financial Inclusion in Trade’ Roadmap, focusing on fair and equitable access to trade finance to empower MSMEs and SMEs, and calling for industry feedback and collaboration. Please submit feedback to [email protected].

The Financial Inclusion in Trade Roadmap identifies five key areas where coordinated action can make a significant impact. These include digital infrastructure, legal/regulatory infrastructure, data infrastructure, technical assistance and new funding sources. Crucially, the Roadmap aims to accelerate the pace of change by providing a holistic framework for public and private sector collaboration.

BAFT is one of the key contributors in the development of this roadmap, together with other notable industry partners, namely the ICC UK, IFC, FCI, and ITFA.

BAFT Launches Foreign Exchange Certificate

WASHINGTON — BAFT, the leading global financial services association for international transaction banking, today announced the launch of its new Certificate in Foreign Exchange (CFX), which includes a series of eight courses that offer an overview of a financial institution’s foreign exchange department and services. The certificate is tailored for junior to intermediate level transaction banking professionals, as well as those who have already completed the Certificate in Introductory Transaction Banking.

This course will provide an understanding of the foreign exchange market, what foreign exchange products are most commonly used by financial institutions, and a working knowledge of foreign exchange as it pertains to a client’s business, including global differences and risk and compliance concerns. Participants will also review the importance of complying with local country regulations that restrict payments to certain parties in a transaction.

“As a finance professional with more than 20 years of progressive responsibilities in both banking and corporate treasuries, I know that foreign exchange is a complex business,” said Deepa Sinha, vice president of payments and financial crime, BAFT. “This comprehensive new certification will provide other transaction banking professionals with the skills and expertise necessary to master this important area of industry focus.”

The courses will be led by Matt Porio, a recognized foreign exchange expert who has worked with top international financial institutions within the risk management, investment management and financial products areas. Porio is an adjunct professor of finance at the University of Connecticut and Sacred Heart University in Fairfield, Conn.

The certificate courses will be available through BAFT’s Learning Management System and take about 15 hours of study to complete.

Click here for more information on the Certificate in Foreign Exchange.

About BAFT
BAFT, the leading global financial services association for international transaction banking, helps bridge solutions across financial institutions, service providers and the regulatory community that promote sound financial practices enabling innovation, efficiency, and commercial growth. BAFT engages in a wide range of topics affecting transaction banking, including trade finance, payments, and compliance.

SBA and BAFT Announce Strategic Collaboration to Support Small Business Exporters

The agreement formalizes an existing relationship with BAFT that supports small business exporters by reducing barriers to accessing capital

WASHINGTON – Today, Administrator Isabella Casillas Guzman, head of the U.S. Small Business Administration (SBA) and the voice for America’s 33 million small businesses in President Biden’s Cabinet, announced the signing of the Strategic Alliance Memorandum (SAM) with BAFT (Bankers Association for Finance and Trade,) the leading global financial services association for international transaction banking, which will formalize the SBA’s existing relationship with the association. BAFT and SBA strive to tackle challenges both lenders and small businesses face when seeking the trade financing that is essential to international trade. Together, the SBA and BAFT will work to educate small businesses and their lenders on the export financing solutions available in the marketplace.

“SBA’s new agreement with BAFT recognizes the impact and ingenuity of our small business exporters and the important role our lending partners play in funding their growth,” said Administrator Guzman. “Our joint efforts to strengthen resources to BAFT members, and increase the number of lenders offering SBA international trade products, will expand access to capital and help deliver on the Biden-Harris Administration’s commitment to create opportunities for small businesses and strengthen our economy for all of us.”

“Financing is an important element in helping small businesses expand their customer base internationally and has been a persistent challenge,” said Tod Burwell, President and CEO of BAFT. “SBA is helping to ease that challenge, and with the leverage of the global BAFT network, we hope to collectively make a positive difference.”

Through its Office of International Trade, the SBA works to support small and midsized exporters with a goal of increasing both the number of businesses exporting and the dollar value of those exports. This work is done across the Agency by offering access to education and technical assistance, access to capital, and trade policy to support market access for small businesses.

BAFT serves as a worldwide forum for analysis, discussion, and advocacy in international financial services and provides support to members that are active in trade finance, supply chain finance, credit insurance, and export credits. Specifically, BAFT is the voice of the global trade finance community. In addition to tracking strategic global trade policy developments, BAFT provides practical guidance papers and tools including standardized legal documentation as well as a forum for discussion on topical trade finance challenges.

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About the U.S. Small Business Administration  

The U.S. Small Business Administration helps power the American dream of business ownership. As the only go-to resource and voice for small businesses backed by the strength of the federal government, the SBA empowers entrepreneurs and small business owners with the resources and support they need to start, grow, expand their businesses, or recover from a declared disaster. It delivers services through an extensive network of SBA field offices and partnerships with public and private organizations. To learn more, visit www.sba.gov. 

About the Bankers Association for Finance and Trade

BAFT is the leading international financial services association whose membership includes large global and regional banks, service providers, and fintech companies headquartered around the world. BAFT provides advocacy, thought leadership, education, and a global forum for its members in transaction banking, including international trade finance and payments. For over 100 years, BAFT has expanded markets, shaped policy, developed business solutions, and preserved the safety and soundness of the global financial system. Learn more at www.baft.org.

Premier of Montserrat to Attend Two US-Based Meetings

Montserrat Premier and Members of the Caribbean Association of Banks to Discuss Banking on Visit to the U.S. at the 2022 BAFT Global Annual Meeting.

MONTSERRAT/WASHINGTON – The Premier of Montserrat, Hon. Joseph E Farrell will be on overseas duty from April 23 to May 5, 2022 as he will be attending meetings in Miami and Washington, DC.

Premier Farrell, whose portfolio includes Tourism, will attend the Seatrade Cruise Global Conference in Miami Beach, Florida from Monday April 25 to Thursday April 28, 2022. His delegation will include the Director of Tourism, Rosetta West-Gerald; Project Manager at the Tourism Division, Charlesworth Phillip and Private Sector Representative, Tour Operator, Roselyn Cassell-Sealey.

In addition to their attendance at the conference which includes workshops, the Montserrat delegation will also attend meetings with several cruise liners and will have an opportunity to display Montserrat branded collateral during the Expo which runs from April 26 to 28. The Montserrat Port Development project will also be highlighted during the week long activities.

Following this meeting, the Premier & Minister of Finance will travel to Washington, DC for the May 1-4, 2022 BAFT Global Annual Meeting.

The meeting will provide an opportunity for the Caribbean Association of Banks (CAB) Member Banks to network with North American banks at the largest correspondent banking event in the United States where industry professionals will be able to network, conduct bilateral meetings, and engage in topical discussions and sessions on the global transaction banking industry.

There will also be a Caribbean Banking Roundtable hosted on May 2, 2022 where BAFT and CAB will convene a group of Caribbean and U.S. Banks along with respective governments together in one room to discuss challenges in correspondent banking for the Caribbean community and opportunities to engage with North American banks.

BAFT Media Contact:
Blair Bernstein
Director, Public Relations
[email protected]
+1 (202) 663-5468

To Advance Sustainable Trade Finance, Agreeing on a Common Definition is Paramount

In this latest op-ed, Diana Rodriguez, Vice President of International Policy at BAFT, talks about ESG, sustainable trade finance, and BAFT’s role in sustainable transaction banking.

Via Trade Finance Global

Market Standard Definitions, Methodologies, and Measurements

Sustainability and ESG have become public and private sector priorities, with consumers and corporates alike increasingly focusing on sustainability practices when making financial decisions, and governments considering a wide variety of policy initiatives to drive behavior.

As nations work to meet the UN Sustainable Development Goals (SDGs), there is an important role for the transaction banking industry to help achieve them.

Trade finance has a crucial role to play in supporting corporate efforts to position sustainability at the core of their business strategies, and throughout their supply chains.

For several years, banks have been offering ESG-linked products including green bonds and sustainable loans, and we see informal markets developing for the trading of carbon credits.

However, in order for sustainability-linked trade finance to gain traction and ubiquity, there is general agreement that market standard definitions, methodologies, and measurements are needed.

Towards a Common Standards Framework

The difficulty of defining workable sustainability standards for international trade should not be underestimated.

