Transaction Banking Academy tutors were lucky enough to spend a week at Campus BBVA in Madrid (above), delivering the sixth annual Treasury and Working Capital course for a group of BBVA team members from around the world.

The five-day course covered every aspect of transaction banking, including the fundamentals of regulation for transaction bankers, which was delivered as five online modules for the first time through Transaction Banking Academy's new learning portal.

The course is  led by three Transaction Banking Academy tutors and includes workshops, case studies and project work based around a realistic treasury RFP from a  'virtual company' created especially for this course.

Transaction Banking Academy has launched the first online training course on its new learning portal. The five-module introduction to regulation for transaction bankers is being delivered as a private programme to a group of more than 30 learners from a global bank.

The course includes interactive tests, videos, downloadable support materials and certificates of completion, and takes five hours in total to complete.

'We've been planning to launch digital training for some time and we're very happy to be working with a technology partner to offer a complete Learning Management System (LMS) which can be branded for our client banks, who can use it as if it were their own, but with our support', said Mike Hewitt, operations director of Transaction Banking Academy. 'This first five-module course covers regulation, but we'll be adding courses and modules on more than 20 other topics over the coming months'.

Transaction Banking Academy is already working with a major African bank to develop new modules for its branded LMS and is planning a wider launch of the Portal later in 2017.

​For more information contact mike hewitt mikeh@transactionbankingacademy.com

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The rumours of the death of cash have been greatly exaggerated, writes TBA tutor Edith Rigler - there are plenty of reasons why cash will be king for a long time to come

That the future of cash has become hotly debated there can be no doubt. Many observers predict the demise of notes and coins as an outdated and obsolete mode of payment. For example, at last year’s World Economic Forum summit in Davos, Deutsche Bank’s chief executive officer (CEO), John Cryan, observed that as cash was both costly and inefficient, it would no longer exist in another 10 years. Notes and coins would disappear. Technology would triumph.

​Further fuel for the debate has from come from the European Central Bank (ECB). Last May, the ECB announced it will stop issuing the €500 note from the end of 2018 – due to a concern that the higher denomination note could facilitate illicit activities.

Yet cash is very much alive – and here to stay as a payment method, precisely because it is convenient, anonymous and safe. Globally 85% of payments are made in cash, and the amount of cash in circulation is growing, not shrinking.

According to research undertaken by Deutsche Bank, euro cash in circulation actually grew over the years, namely to €1.1 trillion by Q3 of 2016, three times as much as in 2003. As cash grew faster than GDP in most periods, the ratio of cash to gross domestic product (GDP) rose from 5% to 10%.  The Bank of England (BoE) comes to a similar conclusion: there has been a growing demand for cash in recent decades, not just in the UK but also in other countries including Australia, the US, and Canada. Even in Sweden, where many cashless payment methods have become popular, cash is still present.

Growing demand for cash

It is interesting to look at where the demand for cash comes from: is it the domestic economy, the overseas market, or the shadow economy? The ECB estimates that more than 70% of cash is used domestically, for transactions or cash “hoarding”, about one fourth is held outside the euro area and only a very small percentage is held in banks´ vaults.

So, the problem of cash in the domestic economy is a “big one” and thus worth looking at.

Consumer usage of cash varies widely by country, as evidenced by a cross-country comparison by the ECB. But it is not only the level of cash usage which differs across the seven countries studied. Differences can also be found in terms of the type of alternatives used for cash – for example, credit cards versus debit cards. One explanation for these cross-country differences is attributed to differences in market structures and the pricing policies re. retail payments.

Germany, EU’s largest economy, is a cash-intensive country. Research after research points to the fact that while consumers are increasingly using the internet for their banking needs, cash is still the predominant method of payment. A 2016 German Central Bank study highlights that 79 % of all transactions in Germany are paid via notes and coins. Moreover, payment habits have not changed much since 2014: in that year the percentage of cash transactions was 80%.

