Trying to gain an edge on its larger trade-financing competitors, National City has added foreign exchange and other trade services to its online treasury platform, exact4web. National City is angling for a slice of a business dominated by large multinational banks that have foreign offices dotting the globe.
Trade financing is "big business and it's going to get a lot bigger," said George Fowler, senior vice president of international banking at Cleveland-based National City.
The new services include trade execution, real-time quotes, and the ability to review contracts and communicate payment instructions. Over the next few months, the bank will add global balance reporting and commercial card reporting options.
Among the new features is a virtual representative office, or VRO, which provides financing quotes within 24 hours to corporate clients, international correspondent banks and independent exporters.
The platform doesn't perform the actual transaction processing, such as issuing letters of credit. Instead, it facilities the sharing of information and eliminates the need to rely on faxes and phone calls.
The system "allows National City to connect seamlessly with our corporate clients, their overseas distributors, representatives and our foreign correspondent bank network," said Fowler.
"Our clients will use exact4web VRO to win more sales in foreign markets, improve their cash flow and minimize their foreign risk and receivables exposure," he added.
Besides helping clients, exact4web has helped National City bring order to its international banking activities. Following an acquisition spree that caused it to balloon to $100 billion in assets, National City found itself stuck with six international divisions. "It was an ineffective way to do international finance," said Fowler, who joined the bank to help consolidate international activities under one roof.
The bank wanted to build its overseas presence, Fowler said, but "didn't want to go out and replicate the large network of bricks and mortar. We asked ourselves are there ways to use technology to at least close up some of the gaps."
That's when it hit upon the idea of the VRO, which Fowler said is the first of its type deployed by a U.S. bank.
"It was originally conceived as a way to enable us to provide a communications vehicle primarily to foreign correspondent banks," he said. In emerging markets such as Brazil or Turkey, for example, a correspondent bank could query National City electronically about a financing deal. "Rather than picking up the telephone and calling a local office of one of our competitors," said Fowler.
The concept has grown to include a variety of transactions, including financing export sales and trades, letters of credit confirmations, discounting, refinancings, clean advances, pre-export finance and selling risk participation in international credits.
The system is largely proprietary, with National City building about 80 percent of it. Because it's Web-based, clients don't need to install or upgrade their computing infrastructure; all they need is a 128-bit encrypted browser.
It has grown organically, Fowler said. "Every time somebody got a look at it they would come up with another idea on how to use it." By simply adding additional screens, the bank was able to expand it across its client base and services.
There's still no substitute for a physical presence, Fowler said. "I am not going to say VRO replaces a local rep office; obviously it doesn't, but it gives us a little bit more visibility overseas. It also makes life a lot easier for the export credit manager."