Should the Philippines remain on the Financial Action Task Force (FATF) list of countries needing to improve cooperation in anti-money laundering initiatives, the extent of the applicable repercussions on cross-border payments is not known. It is possible that international payments to and from the Philippines will be subject to rigid scrutiny. Offshore banks and financial institutions, for example, may require detailed information on the nature of payments to and from the Philippines, and they could discourage or even ban the use of local banks in international fund transfers with parties in the Philippines. Although it is unlikely to be the final solution, the bill must be implemented soon.
Cash managers have learned the advantages of heightened competition between banks in the Philippines, giving them additional leverage. It is not unusual for banks today to receive notices to tender for cash management business. These usually require comprehensive proposal covering the specifics of cash management facilities, treasury services, electronic banking, integration capability, and of course, pricing. Then tender process is generally favored by more independent MNCs, or required as part of a regional tender. However, local corporations have also been seizing this opportunity to develop a more structured and competitive approach when establishing a banking partnership.
An increasing number of MNCs have established a presence in the Philippines in recent years. While establishing Manila as a regional headquarters or treasury center is not impossible, the more likely outlook based on the growing competency of Manila’s banking system (and in face of competition from the well-founded and stable economies of the Hong Kong SAR and Singapore), is that Manila may be chosen as a sub-regional center of operations covering a few Southeast Asian developing economies.
Technological aptness, available skills, and low-human resource costs are key reasons why Manila may be a logical aspirant for the local of a sub-regional financial center. Foreign investors, however, remain cautious.
As for technology, the Philippines is generally at par with its more progressive neighbors. With the introduction of electronic trade services and electronic banking, and a bank’s ability to integrate systems with its customers, the Philippines is now able to provide the type of banking services that are typically available elsewhere in Asia.
What we have seen in recent years in that banks do strive to better their services by partnering with their customers in driving efficiency through automation and the assumption of customers’ financial functions. More than just mere providers of services, banks have also accepted the consultative role in the light of new and possibly more exacting regulatory requirements on payments, clearing, foreign exchange and money laundering. In this way, we shall continue to see banks seeking to become, or remain, their customers’ foremost partners in financial management.
(Adarve is a respected executive of HSBC Philippines.)