Powering Real-Time Business As the consumerisation of commerce drives customer demand for faster and more efficient ways of doing business, Treasurers need to adopt new digital tools such as real-time payments to support the business.

BUSINESS INNOVATION SERIES

Powerful market drivers are transforming the business landscape. Digitisation is enabling businesses to connect to suppliers and clients in new and more direct ways. At the same time, customers are demanding more of a real-time experience, challenging firms to come up with faster and more efficient ways of delivering products and services to them, not just in the consumer space but increasingly in business to business transactions.

This challenge is disrupting traditional business models. While real-time commerce has been widely used in the business-to-consumer (B2C) space for some time, similar business models and channels are beginning to be applied to the business-to-business (B2B) world, especially in relation to small and medium enterprises that have traditionally been serviced via distributors. In the same way consumers can bypass traditional bricks and mortar retailers to buy directly online, manufacturers see an opportunity to bypass third-party distributors and instead connect directly with their end buyers. This not only enables them to shorten the supply chain and remove a layer of costs, but also to create a direct relationship with their end customers.

Business Innovation Series

Businesses can capture new opportunities and markets, offering clients additional services, opening up new distribution channels, and executing transactions fast and efficiently.

This has the potential to create greater brand loyalty and leverage data about these customers to package more products and services together. Take the case of a machine manufacturer who cannot only sell their equipment online but also parts, consumables and service packages. Taking the model a step further could involve providing the whole package on a subscription-based model, i.e. a flat monthly fee for use of the equipment including parts, consumables and service with automated fulfilment of parts and consumables using sensors imbedded in the equipment to automatically detect and communicate with the warehouse when items need to be despatched.

To be equipped to succeed in this new real-time world, businesses need new tools: real-time FX pricing engines to convert from central to local process when selling cross-border, real-time and alternatives payment methods suitable for businesses purchase online, and application programming interfaces (APIs) to connect bank and client systems directly for instant processing, reconciliation and settlement of transactions. With these tools and real-time, online capabilities, businesses can capture new opportunities and markets, offering clients additional services, opening up new distribution channels, and executing transactions fast and efficiently.

At Standard Chartered, we are helping clients to enhance their business through digital co-creation, working together to understand and address how these new ways of business can work in practice. Developing new solutions directly with clients in this way enables us to offer relevant digital tools to clients and advance their e-commerce

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capability. Several live projects delivered with clients highlight what is possible today by applying new types of real-time FX pricing, payments and collections to power real-time business transactions.

Real-time multi-currency pricing Businesses are using websites and apps to sell directly to their end clients in multiple markets with products often sourced from central production facilities. This online capability enables them to reach new countries and markets, growing their business at a low cost compared to establishing a presence on the ground. As buyers are keen to pay for products and services in their home currency and will also be looking for price certainty, the ability to provide real-time pricing in multiple currencies is vital in today’s business landscape.

SCALE To help businesses instantly price products and services in different currencies, Standard Chartered has developed SCALE; a tool that provides automated FX pricing and execution for e-commerce platforms. With this API based solution, businesses can dynamically price products in multiple currencies from a base price and receive settlement in their functional currency. It’s an integrated tool with options for local language, currency and payment methods, so websites or apps can easily be tailored to new markets.

SCALE enhances the buyer’s experience, as customers in other countries can pay in their local currency. It also gives the buyer price certainty as businesses have control of the FX margins applied to customer transactions, and there is an option to lock in guaranteed FX rates for an agree period to reduce market volatility.

Real-time pricing example Working with a travel company selling across ASEAN, Standard Chartered co-created an e-commerce FX solution offering customers real-time pricing in local currency, wherever they were across the region. The travel company wanted to price travel products for consumers in their home credit card currency and ensure price certainty on their travels. This meant that the project needed to provide the travel company with full control of FX risk between the tourist currency and the operating currency.