The volume of global trade transactions that cross multiple jurisdictions to form part of complex supply chains presents an inherent challenge to defining what constitutes sustainable trade finance – a market that accounts for more than a third of global trade.

Additionally, institutions are at different stages of their own journey toward sustainability, and have different priorities based on their geographic footprint and client base.

This complexity heightens the importance for the trade finance industry to coalesce around a common standard that reconciles the divergent banking landscapes and provides rigorous yet implementable standards.

Policymakers in certain regions are outlining public policy frameworks and taxonomies to support policy positions for companies operating within their jurisdictions.

In some cases, private enterprise is well ahead of the policy requirements, while in others they are being influenced by policy requirements.

An appropriate balance between the public and private sectors will shape policy in a way that incentivizes behavior without creating unintended consequences with negative economic implications.

Industry advocates must strive to ensure that public policy reflects some consistency across jurisdictions, so as not to create undue advantages or burdens based on geography.

BAFT’s Role in Sustainable Transaction Banking

In the past year, we have seen the market become more collaborative, with institutions working together through industry working groups and consortia to find innovative solutions to address sustainability in transaction banking.

Last year, BAFT launched a Sustainability Working Group to address the needs for standards, tools, education, and policy advocacy on behalf of the industry.

To address these challenges, the working group will be developing resources, training, and best practice standards to promote sustainability across the trade finance and global payments industry.

The working group is focusing its efforts on five work streams:

Developing standards for sustainable transaction banking
Principles on how to apply net zero to transaction banking
Guidance on sustainability reporting
Advocacy and education on sustainable transaction banking
Defining an industry approach for the full spectrum of ESG – beyond the “E”

It is the objective of this working group to advance the interests of the transaction banking industry, while complementing and leveraging the work of other bodies.

To that end, the BAFT Working Group welcomed the ICC Standards for Sustainable Trade and Sustainable Trade Finance positioning paper published in November 2021.

The roadmap is a positive development and moves the industry closer to agreement on a common standard that the industry can reference.

An Equal-Weighted ESG

As a common standard begins to take shape, much work remains to ensure broad industry support and wide adoption.

The first consideration is to ensure that equal weight is given to all elements of ESG. While social and governance factors are generally taken into account for the calculation of an ESG rating, most of the taxonomies are still primarily focused on the “E” for environment. The true impact of trade finance extends to the social and governance elements of ESG, and should be effectively represented in the emerging standard.

Second, recognizing the transition needed to make business more sustainable, such standards must not only recognize positive activity, but also guide those involved towards what best practices, or even minimum acceptable standards. While specific goods may not in themselves be sustainable, they can often be used for purposes that lead to sustainable ends.

Lastly, underpinning the development of any standard, care must be taken to be inclusive of the global nature of the business. For a global sustainability standard to take hold, geographically diverse stakeholders must be an integral part of the development and adoption.

The sooner the industry can stand behind a shared understanding and common vocabulary of what is considered sustainable trade, the more effectively the industry can dispense with concerns over ESG-washing and realize the potential of sustainable trade finance.

The Banker: Attracting New Talent in Transaction Banking

The war for talent has never been greater, as many people have reassessed their lives and work during the Covid-19 pandemic. Transaction banking’s digital transformation, as well as its role in supporting the real economy, may give the industry an edge in attracting and retaining staff.

Via The Banker

The changing image of transaction banking – often seen as less glamorous and exciting than investment banking – is helping the industry appeal to new talent, according to panelists at industry association BAFT’s Virtual Europe Bank to Bank Forum.

Speaking on a panel entitled ‘The way we work post-Covid-19: attracting and retaining talent in transaction banking’, participants highlighted how the industry is at the forefront of innovation, making it a complex and stimulating environment. Additionally, transaction banking’s role in supporting economic growth – through cross-border payments and trade finance – is proving attractive to those wanting to make a positive contribution to wider society.

“While transaction banking is the foundation of the core product offering, it is also at the heart of the digital disruption and close to the real economy,” said Maria Chiara Manzoni, head of corporate and investment banking (CIB) people and culture strategic partner, CIB process and operational excellence at UniCredit. “As an industry, we need to communicate even more effectively to illustrate how diverse and dynamic transaction banking is.”

“It’s clearly an exciting time for transaction banking, which presents many opportunities for transformation,” added Emma Dunlop, vice-president and global head of human resources, Royal Bank of Canada (RBC) Investor and Treasury Services. She believes that demonstrating how it can link to the purpose of supporting the real economy, ESG or international trade could be a real differentiator for transaction banking. “Employees are seeking opportunities to align their personal purpose and values to an organization’s or to the work that they do. This is an opportunity for transaction banking leaders to promote and harness that thinking,” she said.

Both agreed that digital skills are essential when recruiting in transaction banking. “[For example] how artificial intelligence is changing how we process information and data – this is crucial for our people to understand. [We are looking for] more hybrid profiles, with experience in banking, fintechs and digital platforms, as well as business acumen, digital literacy and high-end skills,” said Manzoni.

The bank also looks for a vast array of soft and hard skills, she added. “For a big transformation, there are some personal characteristics that UniCredit looks for in our talent, such as accountability and constructive criticism. In one word, we’re looking for courage – the courage to take some risks but also flag when we’re taking the wrong turn,” she said.

The Human Side

“Data and digital literacy have been a huge focus for our future skills agenda, as we look to accelerate digitization of manual processes,” said Dunlop. “However, as mentioned, digital skills are only one aspect and it can’t replace some of those customer-facing human-centric skills that are fundamental to transaction banking, which is a very relationship-based business. We want resilience, as well as problem solving, critical thinking, collaboration, communication, and financial and commercial acumen.”

Dunlop reports that RBC recruits from different sectors, such as technology firms and fintech start-ups, not solely from other banks. “There many different players that banks are working with, which is far more common now than in the past. We need to look at that as an opportunity for internal talent to collaborate and learn from other players in the market,” she said, adding that this helps with retention efforts. While RBC is focused on talent development and internal mobility, it also looks in the market or to partnerships to supplement staff skills sets.

During the pandemic, the number of fintech collaborations with transaction banks have increased, according to Tarun Khosla, head of trade and working capital loans, Europe, the Middle East and Africa at Citi. In trade finance, for example, transaction banks are working closely with fintechs to develop digital solutions – “basically co-creating solutions”. He believes that this engagement is also resulting in the movement of talent between fintechs and transaction banks and vice versa. “When we are working on a holistic solution design, the traditional boundaries melt away,” he added.

Another conference panel, ‘Fintech venture experience: sitting on the same side of the table’, showcased two successful bank-fintech partnerships: Barclays and SparkChange, which provides specialist carbon investment products; and Société Générale (SocGen) and Treezor, a banking-as-a-service platform.

There are numerous reasons for a bank to partner with a fintech, such as providing specialist capabilities that the bank doesn’t have internally, as in Barclays’s case, or enabling a faster time to market, as in SocGen’s case.

From the fintech’s perspective, a bank can help validate its business or product proposal, provide investment (SocGen acquired Treezor in 2019; Barclays led SparkChange’s $4.5m funding round in late 2020), as well as act as a dedicated sales and distribution partner, an advocate and a marketing machine.

But fintechs still have a difficult time accessing the right people within the bank. That is why SparkChange joined the Barclays accelerator program. “We partnered with Barclays [three years ago] because we heard good things about its accelerator program and found them to be very accessible and progressive in their views towards working with start-ups,” said Joff Hamilton-Dick, founder of SparkChange.

Onboarding Issues

Additionally, the onboarding process remains onerous. “We had to overcome some pain points when we [started working] with SocGen in terms of compliance, security, best practice, processes, etc.,” said Éric Lassus, co-founder, CEO, Treezor. But once it is completed, this can be a competitive advantage for the fintech, especially when dealing with corporates, according to Jean-François Mazure, head of cash clearing services at SocGen.

One of the biggest challenges is aligning the culture of a large incumbent with a start-up. In both panel examples, this was solved by a degree of independence for the fintech. Treezor, for example, remains a standalone project with its own roadmap and budget, and it is free to follow its strategic objectives, according to Lassus.

SparkChange has had “zero interference from a strategic perspective” from Barclays, according to Hamilton-Dick. “But, as with any good investor, Barclays is not afraid to challenge our decision-making from time to time, which makes it a very welcome and much needed sounding board to our strategic operations,” he said.

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