Digital natives: staying agile in the digital world
Hubert J.P. Jolly, Global Head of Financing and Channels, Global Transactions Services, Bank of America Merrill Lynch, tells FX-MM Editor Peter Garnham how digitisation is changing the face of transaction banking and driving innovation in the sector…
Jolly, who has 20 years of experience in transaction services, joined Bank of America Merrill Lynch in June this year.
“As I have engaged with clients in this industry, it has become clear that Bank of America Merrill Lynch has an excellent reputation as far as the quality of its people, products and services,” he says.
“So, when they asked me to look after global financing and channels, I jumped at the chance.”
One part of that remit is overseeing credit products in global transactions services, which include commercial cards, trade finance and supply chain finance. These are products that have gained a lot of prominence in the wake of the financial crisis, according to Jolly, as companies became more focused on managing their working capital.
Many large corporates, which have just-in-time supply chain models with their key suppliers, have recognised that their whole supply chain model is vulnerable if one of those suppliers lacks the availability of credit and is forced out of business, he says.
“Since the financial crisis some large corporates – and they don’t particularly publicise it – have had to go out and inject liquidity into their suppliers,” says Jolly. “A lot of corporate clients are looking at supply chain finance and purchasing cards as a way to provide financing to their own suppliers.”
This means that potentially vulnerable suppliers of Bank of America Merrill Lynch’s clients can benefit from their customer’s credit rating. Safe in the knowledge that the bank’s clients are going to pay their suppliers in, say, 90 days, the bank can, therefore, extend credit to the supplier. “The benefit for the supplier is that they get paid faster and their cost of credit will typically be lower,” says Jolly.
“Now, as interest rates are starting to move up, at least in the US, corporate clients are looking more and more at their own working capital and they want to hold on to cash for longer. These kinds of credit products are going to be critical to our clients because they are going to try and preserve as much liquidity as possible. Supply chain financing or purchasing cards allow clients to extend their payments to their suppliers and to extend their cash cycle.”