But, cash need not stay as popular as it is today, say those who foresee its demise or who would have government abolish its use. The proponents of a cashless economy argue the following:

• Without cash, it becomes easier to fight against money laundering and terrorism financing: however, there are no hard facts supporting the argument. Illegal activities do not depend on cash – criminals have multiple non-cash alternatives for their activities. Bitcoin is certainly a case in point.  Deutsche Bank Research argues that if society were to take away cash, criminals could find new ways of moving money without detection. Simply put, when payments go digital, fraud follows.

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• Without cash, the shadow economy will shrink or disappear: however, as Deutsche Bank Research points out, surveys and estimations for different countries show that a high share of cash in total payments does not always indicate a large shadow sector. Some cash-intensive countries, such as Germany and Austria, have relatively small shadow economies. In Sweden, cash payments have become rare but the country still has a mid-sized shadow economy. Findings from various European countries are diverse, but what seems clear is that the abolition of cash would not eliminate the shadow economy.

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• Bribery would become less popular if cash were not available: again, research shows that cash cannot be blamed for bribery. In some European countries, the simple equation of “much cash, much bribery” seems to hold true, but it does not hold true for others.

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• Cash is inefficient and costly: this 2016 statement by John Cryan has been touted as an argument for the abolition of cash. Yet despite numerous studies in the field of payment system costs, there is no clear picture on the cost of payments to the economy as a whole.

Hold on to cash!

This simple phrase sums up the position of those who want to be able to keep using cash.  By the way that’s about 91% of the German population, according to a survey by the German Postbank.
The defenders of cash point to several advantages:

• Cash is universal: not every store will accept Bitcoins or other virtual currencies, PayPal transfers, or payments via mobile phone.
• Cash is anonymous and untraceable: in contrast to cash, digital forms of payment can be easily tracked.
• Cash is secure and does not require sharing of sensitive personal data: the merchant from whom you buy goods will not require your phone number, email address or other identity-related data. In contrast, digital payments can be the victim of data breaches.
• Cash provides payment finality: while credit cards are based on the principle of buy now but pay later, physical money offers finality of payment. There is no possibility of defaulting on your payment.
• Cash enforces self-discipline: when asked about their preference of paying cash vs. paying by credit card, survey respondents often point out that cash in the pocket forces them to spend less. Quite simply, when one’s wallet is nearing emptiness, shopping has to stop. Overspending can only occur when credit is used.
• Cash is reliable: sadly we have become used to news headlines reporting quite frequently that a bank’s or a company’s electronic payment system is unavailable. Consumers find that they are unable to access their account. Payments by cash are untouched by such difficulties.
• Cash is cheaper than other payment methods: many businesses pass on the credit transaction fee to the customer. If you don’t pay your bill on time, you’ll also be hit with interest fees. With cash, many businesses offer discounts to the consumer.
• Cash circumvents negative interest rates: should banks levy negative interest rates on bank deposits, consumers can use cash to avoid such a penalty.

The future of cash

Evidence from various sources shows very clearly that while payments have increasingly moved from paper to electronics and new technologies enable cashless payments, cash usage and holding have not disappeared. In fact, cash is still used extensively in some countries.

What does the future hold? The future of cash depends on a multitude of factors which makes any type of prediction difficult. These factors include:

• emerging and new alternative ways to pay (mobile wallets, biometrics and wearables);
• the emergence of new virtual currencies beyond Bitcoin;
• preferences of retailers (e.g. preference for cards and mobile payments vs. acceptance of cash;
• commercial banks´ distribution channels of cash (e.g. availability of automated teller machines (ATMs), opening hours of bank branches);
• changing attitudes of consumers towards cash (e.g. negative interest rates on bank deposits are likely to increase the hoarding of cash);
• government intervention and restrictions on the usage of cash; and
• socio-economic developments (e.g. inflation, trust in governments, etc.).

Conclusion

If cash could speak, it might very well end this article – while tipping its hat to Mark Twain – with the following quote: “The reports of my death are greatly exaggerated.”