The solution offers FX pricing, aggregation, and reporting APIs. So how does it work? The travel company receives FX rates in multiple currencies from the bank and when the tourist initiates the travel purchase transaction, they can view competitive rates for each currency available for the travel product. The tourist can then transact in their preferred or home currency. The bank offers a guaranteed rate period for the travel company and aggregates all the individual FX transactions within the rate period, giving the travel company settlement of all transactions at the guaranteed FX rate. For the client, our solution has advanced their operational efficiency, helped to deliver a revenue opportunity, and provide their customers with cost certainty on their travel purchases.

To help businesses instantly price products and services in different currencies, Standard Chartered has developed SCALE.

Business Innovation Series

The business need for real-time solutions is not only in FX pricing of online products and services.

Real-time payments The business need for real-time solutions is not only in FX pricing of online products and services. The growth of real-time payment systems, combined with foundational technologies such as blockchain and connected technologies like APIs, means businesses can also now settle transactions in an instant using a range of new payment methods such as mobile money, bank instant payments, and peer-to-peer payments.

Real-time payment tools enable businesses to transact with others in real-time, thereby expanding the use of online and app-based sales to small and medium sized enterprises who would otherwise be forced to purchase via distributors or retail outlets.

Instant marketing rebate example Many industries use marketing rebates and rewards as a way of encouraging sales. However, these are often paper intensive with a need to submit vouchers or use coupons to claim rewards. This diminishes the consumer experience and makes the rebates less effective. In India we worked with a major oil company selling lubricants via roadside sellers and repair shops. Rather than recording and then claiming rebates for the sale of lubricants produced by the oil company monthly, the roadside attendant merely scans a QR code on the underside of each bottle cap using a phone-based app. This records what has been sold and instantly rewards the attendant (or business) for the sale just made. In the back end the app is connected to the company’s rebate system which then sends a payment instruction via API to the bank, which is then processed and paid to the attendant via the local instant payments system. Another variation of this solution supports a marketing company that pays users for watching online video advertisements.

Claims payment through APIs example With the move to an e-commerce environment, real-time payment tools offer benefits across a variety of industries and geographies. Standard Chartered works with different clients across the world to make settlement of transactions faster and more efficient. In Singapore, we worked with an insurance client using the Fast and Secure Transfers (FAST) electronic funds transfer service, together with API connectivity, to enable instant claims payments and reporting. This has enabled the insurance company to offer surge pricing insurance to users of ride sharing services – the customer can forward their email receipt documenting the surge pricing to the insurance company and receive their money back in a few hours.

The solution works by using FAST to provide immediate credit on a 24/7 basis once claims have been processed. Singapore’s PayNow scheme, which allows money to be sent or received with just a mobile number, is used to identify the beneficiary. API connectivity between the insurance company’s Enterprise Resource Planning system (ERP) and the bank is used to initiate payment instructions, while the existing Java host-to-host (H2H) connectivity is used for reporting purposes. Another variation of this same solution enables the Insurance company to pay claims instantly once a telephone claim has been lodged and approved over the phone.

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Electronic tax payments example For another sector, Standard Chartered worked with a Kenyan logistics client to enable real-time tax payments. The client wanted real-time integrated tax payment services, as the faster the tax payment can be processed, the quicker they are able to deliver the order to their customer. Their requirements included validation of each payment against their tax filings prior to payments processing.

In this solution, the client files their tax in the Kenya Revenue Authority’s iTax Portal and receives an e-slip with tax details. The payment details are inputted on Standard Chartered’s internet banking system. Once the client initiates payment, our systems automatically interfaces with the Kenyan tax authority’s system. Our system validates the e-slip information, completes the payment, and updates both the tax system and the client account.

The new solution means that the logistics company benefits from the validation of the Payment Registration Number (PRN) before payments are processed, and reconciliation of the tax and debits are completed swiftly and efficiently. Additionally, it has enabled the client to maintain just one account with us for all of their tax payments, enhancing their visibility and control.

