Takeshi Ohashi, general manager and head of Mizuho Bank’s global transaction banking business shares his views on the challenges of expanding its international operations in the midst of the current economic and trade slowdown.
Foo Boon Ping
February 09, 2017 | Foo Boon Ping
- Mizuho Bank undertook internal transformation and reorganisation in early 2016 to become a total financial solution provider
- Ohashi believes this is the best time to hire good talent who are looking for opportunities in large banks
- The bank is also casting its eyes on leveraging technologies that are potential game changers
Lately, a number of the mega Japanese banks have been actively following Japanese corporates that have ventured out of the country and into overseas markets, mainly in Southeast Asia and other emerging markets, to expand their businesses. Mizuho Bank is one such bank. However, it has done so at a time of increased global economic uncertainties. Is this a favourable time because some of the global players are retreating from the region, which open up opportunities and service gaps?
Expanding global footprint
To the head of the bank’s global transaction banking business, Takeshi Ohashi, the precise timing when to set up its global business may not be as important as strategic considerations.
“One of the reasons we set up global transaction banking department is because our objective is to be a total financial solution provider. Transaction banking is one of the important solutions that our customers require. And more importantly, this business generates the necessary non-interest income and risk-adjusted returns that meet our objective. Strategy-wise, our focus is Asian markets. But at the same time, we have to cater to all Japanese companies that do their businesses globally,” he explained.
“Although we focus on Asia, we also support our customers in the global transaction banking landscape, especially in Europe, where the post-merger integration business is booming,” he added.
The competition in Asia is no less intense than the western markets. However, the ongoing de-risking and restructuring at some international banks have seen them reducing their presence in the region. And this has created opportunities for globally-oriented banks such as Mizuho to step up their relationships with clients who in the past may have depended on European or US banks for more of their complex transaction banking needs. This applies not only for Japanese corporates but also for the global 300 companies.
“It is very difficult to compete with US banks in the US, or European banks in Europe. But some of the banks are actually downsizing their business. They are focusing more on their home markets because of tighter regulations. We have additional capacity to serve more companies, especially the non-Japanese ones. and we have set a target for the global 300 corporates,” remarked Ohashi.
The economic slowdown has in fact created several opportunities for the bank. Take for example, the fluctuation in foreign exchange rate has increased demand for more sophisticated risk management and efficient cash flow as well as liquidity management solutions. Those customers who have a wider global operational reach mean they also have to focus on corporate governance issues. So they must be able to visualise their cash flow, and in that sense their transaction banking requirements would increase.
Developing capabilities to meet customer needs
To better serve these needs, Mizuho Bank undertook an internal transformation and reorganisation exercise to become a global bank in early 2016. It has been setting up six global transaction banking offices in key locations such as London and New York, and the Singapore headquarters, in order to capture more transactions from its global customers.
The bank has located a product management team in Singapore and has made it a top priority to develop product capabilities and platforms that meet global standards. With more European or American banks downsizing their Asian presence, Ohashi sees this as an opportunity to fill the gap.
“But to do so, we have to provide the same level of product and service turnaround. So that is one of our targets. We are providing very sophisticated products and services to our customers in Japan. But globally, our cross-border transaction banking products and services are not exactly the same as the ones we provide in Japan.” he explained.
One specific product gap is in the area of a supply chain financing platform which Ohashi has set a target of end-2016 to complete for Singapore.
The current slowdown may have impacted overall industry performance, but Ohashi sees a silver lining.
“There is a lot of experienced bankers who are looking for opportunities in large banks that are planning to expand. Environment-wise, it might not be the best, but now is the best time to hire good talent,” he remarked.
The bank is also casting its eyes on leveraging technologies that are potential game changers. It is part of a consortium led by Ripple Lab that is actively exploring the use of blockchain technologies for cross-border payments and trade transactions.
“We have a project team that is studying these new technologies in Tokyo. It is perhaps one of the best places to see it being developed and applied in financial services,” he commented.
Mizuho Bank is still in the early stages of ironing out its global operations and creating a world-class product platform will be critical to its success. While the external environment continues to be challenging, it represents a new breed of Asian global banks that is transforming and when fitted with new technology, is poised to expand when the cycle turns positive again.
Categories: Technology & Operations
, Transaction Banking
Keywords: Mizuho Bank
, transaction banking