How to engineer a cash management monster

By:
Kimberley Long
Published on:

What does it take to succeed in the increasingly competitive world of transaction services? Internal collaboration, global footprint, adaptability, connectivity and mobile technology all make up part of the equation. But every bank, and every client, is different

iron man 
For the past decade and more, the big money spinner in global banking was to be a flow monster. Becoming a leader in the sales and trading of fixed income, currencies and commodities was the fast route to the big league of earnings. FICC was the glue that held global banks together.

But with a combination of regulation, litigation and moribund markets challenging the flow monster model, banking industry leaders are increasingly turning to a new adhesive – transaction services.

At the heart of transaction services is cash management. And at the heart of the biggest banks’ daily dealings with their clients, whether corporate or financial, are now not just the wheels of daily payments or trades, but also a strategic view of how to operate efficiently and successfully in an ever-more international marketplace.

Being a top cash manager is increasingly a prerequisite of being a top global bank. Euromoney’s annual cash management survey is the benchmark for the industry, with well over 27,000 corporate and financial services clients taking part.

HSBC retains top spot in both the financial institution and the non-FI categories this year. It holds a resounding top place in the non-FI category, with almost double the points of second place Citi.

But HSBC is not alone in keeping its position among the world’s top-ranking cash management providers, as the leading group remained similar to last year. With myriad banks providing global cash management solutions there is a consistency to the top 10 that suggests a long-term satisfaction among their clients.

What does it take for these banks to make it into the top 10? As each bank has grown and evolved in its own way there is no set standard for producing results, but themes for success in working alongside modern corporates do emerge.

Jennifer Boussuge
  We have built a platform which has allowed us to innovate and provide a globally consistent experience  

Jennifer Boussuge, Bank of America Merrill Lynch

When banks describe the transaction banking business as the 'core’ or 'backbone’ of their clients’ business, what do they actually bring? This is a market that appears to be both a marathon and a sprint: one in which longevity and track records are crucial, but so is cutting-edge innovation.

Bank of America Merrill Lynch and Citi are just two banks that have created innovation centres to work directly with clients to ensure they are building a banking proposition that caters to customers’ needs using their direct feedback. Through workshops they can feed upwards what the client wants and, where there is a commonality between several companies, make an appropriate offering around it.

Naveed Sultan, global head of treasury and trade solutions at Citi, says the bank has created a diagnostic tool that runs comparative studies for clients to compare themselves against their peer group and find solutions to run their operations more effectively.

BAML’s co-head of global transaction banking Dub Newman says: "We are in regular contact with our clients, and meetings such as the annual advisory board and other client conferences give us a very deep understanding of what they need from us. Increasingly, they want solutions that allow them to drive loyalty among their own client base."

One thing the top 10 banks have in common is understanding that they need to pull together, both within the transaction banking department and across different divisions.

There is no consensus over what falls within transaction banking – some will stick to traditional trade finance while others will bring their card offering into the fold – but there is a rising understanding about the possible benefits of figuring out which divisions can work together to create the most cohesive structure for clients.

Diane Reyes, global head of payments cash management at HSBC, says the bank has focused on creating a strong digital strategy to support its clients. This includes breaking down previous roles for the creation of specific product heads, such as e-commerce, to support growing digital requests and the diversity of the support that is now needed by the corporate clients.

Depending on size and global reach, the banks will break down their operations into manageable chunks – BAML has regional heads including Newman and Jennifer Boussuge to run global transaction banking north America and EMEA respectively – to oversee geographical regions. And Boussuge notes that an outcome of dividing up the operations in this way is that, rather than there being competition between the regions as they vie for attention, collaboration is encouraged.

Working across the business and the bank in a joined up way makes sense to provide a coherent structure to customers. The different parts of the bank will often work with the same clients, and working in a cohesive way creates strong brand loyalty when they all work well together.

This moving away from working in silos within banks has benefits as it creates a streamlined operation, which ultimately help the client. Angelo Rizzuti, UniCredit’s deputy head of global transaction banking, explains that within the GTB division there is closeness, not only to the sales side, but also to the product management and the product development teams, to structure the most effective offering for the client base.