Business Innovation Series

Real-time cross-border remittance example In our next case study, blockchain and APIs were combined to enable cross-border mobile-to-mobile wallet payments in Asia, incorporating a real-time FX element. A market-leading mobile wallet provider in Hong Kong identified the need for workers from the Philippines to send money home in a more efficient and cost-effective way. To achieve this, they needed to integrate with a wallet provider in the recipient country to provide a seamless and low-cost process for receiving funds. With the remittance flow including the sender and recipient, two different wallet providers and the bank, full transparency of all transactions to the multiple participants was also critical.

Standard Chartered worked with the client to design a cross-border remittance solution that is triggered when a sender in Hong Kong remits Hong Kong Dollars to a recipient in the Philippines from their mobile phone wallet to the recipient’s mobile phone wallet. The HKD wallet provider receives the request, and then the cross-border payment is added to the blockchain. Our SCALE engine then makes the FX conversion in real-time using the payment data recorded on the blockchain. The validated payment is published to the blockchain. This alerts the PHP wallet provider

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that the funds are available, leading to the release of funds to the recipient’s mobile wallet in the Philippines.

This demonstrates the viability of a proprietary blockchain solution in a real-world business case, and while the perception of mobile wallet remittance is that it is a peer-to-peer (P2P) activity, other solutions can support settlement of corporate mobile transactions or even the development of wallets for customers who then use them to make online purchases from a corporate. This is especially useful where there are limited real-time payment options in a market as the customer can pre-fund their wallet and then use it to settle online purchases.

Real-time collections As the demand for real-time payments increases, so does the need for real-time collections. The growth of faster payments systems and mobile banking technologies has advanced corporate collections processes in terms of cost, efficiency and speed, with a seamless user experience. Together with our clients, we have co-created several innovative corporate collections solutions to deliver real-time processes.

The growth of faster payments systems and mobile banking technologies has advanced corporate collections processes in terms of cost, efficiency and speed, with a seamless user experience.

Business Innovation Series

Instant debits for wallet funding example To assist a corporate mobile app provider based in Hong Kong, we have developed an API driven, real-time account top-up capability via a mobile app. This will deliver real-time, high-volume mobile wallet top-ups and instant payments to the client’s mobile app users, who will also be able to make a withdrawal via an instant credit API.

The mobile app provider initiates the receipt of funds based on agreed top-up thresholds for each individual wallet holder and the electronic direct debit details are received by Standard Chartered. This generates the request to pull the specified funds to the mobile wallet. The clearing house then receives the direct debit, and the debit is validated and executed by the bank of the mobile app user. Finally, the amount is credited to the mobile app user and they receive a collection alert.

This example demonstrates how using a faster payments network together with API integration creates instant cash collection with considerably reduced transaction costs.

Mobile money collections example Mobile money collections offer corporates faster and more convenient ways to sell to their customers. For a client in Kenya, this provided a way to offer their customers a more convenient way to shop, improving sales and increasing the loyalty of their customers.

In Kenya, we collaborated with PesaLink, an interbank money transfer solution, to develop a receivables management solution. Collections for online purchases were enabled through real-time interbank money transfers using a mobile number via PesaLink. The firm’s end-customer uses their mobile number as a unique payment identifier, while the solution also includes 24-hour processing.

For the client, this solution speeds up real-time receipt and improves the visibility of funds for online purchases. The convenience of being able to buy quickly with just a mobile number for identification, rather than spending time entering bank account or card details into the website, enhances the end-customer experience, building customer trust and loyalty.

A new way of doing business The ‘Uberisation’ of commerce has driven businesses to operate in a different way. While digitisation is the standard building block for all of these case studies, they are all bespoke solutions. By working together, we can combine the potential of new technologies to transform businesses and co-create unique solutions that will help companies succeed.

Standard Chartered have developed an API driven, real-time account top-up capability via a mobile app.

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