Why Scotiabank is investing in working capital and liquidity

• Key insights: Geopolitical and macroeconomic uncertainty is influencing the bank's quest to deepen relationships in transaction banking.  
• Expert quote: "We're trying to make it really easy for our corporate treasurers to not only understand their cash position, but also maximize the value of that cash position across the entire corridor in one easy place." —Allysun Fleming, managing director and global head of products, liquidity, trade and channels, Scotiabank.

As macroeconomic and geopolitical uncertainty continues to impact global trade, Scotiabank is making investments in its liquidity and working capital tools to deepen client relationships and capitalize on its footprint in Mexico. 

Processing Content

"Our strategy is really to connect the corridor across North America. Getting into Canada has been easy for U.S. clients. There's a lot of choice, but Mexico has always been really challenging," Allysun Fleming, Scotiabank's managing director and global head of products, liquidity, trade and channels, told American Banker. 

"We're trying to make it really easy for our corporate treasurers to not only understand their cash position but also maximize the value of that cash position across the entire corridor in one easy place," Fleming said. 

Corporations are seeking visibility, predictability and liquidity control from their financial institutions, according to the 2027 Capgemini World Payments Report, which noted that "while 60% of banks prioritized business-to-business payment innovation during the past three years, only 32% of corporate clients report satisfaction with their primary banking partner." 

Scotiabank is investing in a few key areas, Fleming said, including working capital and liquidity tools, and its digital platform, which it first rolled out in Mexico and has since extended into the U.S. 

The goal of the digital platform is to provide a single place where clients can manage their accounts. The bank is taking a similar approach to payables, receivables and finance, where it is working to create a common platform where clients can manage all three of those business lines.  

"Clients increasingly make a decision on who they bank with based on the ease of doing business," Fleming said.

Extending more receivables finance and payables finance to clients is also a priority for the $1.1-trillion-asset bank. 

"We're making some investments to do things like extend [more] receivables finance and payables finance to our clients" and help clients manage their overall cash, Fleming said. "Working capital is meant to actually reduce uncertainty. And right now, I would tell you, reducing uncertainty for clients is extremely important."

And Scotiabank is, of course, exploring ways that AI and digital assets can help reduce friction for its global clients. Scotiabank is one of six Canadian banks that are pursuing a joint Canadian dollar tokenized deposit project. The bank is also part of Project Agorá, a public-private collaboration led by the Bank for International Settlements and the Institute of International Finance that is researching tokenization and programmability in cross-border payments and settlement. 

"We're really in a learning mode right now," Fleming said. "We're spending a lot of time listening to our clients and how they're thinking about stablecoins and tokenized deposits and newer ways of transferring money."