Changing customer expectations regarding ESG and digital at the heart of the Transaction Banking strategy

1.    What changes in client needs are you facing locally in the Global Transaction Banking (GTB) business?

The recent crises have led to a rapid change in the challenges faced by treasurers and CFOs, the main clients of transaction banking. Whereas they were expected to be reactive and proactive, they must now be predictive and anticipate market and industry developments to better support the transformation of their business and operations. 

In this respect, integrating sustainable performance indicators (ESG) into treasury management appears to be a new challenge for corporate treasurers. 
Treasury departments are applying this ESG lens to various aspects of their business, from investing surplus cash to raising working capital to providing supply chain finance to their company's suppliers.

They therefore expect their banking partners to have the right level of information, to speak the same language, to understand and anticipate their needs, and to provide tailored solutions to help them achieve their own sustainability goals.
Treasurers have the same expectations in terms of digital transformation and innovation: the bank must open new roads and offer them disruptive and efficient solutions.

2.    How have the Payments & Transaction Banking business lines adapted to these new ESG needs?

Aware of these expectations and in line with the Group's strong commitment to support its clients in their sustainable development strategy, GTB business lines have therefore initiated a global evolution towards positive impact offerings, whether Trade Finance, Payments & Cash Management or the solutions offered by Societe Generale Factoring, the Group’s factoring subsidiary.

All of GTB's businesses are now working to offer treasurers green-or social-labelled or sustainability-linked advisory or financing solutions, that encourage the client's performance in terms of sustainable development.

We can work with our Swiss clients to develop so-called "green" solutions when the underlying transactions fall into these categories: renewable energy, clean transport, sustainable water and wastewater management, waste management, hydrogen, circular economy, green buildings. Projects with a "social" underlying are also eligible in the areas of health, education, basic infrastructure, and affordable housing.

These projects are assessed by the bank according to internal criteria established in the spirit of the EU taxonomy on sustainable activities and market standards (Green Loan Principles, Green Bond Principles, Sustainability-Linked Loan Principles, etc.).
Other projects promote the client's sustainability and sustainability-linked performance (e.g., by obtaining an external label or certification), and measure the achievement of pre-determined targets by the client company, regardless of its area of activity, on its own sustainability performance indicators. 
We are also able to offer hybrid solutions, combining green and social and sustainability-linked indicators.

The main areas of application of this ESG offering today are the setting up of import/export letters of credit and bank guarantees as well as the factoring and supply chain finance programmes offered by SG Factoring. 
For all these ESG offerings, the bank applies a pricing mechanism linked to the achievement of ambitious targets for the main performance indicators selected. We assist our clients in choosing the right solution and indicators, whether they are based on external standards - e.g., EU Taxonomy - or a labelling process, or even when they are pre-existing in the context of a revolving credit facility or a "green" bond issue. 

Our ambition in Switzerland, in the near future, is to provide our clients with a complete ESG offering: short-term working capital financing, receivables programmes, green deposits, etc.

3.    What innovations have the transactional bank recently deployed to meet its clients' expectations, particularly in terms of digital?

Innovation is part of the Group’s DNA, which has been committed for several years to the digital and positive transformation of companies, to better support its clients. We are aware that to go further in this approach, we need to cooperate with key and innovative players, such as fintechs. 

Among the most significant partnerships is Kyriba, with whom we have partnered to develop a cloud-based cash management solution for the Bank's clients. 

On a local level, SG Zurich Branch established the transactional bank's first commercial relationship with a player in the Swiss crypto-economy, Crypto Finance AG, a fintech company active in the digital asset sector in Switzerland. An opportunity to serve the new digital economy and learn more about digital assets, while offering Crypto Finance AG's brokerage arm our payment and cash management services.  

The Group recently entered a commercial partnership with Lemonway, an ACPR-approved pan-European payment institution, to provide payment services to large Western European companies launching their B2B marketplaces. This partnership will allow us to support our Swiss clients in their digital transformation by offering them payment solutions that are adapted to the specific needs of B2B marketplaces. 

Finally, the Group's transactional bank launched the Payment & Transaction Banking Accelerator (P&T BAX) last year, with the aim of improving the client experience while increasing the performance and productivity of our business. This accelerator gives entrepreneurs the opportunity to turn innovative ideas into market-ready solutions and increase their visibility. The solutions proposed may concern data, customer communication interfaces, CSR, the fight against fraud, among other topics.