MNC’s usually run a strong risk management practice due to their exposure to multiple geographies. Due to their global presence, they are exposed to numerous cross border risks thus it is imperative for them to prepare their strategies and evaluate risk mitigation techniques to combat the change by using emerging trends in treasury and CMS solutions.
India has been poised to offer multiple growth opportunities and there has been constant push to capitalise on the China plus 1 strategy, such as introducing the PLI schemes, make in India initiative, focusing on setting up of electronic manufacturing hubs, setting up global capability centres, etc. thereby attracting investments in form of FDIs in various sectors.
MNCs are willing to adopt an agile culture driven by their global outlook, and governed by their parent’s goals and objectives. Parent’s vision towards their Indian subsidiary is of prime importance, thus it is essential to understand their goal. Related party risks are often high, hence understanding the business model along with the risk & accounting practices is essential for a FI/ Bank to take debt call in case of catering to such requirements. They seek cost optimization solutions and work along with Banks/ FIs to evaluate treasury related solutions while bringing their global capabilities in India.
They tend to create partnerships with local vendors by creating substantial local vested interest in their supply chain. Suitable digital products offered by Banks/ FIs driven by artificial intelligence using APIs help in building robust supply chain solutions to manage their financing needs along with effectively managing their AR’s and AP’s. Development of the fintech ecosystem has further scaled MNC’s willingness to work with different start-ups offering customised solutions around it.
Meeting Burgeoning Requirements of MNCs
Traditional borrowing products are being packaged with digital innovations to cater to the growing banking needs and requirements of MNCs. Artificial intelligence and cloud computing are revolutionising the way businesses were done, data and communication channels have become more robust and real time reports are being generated which are leveraged to manage receivables, payables, inventory position, etc. in order to effectively manage working capital cycles hereby focusing on improving ROCE.
A Global Hub
The next big wave is created by the establishment of the global capability centres or GCCs which have helped India become a preferred destination to establish a center of excellence (CoEs) for their parent. These are back-offices set up by MNCs with an objective to build support functions such as innovation hubs, research & development centres, support & operation functions, etc. to work upon fuelling their global vision and goals. This model offers cost-effectiveness and an ability to drive agility in their global operations by aligning to their parent’s objectives and goals.
The continuous push for digitisation in the nation makes it attractive for GCCs to continue considering India as their preferred choice. It is projected that India shall host 2,550 GCCs adding a market value of USD 110 billion by 2030. This offers significant potential for the banking system since it carries a huge economic impact. Digital cash flow products such as e-invoicing, host to host, API integrations entails huge advantages to such businesses due to significant transaction volumes and value. India remains a preferred choice for MNCs and the financial industry shall continue to run the marathon with their products and offerings to cater to growing needs and aligning them with the emerging trends.
About the Author
Ankit is a proactive and achievement-oriented professional who brings over 16 years of unparalleled expertise in Banking industry, spanning across wholesale banking managing both domestic and multinational clients. He comes with a proven track record in Corporate Finance, Structured Finance, and Financial Analysis. Furthermore, he is proficient and pro-active in exploring new income avenues, targeting new business opportunities, and cross selling a wide range of banking products such as trade finance, cash management services.
