This major financial institution provides services to oil, gas, nuclear, chemical, and petrochemical, electric power industry, transport, communications, and other industries. As businesses within these sectors expand their global trade relations, they need efficient, cost effective and quick to market payment solutions to keep pace with their business growth.
When one of the bank’s key corporate clients needed to expand into Central Europe, they required a solution for local currency supplier payments. “Speed to market” was a critical factor is choosing the final solution as the client was looking to start processing invoice payments within 5 – 6 weeks of the initial engagement.
Historically speaking, for banks to settle cross-border payments in local currency, a nostro account solution would have been the primary option. However, there are several challenges with opening nostro account e.g., incremental account related cost, additional AML/KYC overheads and the time taken to open such accounts can take from several weeks to months, and thus would not have been the best solution for the bank’s client.
To address this client need, the bank chose to leverage Citi’s flagship crossborder payments solution WorldLink®, enabling them to leverage a centralized, one-account solution with integrated cross-border payments and competitive FX capabilities. In practice, the bank is now able to receive the FX rates upfront from Citi, to confirm with their underlying client, and then leverage their existing USD nostro account and SWIFT Fin connectivity with Citi to settle those payments in local currency into Central European markets.
This was a “quick-to-market” solution leveraging the bank’s existing USD clearing set-up with Citi and provided a cost effective alternative due to the competitive and embedded FX capabilities and the fact that the bank did not need to open/hold a nostro account in the pay-out currencies. As a result, the solution was implemented in time for bank’s corporate client to start processing their cross-border supplier payments
This major financial institution was able to retain the cross-border payment flows from their strategic client without any incremental costs of opening nostro accounts or developing a new bank-to-bank integration. Additionally, they were able to deliver an improved client experience with regards to local currency cross-border payments by ensuring “full value” payments to the beneficiaries. The bank has since increased the number of payout currencies leveraged via this solution, to enable their underlying clients to easily reach a wider payment footprint that is scalable on demand.
This solution has helped the bank achieve the following: