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Optimizing Cross-Border Banking Between Canada and the US

June 5th, 2012. Optimizing Cross-Border Banking Between Canada and the US. Rory Langran AVP Global Payments and Cash Management HSBC Bank Canada. Agenda: Canada and the US. Learning Objectives Economic Comparison Banking Landscape Regulatory Environment Liquidity Future Payment Trends

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Optimizing Cross-Border Banking Between Canada and the US

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  1. June 5th, 2012 Optimizing Cross-Border Banking Between Canada and the US Rory Langran AVP Global Payments and Cash Management HSBC Bank Canada

  2. Agenda: Canada and the US Learning Objectives Economic Comparison Banking Landscape Regulatory Environment Liquidity Future Payment Trends Key Learnings

  3. Learning Objectives Understand how key differences between the Canadian and US Banking Systems shape different approaches to cash management Understand strengths of each system to enhance the effectiveness of your cross-border treasury operations Recognize the impact of future changes to cross-border banking services Understand best practices and identify opportunities to optimize cross-border operations

  4. Economic Comparison

  5. Economic Comparison

  6. Banking Landscape

  7. Banking Landscape

  8. Canadian Payments Association (CPA) operates 3 clearing and settlement systems in Canada: ACSS (Automated Clearing Settlement System) LVTS (Large Value Transfer System) USBE (US Bulk Exchange) Banking Landscape:Payments in Canada

  9. In 2009, the total value of transactions cleared and settled through LVTS was $38.7 trillion, or approximately 90% of value cleared through CPA systems. In 2009, the total value of transactions cleared and settled through the ACSS was $4.9 trillion, or approximately 10% of the total value cleared through CPA systems. Banking Landscape:Payments in Canada

  10. Regulatory Environment

  11. Regulatory Environment: Anti-Money Laundering

  12. Regulatory Environment: How to Optimize Understand the regulatory environment(s) in which the business operates Full disclosure of Know Your Client (KYC) and Anti-Money Laundering (AML) Guidelines Develop a rapport with financial institutions to be kept abreast of regulatory changes. CPA vs. U.S. Clearing

  13. Liquidity

  14. Liquidity: How to Optimize Canada; ensure you’re being paid competitive rates on surplus deposits US; take advantage of early clearing reporting, and ACH transfers from other institutions Sweeping and earnings credit not available in Canada Perform daily sweeps of all accounts into the primary cash management bank Relationship as a cash management client demonstrated our stability during economic turbulence and resulted in an introduction to credit and financing opportunities

  15. Clearing Systems: Collections & Receivables

  16. Clearing Systems:Optimizing Collections & Receivables Select a bank with presence in area of operation Minimize number of providers Bank relationships with armoured couriers simplify the transportation from locations to central depository rooms Overcome US geographic limitations, Remote Deposits Capture (RDC) equipment is used in regional offices On-site drop safes provide real-time deposits – but with a business risk and cost

  17. Clearing Systems: Payments & Disbursements

  18. Clearing Systems:Optimizing Payments & Disbursements US advanced posting of cleared items allows for early planning of clearing account balances Canada has no advanced knowledge of clearing, but has the advantage of earning interest on surplus balances Utilize disbursement accounts in the country of the currency to ensure clearing protection by the appropriate association: US$ checks drawn on a US domiciled account to ensure coverage by Fed

  19. Future Payment Trends: Canada & US • Convergence of business and consumer payments: • B2B payment alternatives converging with consumer payments • Corp. credit cards, travel & entertainment, purchasing, etc. • Online payments supported for both corporate and consumers • Online bill payments • Online tax payment and filing • Online consumer debits • SWIFT now allows corporates to access SWIFT directly

  20. Future Payment Trends:Canada & US • Migration of payments away from cash and paper methods: • Disappearance of cash • Technology impact on the payments market: • Migration to chip technology for cards • Mobile technology taking hold • Contactless payments • Migration to online payments

  21. Future Payment Trends:Canada & US • Move toward real-time payments • Consumer payments: • Online - real-time debits for online purchases • EMMT (e-mail money transfer) - person to person funds transfers in real-time

  22. Key Learnings Better understanding of differences and similarities in Canada/US banking Understanding of payment systems and regulatory environment Optimize Canada/US treasury

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