Iran to host first corporate banking forum among top 500 firms The first corporate banking conference will be held in Tehran with the participation of senior executives and chief financial officers of the top 500 companies on December 3,2018, according to the conference secretariat.
Ali Divandari, the chair of corporate banking forum, says the conference, held at the IRIB International Conference Center, aims to create a “two-way dialogue”, where large businesses get to discuss their expectations, and financial institutions get to express challenges on the way of banking system, as a step towards improving banking services.
Divandari, who is also the head of Monetary and Banking Research Institute of the Central Bank, says that currently, the traditional products in the banking portfolio cannot meet the needs of large businesses; therefore, it is necessary to assess today’s corporate banking issues as the world moves on. He is of the opinion by that corporate banking can be of greater help to large businesses by understanding their business and designing solutions tailored to the specification of the customer and its supply chain.
In addition, he believed banks need to pay heed to recruit experts and consultants, and says any changes in banks business model requires careful management and special plans.
Iran Economy Magazine recently, conducted a short interview with Divandari to explore the corporate banking status in Iran as well as services it providers to companies.
Q: What is your definition of corporate banking, as there is variety of meanings for it, and what does this concept cover?
A: Since that major banking services are designed in accordance with clients’ needs, which is mostly focused on money market, banks are faced with challenges to resolve complex issues of large corporate customers.
Therefore, corporate banking is trying to meet the needs of big businesses by knowing customers well and designing solutions tailored to their characteristics and supply chain.
Q: Given the definition you presented, what do you think of the importance of corporate banking, and what is the world experience about corporate banking?
A: The role of corporate banking is very important with specific and limited capacities in each country, only large organization can take advantage of and the optimal use of such capacities can have a very positive economic impact. Although, in general, in many industries, small and medium-sized businesses have seized a significant part of the business domain, formerly used by large businesses, yet capital, security and many other obstacles prevent the drop of the role of large organizations in economy.
In addition, since international businesses recognize no geographic boundaries, working with banks with customers beyond the country boundaries becomes very important.
The role of the world’s leading banks is not limited to the provision of deposit services, facilities, and so on, but, rather, the bank is the client’s trustee in his business dealings and his consultant in the growth and resolution of his business problems.
Key business decisions, including mergers and acquisitions, import and export activities, etc. are generally carried out in conjunction with skilled banking advisers in corporate banking.
Q: How did the idea of a corporate banking forum come about, and what is its purpose? Who are the main participants in the conference?
A: Given the current economic conditions of the country, the collaboration between business leaders and banking industry should increase. Lately, traditional products in the banking portfolio can no longer meet the needs of big business. Technological problems and so forth have created a greater gap between customer expectations and banking services. Therefore, the forum strives to create a two-way dialogue where large businesses get to discuss their expectations and the financial institutions express challenges on their way of services, a way to explore solutions to banking services.
Q: Do you think that corporate banking, as expected, has progressed and developed in comparison with retail banking in Iran?
A: The development of new banking models in all countries has taken long. The issue of banking model has been raised on Iran only for the past few years, and It is on the agenda of some banks.
The major drawback of corporate banking implementation in the country is that banking model is a concept that in the world is limited to enhancing the interaction between the bank and client relatively. A part of corporate banking capital comes from international foreign exchanges services and capital market, an area that our banks are limited in. Naturally, infrastructure providers can also support banks through corporate banking solutions.
Q: What is your opinion about implementation of corporate banking in our domestic banks? What percentage of local banks has the ability to provide corporate banking services?
A: A number of Iranian local banks are setting up a corporate banking, but none of these banks has completed the process. If the plan executed with knowledge and proper leadership, it can be a win-win situation for both banks and businesses. It is also valuable service for our country, with a valuable economic role.
As to whether all banks have the ability to provide corporate banking services, even if that were the case, doing so would not be beneficial. The banks’ objectives, target market, and customers are different; therefore, it is best that the financial institutions assess their clients’ needs. Of course, the role of banks’ infrastructure and consultants, and … should not be ignored, which varies from on bank to the next.
Q: Can legislative debates be a barrier to corporate banking enhancement? If so, please explain how the legislation can help the development of corporate banking?
A: The issue here is that the legislative body should be agile in catching up and keeping the laws updated in corporate banking.
Another issue is the dispute over the revenue between the banks and consulting firms, which have assisted the banks to design corporate banking solutions. This has led to banks’ reluctancy to complete their corporate banking portfolio.
Q: How far can corporate banking penetrate in the target market?
A: The banks with corporate banking services have given us good feedbacks, but we still have a long way to go. Our banks also leg behind in some of the corporate banking services provided by international banks.