Cash management poll 2008: Results
Cash management: Cash captains see their ship come in
Citi: the $6.5 billion start-up
Third-party provision finally takes off
Emerging markets: challenges remain
However, there are two crucial differences between cash management for FIs and corporates. The first is that as many FIs are banks they will often require products to re-sell to their own clients. "We operate almost a wholesale model when working with FIs," says Paul Camp, global head of cash management, financial institutions, at Deutsche Bank, which performed strongly among FIs in Euromoney’s poll.
For example, Deutsche Bank’s recently launched FX4Cash offering brings together the bank’s 21% global market share of FX trading with a payment capability that allows FIs to use one account to make payments. "For FIs such as universal banks with retail branches it means they can offer 77 currencies off a daily rate sheet whereas previously they might have been limited to a handful of currencies," explains Camp. "Meanwhile, the real-time feed allows that bank’s head office to provide spot pricing for their corporate clients. Effectively we enable them to do more business."
The second – and most dramatic – difference between cash management for FIs and corporates is that the financial institutions business is non-contractual. This means that FIs can shift their business rapidly – not least because most use Swift and consequently require no changes in their infrastructure in order to work with another bank. Anecdotal evidence suggests that there have been some recent instances where concerns about creditworthiness have resulted in clients leaving banks.
One might imagine that such business arrangements make cash management for financial institutions a somewhat precarious business. But Camp says that the business is still sticky. Many of the 3,000 FIs that Deutsche Bank works with have been customers for decades – but not as a result of contractual obligations. "We prefer to see the absence of contracts as an opportunity to win additional business – it keeps us at the top of our game: service and products must be cutting edge in order to succeed," says Camp.