Transaction Banking Academy tutors recently led four intensive days of training in Jakarta, Indonesia, for Bank Rakyat Indonesia (BRI). The Academy's two day course on The Fundamentals of International Cash and Liquidity Management was followed by the two-day Trade and Supply Chain Finance Masterclass, helping BRI bankers better understand the needs of corporate clients and current best practice in global transaction banking. Resky Irianawati, general manager, international business, at BRI, said the training had had a 'significant impact' on the bank's development.

"We were delighted to able to develop these courses for BRI," said Diana Henderson, managing director of Transaction Banking Academy. "They are part of a rollout of our services in the Asia Pacific region, with new tutors and courses specifically developed to address the needs of regional clients."

When Canadian software developer Azur Group started to develop a product for the corporate treasury market, they knew they needed to understand how treasurers worked. Transaction Banking academy was able to offer a bespoke course for their developers and sales people based on our popular 'Day in The Life of  Corporate Treasurer'. Our expert tutor spent three days in Azur's home city of Montreal, working with the team to ensure they fully understood how treasurers work - and how they think about software that might help. 

“It was clear from the moment we did the calls to plan the course that the tutor, was very knowledgeable in treasury management, said Rehan Siddiqui, team lead at the Azur Group. "The training material was well prepared and the whole experience was very interactive. I highly recommend the services we received from Transaction Banking Academy."

FirstBank of Nigeria recently turned to Transaction Banking Academy (TBA) when it needed to bring 30 bankers up to date on the latest techniques in international treasury. We developed a bespoke course based on our International Cash Management programme and our expert tutor spent a week in Lagos, Nigeria, running the course, which included assessments and certification. "We were especially pleased to be able to develop and deliver this course, as it is our first move into Africa", said TBA founder Diana Henderson. "Partly as a result of this, we are already in talks with another major African bank to develop and deliver training in no fewer than five African countries."

Transaction Banking Academy Tutor, Edith Rigler, was a panellist at the European Payments Regulation conference in London, in her capacity as an associate at the Payments Advisory Group. Rigler, a leading expert on payments and regulation, pointed out that the development of Blockchain for payments may end up more fragmented than many people are hoping.

“It’s hard to get 20 countries to agree anything, let alone to get the entire world,” she said. “Is it feasible that global all banks and regulators will agree? The speculation is that we’ll get regional clubs, and that will help to spur competition. But there will also be fragmentation, and banks will have to decide which clubs to join. In some ways, that means we would be back in the same situation as we are with the ACHs.”

Edith teaches regulation and payments for Transaction Banking Academy, including the one-day Introduction to Banking Regulation. 

By Whitman E. Knapp, chairman, GTBInsights LLC

Sibos 2015 provided a unique opportunity to understand the significant issues driving the transaction banking world.  Blockchain technology dominated the conversation. Rarely has one subject so dominated a Sibos.  There was standing room only at the Innotribe meeting, and every session covering payments or trade included a discussion of the use of blockchain technology, whether it was on the agenda or not.

So what were the five key take-aways for wholesale transaction banking from this outpouring of interest?      

By Edith Rigler 
Senior Tutor, Transaction Banking Academy

Open a financial services publication or attend a payments conference and you are confronted with “instant”,“ immediate”, “real-time”, or “faster” payments. What is this all about? 

For decades, making a payment took time … and often quite a lot of time. Whether a payment arrived at its beneficiary the next day, or after three days, or a week depended on the country, whether it was a domestic payment or had to travel across borders, and how many banks were involved in the middle. In some countries payments moved faster than in others. The consumer had no say in the matter. Short of choosing a large-value RTGS system with immediate finality, the consumer was dependent on his country´s ACH system and its clearing cycle. 

Transaction Banking Academy offer custom courses, turored by Edith Rigler,  to help banks, technology vendors and corporate treasurers understand the evolving world of payments. Contact Diana Henderson for more details.